Question

What does the term "Balance" represent in reinsurance?

a.

The ratio between written premium and maximum limit of liability

b.

The ratio desired for a specific treaty

c.

The process of negotiating reinsurance contracts

d.

A detailed report of insurance premiums and losses

Posted under IC85 Reinsurance Management

Answer: (a).The ratio between written premium and maximum limit of liability Explanation:"Balance" in reinsurance represents the ratio between the written premium under a treaty and the maximum limit of liability to which the reinsurer is exposed. If the desired ratio for a specific treaty is achieved, it is referred to as "balanced."

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