Question

What is the purpose of a quota share treaty?

a.

To fully utilize the retention capacity of the insurer in all cases.

b.

To determine the retention that can be supported by the portfolio of the ceding insurer.

c.

To protect the retained liability against the larger claims through working excess of loss covers.

d.

To provide a satisfactory solution only where the pattern of exposures per vessel shows clustering around a certain level.

Answer: (d).To provide a satisfactory solution only where the pattern of exposures per vessel shows clustering around a certain level. Explanation:A quota share treaty can be a satisfactory solution only where the pattern of exposures per vessel shows clustering around a certain level.

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Q. What is the purpose of a quota share treaty?

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