Treaty and facultative reinsurance arrangements may be proportional or nonproportional.

Question

Quizplus · Accepted Answer

In treaty and facultative reinsurance, the arrangements can be either proportional, where losses and premiums are shared between the insurer and reinsurer based on a predetermined percentage, or nonproportional, where the reinsurer only pays out if losses exceed a certain amount, focusing on the severity of the loss rather than the distribution of premiums and losses.

Treaty and Facultative Reinsurance Arrangements May Be Proportional or Nonproportional