Liability Insurance Company (LIC)was approached by a regional airline to see if LIC would write the airline's liability coverage.LIC agreed to write the coverage and entered into an agreement with a reinsurer.Under the agreement,LIC retains 25 percent of the premium and pays 25 percent of the losses,and the reinsurer receives 75 percent of the premium and pays 75 percent of the losses.This reinsurance arrangement is best described as

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This is quota-share reinsurance because the reinsurer and the primary insurer (LIC) are sharing the premiums and losses based on a predetermined percentage split. 25 percent retention by LIC and 75 percent shares by the reinsurer is a clear indication of the quota-share reinsurance arrangement.

Liability Insurance Company (LIC)was Approached by a Regional Airline to See