Reinsurance types are proportional treaty and non - proportional , what the difference between the proportional and non - proportional treaty?

 A) Proportional reinsurance treaty :-

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1/ Based on liability and cession amout i.e The total sum insured .

2/ isurer and reinsurer share proportionally each dollar of premium written in ceding company office during the period of the treaty as well as every and each loss that may arised during the period of the treaty , the percentage share of the insurer and reinsurer arranged and agreed prior the inception date of the treaty and be effective at inception .

3/ Example for such treaty is Quota shre and surplus reinsurance treaty .

Non-proportional reinsurance treaty :-

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1/ Based on loss and claim amount .

2/ Rinsurer pay only losses that exceeding the underlying retention or the priority of the insurer ( the ceding company) as agreed,

3/ Total Premium payment to reinsurer arranged and agreed between insurer and reinsurer at inception and subject to adjustment at the end of the treaty period depending on the performance of the treaty . i.e premium paymet to reinsurer may increase by additional premium after adjustment but under any circumstances not decrease and no refund from reinsurer , that is because the reinsurer premiun is a minmum and deposit premium according to the treaty's terms .

3/ Example for such reinsurance treaty is Excess of loss reinsurance treay

Best wishes .