One method through which reinsurance is provided is through an organization of insurers that underwrites insurance on a joint basis.Through the organization,financial capacity is available for large commercial risks.This reinsurance arrangement is a(n)
A)quota-share treaty.
B)surplus-share treaty.
C)excess-of-loss treaty.
D)reinsurance pool.

Question

Quizplus · Accepted Answer

The reinsurance arrangement described is a reinsurance pool, where insurers come together to share the risk of large commercial risks by pooling their financial resources. A quota-share treaty involves sharing the risk and premiums of an insurance policy with a reinsurer in a predetermined ratio, a surplus-share treaty involves the reinsurer taking a percentage of the risk and premiums above a certain limit, and an excess-of-loss treaty involves the reinsurer agreeing to cover losses that exceed a certain amount. None of these fully describe the described reinsurance arrangement.

One Method Through Which Reinsurance Is Provided Is Through an Organization