Proportional and Non-Proportional Reinsurance
Reinsurance agreements are written on a treaty or facultative basis, which determines how the Reinsurer accepts risk from the Ceding Entity. Coverage may be written proportionately, such as in a quota-share agreement in which premiums and losses are shared based on a defined percentage. Alternatively, coverage may be written non-proportionately in which the reinsurer assumes risk in excess of defined limits, on a per risk, per occurrence or in excess of an aggregate amount, in exchange for premium. Some reinsurance placements may even include a combination of both coverages, for example a quota-share agreement in an excess layer of coverage.
This OnDemand Learning session provides an overview and examples of proportional and non-proportional reinsurance.
