# What is non proportional facultative reinsurance?

## What is non proportional facultative reinsurance?

Nonproportional Reinsurance — also known as excess of loss reinsurance. Losses excess of the ceding company’s retention limit are paid by the reinsurer, up to a maximum limit. Reinsurance premium is calculated independently of the premium charged to the insured.

## Is facultative reinsurance proportional?

Both treaty and facultative reinsurance contracts can be written on a proportional or excess-of-loss basis (or a combination of both). Facultative reinsurance contracts are much more focused in nature. They cover individual underlying policies, and they are written on a policy-specific basis.

What is the difference between proportional and Nonproportional reinsurance?

While Proportional reinsurance is based on the sum insured, Non Proportional reinsurance uses the size of the claim to design the cover. The insurance company decides the claim amount it can assume for itself on one single risk or on one event involving many risks: that is the retention.

What is a facultative reinsurance agreement?

Facultative reinsurance is reinsurance purchased by an insurer for a single risk or a defined package of risks. Usually a one-off transaction, it occurs whenever the reinsurance company insists on performing its own underwriting for some or all the policies to be reinsured.

### What is non-proportional?

Non-Proportional: A proportional graph is a straight line that always goes through the origin. A non-proportional graph is a straight line that does not go through the origin.

### What is the difference between non-proportional and proportional?

How to tell the difference: A proportional table has a constant of proportionality in that y divided by x always equals the same value. A non-proportional table will have different values when y is divided by x.

What is proportional and non-proportional treaty?

According to Investopedia, proportional treaty reinsurance requires the primary or ceding insurer and the reinsurer to maintain a post-transfer relationship. Non-proportional reinsurance, or excess of loss basis, is based on loss retention. The ceding insurer agrees to accept all losses up a predetermined level.

What are the two types of proportional reinsurance?

Two basic forms of proportional reinsurance are called “quota share” and “surplus share.” In quota share reinsurance, the ceding company and the reinsurer agree on what type(s) of insurance is to be ceded.

#### How is facultative reinsurance calculated?

If the Reinsurance rate was 10.0%, Facultative premium would be 10%*6,750.00= 675.00. X would pay this to its reinsurers and apportion the balance 6,750-675= 6,075.00 to its treaty. The pricing for this kind of arrangement could either be experience based (burning Cost) or exposure rating.

#### What are the three types of reinsurance?

Types of reinsurance include facultative, proportional, and non-proportional.

What are examples of non proportional relationships?

The distance a car can travel on a tank of gas or a full battery charge in an electric car depends on factors such as fuel capacity and the car’s efficiency. This is described by a nonproportional relationship. more than one word in each box.