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Insurance Glossary

Proportional Reinsurance

Industry

Definition

A reinsurance arrangement where the reinsurer shares premiums and losses with the ceding company in a fixed proportion. Includes quota share and surplus share arrangements. The reinsurer participates proportionally in both the income and the risk.

Definición en Español

ES

Reaseguro Proporcional

Un arreglo de reaseguro donde el reasegurador comparte primas y pérdidas con la compañía cedente en una proporción fija. Incluye arreglos de cuota parte y excedente de suma. El reasegurador participa proporcionalmente tanto en los ingresos como en el riesgo.

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Related Terms

Quota Share
A proportional reinsurance arrangement where the reinsurer accepts a fixed percentage of every policy written by the ceding company, sharing premiums and losses proportionally. For example, in a 40% quota share, the reinsurer receives 40% of premiums and pays 40% of losses.
Surplus Share
A proportional reinsurance arrangement where the reinsurer covers the amount of risk that exceeds the ceding company's retention limit, up to a specified multiple. This allows the ceding company to write larger policies while maintaining consistent retention levels.
Non-Proportional Reinsurance
A reinsurance arrangement where the reinsurer pays only when losses exceed a specified threshold, regardless of premium sharing. Includes excess of loss and stop loss arrangements. The reinsurer's obligation is triggered by the size of the loss, not by a fixed percentage.
Actuary
A business professional who analyzes probabilities of risk and risk management, including calculation of premiums, dividends, and other applicable insurance industry standards.
Underwriting
The process by which an insurer evaluates the risk of insuring a person or property and determines coverage terms and premium rates.
Loss Ratio
The ratio of losses paid plus loss reserves to premiums earned, used by insurers to measure underwriting profitability and pricing adequacy.
Combined Ratio
The sum of the loss ratio and expense ratio, measuring an insurer's overall underwriting profitability. A ratio below 100% indicates underwriting profit.
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