What is the Difference Between Proportional and Non-Proportional Reinsurance Agreements?

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Reinsurance is when an insurance company transfers risk to other parties by a formal agreement-- thereby lessening its liability on catastrophic or multiple losses. It is insurance for insurers and enables insurance companies to remain solvent after major claim events, such as hurricanes. Both Treaty and facultative reinsurance policies can be proportional or non-proportional in structure.

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Topics: Reinsurance, Reinsurance Agreements

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