What is the difference b/w stop loss treaty and quota share treaty? Explain with figures if possible.

4 answers

Ravi Staff March 9, 2019

hello please this chart which we discuss in class, it has examples also
https://auditguru.in/wp-content/uploads/2017/07/Reinsurance-Auditguru.in_.pdf
 
its difficult to explain, while concept here in typing 
you can see video lectures,if you are facing many problems in subject.

#1

I already am a video student and I am unclear about the concept even after watching the video. Kindly help.

#2
Ravi Staff March 9, 2019

ok barun you can see above chart also, it is recently introduced.
In Quota Share treaty, % percentage of premium and claim will be shared with re-insurer, for example if percentage to be ceded / given / re-insured is 40% and now premium collected is 100 crores and claims to be paid are 60 crores in such case, we will give re-insurer 40% of premium that is 40 crores and we will recover 40% of claim that is 40% of 60 crore that is 24 crore
now in stop loss treaty loss (claim) “above” fixed percentage will be shared with re-insurer with negotiated premium for example we collected 100 crore premium and claims are 60 crore. further stop loss treaty says claims above 40% of premium will be recovered . Now if claims are 15 crore no recover will happen, and if claim is of 60 crore then above 40% of premium that means above 40 crore that is 60-40 = 20 crore will be recovered

i hope you got the difference, please comment back if there is any doubt 🙂

#3

Yes got it!  Thank you so much for the reply. 

#4

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