Alberta General Insurance Level 1 Practice Exam

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What kind of reinsurance agreement specifies loss limits and premium payments beforehand?

Proportional Reinsurance Contract
Non-Proportional Reinsurance Agreement
Treaty Reinsurance Agreement
Facultative Reinsurance Case

The correct answer is: Treaty Reinsurance Agreement

A treaty reinsurance agreement is a type of reinsurance contract where loss limits and premium payments are predetermined and agreed upon by both the insurer and the reinsurer. This type of agreement allows for a more systematic approach to risk management and is generally used for covering multiple risks and policies over a period of time. The other options may seem similar, but they do not specify loss limits and premium payments beforehand. Proportional reinsurance contracts involve sharing both risks and premiums between the insurer and reinsurer, while non-proportional reinsurance agreements only cover losses over a certain amount. Facultative reinsurance cases are one-time deals and do not involve predetermined terms for loss limits and premiums.