Important Points for IC 83 - Group Insurance and Retirement Benefit Schemes Exam
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Treaty Reinsurance means that the ceding company and the reinsurer negotiate and execute a reinsurance contract under which the reinsurer covers the specified share of all the insurance policies issued by the ceding company which come within the scope of that contract.
The reinsurance contract may oblige the reinsurer to accept reinsurance of all contracts within the scope, or it may allow the insurer to choose which risks it wants to cede, with the reinsurer obliged to accept such risks.
There are two main types of treaty reinsurance: Proportional and Non-proportional.
Under proportional reinsurance, the reinsurers share of the risk is defined for each separate policy.
Under non-proportional reinsurance the reinsures liability is based on the aggregate claims incurred by the ceding office.
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