Question

What is a "Treaty" in the context of reinsurance?

a.

A reinsurance agreement between the reinsured insurer and the reinsurer

b.

A retroactive pricing mechanism for excess of loss reinsurance

c.

An insurance policy issued by the reinsurer to the ceding insurer

d.

An agreement between primary insurance insurers for retrocession purposes

Posted under IC85 Reinsurance Management

Answer: (a).A reinsurance agreement between the reinsured insurer and the reinsurer Explanation:A "Treaty" can be defined as a reinsurance agreement between the reinsured insurer and the reinsurer. It specifies the technical particulars applicable to the reinsurance of certain classes of business. Reinsurance treaties can be classified as participating type or excess type, depending on whether they involve sharing of liability, premiums, and losses or indemnity for losses exceeding a predetermined amount.

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