Question

What is the primary objective of quota-share and surplus treaties in fire reinsurance?

a.

To protect net retained business by appropriate working and catastrophe excess of loss covers

b.

To provide an effective means for stabilization of results for the portfolio

c.

To iron out the variation in results that occur from year to year

d.

To make a larger recovery from reinsurers in a year of higher than average fire losses in large risks

Posted under IC85 Reinsurance Management

Answer: (b).To provide an effective means for stabilization of results for the portfolio Explanation:The primary objective of quota-share and surplus treaties in fire reinsurance is to provide an effective means for stabilization of results for the portfolio. These treaties help in ironing out the variation in results that occur from year to year. In addition, the ceding reinsurance commission received on proportional treaties adds to the net results of the ceding insurer.

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Q. What is the primary objective of quota-share and surplus treaties in fire reinsurance?
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