What is insurance reinsurance treaty?
Treaty reinsurance represents a contract between the ceding insurance company and the reinsurer who agrees to accept the risks of a predetermined class of policies over a period of time. When insurance companies underwrite a new policy, they agree to take on additional risk in exchange for a premium.
What was the reinsurance treaty and why did it fail?
Reinsurance Treaty, (June 18, 1887), a secret agreement between Germany and Russia arranged by the German chancellor Otto von Bismarck after the German-Austrian-Russian Dreikaiserbund, or Three Emperors' League, collapsed in 1887 because of competition between Austria-Hungary and Russia for spheres of influence in the ...
What is reinsurance treaty and facultative?
Facultative reinsurance and reinsurance treaties are two types of reinsurance contracts. When it comes to facultative reinsurance, the main insurer covers one risk or a series of risks held in its own books. Treaty reinsurance, on the other hand, is insurance purchased by an insurer from another company.
What is a treaty reinsurance contract?
A treaty reinsurance contract is a contract between an insurance company and a reinsurance company. According to the terms of the contract, an insurance company (also known as a cedent) passes on the risks of a class of policies to a reinsurance company. The reinsurance company will take on these risks for a certain fee.
Who is the cedent in treaty reinsurance?
The company that issues the insurance is called the cedent, who passes on all the risks of a specific class of policies to the purchasing company, which is the reinsurer. Treaty reinsurance is one of the three main types of reinsurance contracts. The two others are facultative reinsurance and excess of loss reinsurance.
What was the Reinsurance Treaty of 1887?
The Reinsurance Treaty originated after the German-Austrian-Russian Dreikaiserbund ( League of the Three Emperors) had lapsed in 1887 because of competition between Austria-Hungary and Russia for spheres of influence in the Balkans.