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Financial advisory
RES5Financial Advisory Services✓Which of the following correctly matches the arrangement to its description?
Surplus is correctly described: a proportional treaty in which the insurer retains a chosen line and cedes only the surplus sum insured above it, with claims shared in that same proportion. Paying only losses above a retention describes excess of loss, not quota share. Automatic cover of a whole class with no choice for the reinsurer describes a treaty, not facultative cover. Sharing a fixed percentage of every premium and claim describes quota share, not stop loss, which is non-proportional and responds to the aggregate annual loss.
Watch for swapped definitions — quota share/surplus are proportional; excess of loss/stop loss are non-proportional.
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