Question

What is "Surplus Reinsurance"?

a.

A form of excess of loss reinsurance

b.

A type of reinsurance treaty

c.

A retroactive pricing mechanism for reinsurance

d.

A pro rata reinsurance that indemnifies the ceding insurer up to the surplus insurance liability

Posted under IC85 Reinsurance Management

Answer: (d).A pro rata reinsurance that indemnifies the ceding insurer up to the surplus insurance liability Explanation:"Surplus Reinsurance" can be defined as a form of pro rata reinsurance that indemnifies the ceding insurer against loss to the extent of the surplus insurance liability ceded. It functions on a share basis similar to quota share, and the reinsurer's pro rata share of insurance increases as the amount of insurance increases.

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