Alberta General Insurance Level 1 Practice Exam

Question: 1 / 400

What is proportional reinsurance?

A flat rate reinsurance contract

A reinsurance contract based on flat fees

A reinsurance where risk and premiums are shared proportionally

Proportional reinsurance is a type of reinsurance where the risk and premiums are shared proportionally between the insurer and the reinsurer. This means that both parties share a portion of the risk and receive a corresponding portion of the premiums. Option A and B are incorrect because they mention "flat" rates or fees, which implies a fixed amount rather than a proportional sharing of risk and premiums. Option D is incorrect because it states that the risk is transferred entirely, which is not the case in proportional reinsurance since both parties share the risk.

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A reinsurance where risk is transferred entirely

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