Quota Share
Definition
A Quota Share is a type of reinsurance agreement in which the insurer and reinsurer share premiums and losses in proportion to a set percentage, distributing risk.
Benefits
A quota share reinsurance agreement divides premiums and losses between insurer and reinsurer by a set percentage.
Frequently Asked Questions
Is quota share the same as proportional? Yes, in insurance, a quota share is a form of proportional reinsurance where both parties share premiums and losses at a fixed rate.
What is the difference between quota share and surplus share? Quota share splits premiums and losses equally, while surplus share covers only losses above a set amount.
What is the difference between stop loss and quota share reinsurance? Stop loss reinsurance covers losses exceeding a set limit, while quota share reinsurance shares premiums and losses in fixed percentages between insurers.
Summary
Quota share agreements distribute risk and rewards fairly between insurers and reinsurers.