Most of the examples cited above relate to reinsurance contracts covering more than one policy (contract). Reinsurance can also be purchased by policy and, in this case, it is called “optional reinsurance”. Optional reinsurance may be recognised either on a quota basis or on an excess loss basis. Optional reinsurance contracts are usually recalled in relatively short contracts, known as optional certificates, and are often used for large or unusual risks that, due to their exclusions, do not correspond to standard reinsurance contracts. The duration of an optional agreement corresponds to the duration of the policy. Optional reinsurance is usually acquired by the insurance insurer that wrote the original insurance policy, while contract reinsurance is usually acquired by an officer of the insurance company. Primary and reinsurance insurers negotiate reinsurance contracts (insurance for the insurance company) through optional agreements and/or contractual agreements; As a rule, the latter are used in combination. In the case of contractual reinsurance transactions, the transferring company transfers to the reinsurer all the risks inherent in a business book. For example, an initial insurer could transfer its entire book from the commercial car or all the risk of its owners. Both parties will enter into an agreement known as a contract in which the reinsurer is required to accept all covered transactions. While contract reinsurance does not require verification of individual risks by the reinsurer, it does require careful consideration of the philosophy, practice and experience of the transferring insurer. In the case of an agreement on excess damages, also known as “non-proportional reinsurance”, the transferring insurer retains some liability in the event of losses. It pays a fee to the reinsurance company for coverage in excess of that deductible and that coverage is usually subject to a fixed cap.

Franchise agreements are often more economical in terms of reinsurance premiums and administrative costs. There are two main types of contractual reinsurance, proportional and non-proportional, which are listed below. In the case of proportional reinsurance, the reinsurer`s share of the risk of each policy is defined, while for non-proportional reinsurance, the reinsurer`s liability is based on the aggregate rights of the transferor. Over the past 30 years, the claims and accident industry has seen a big shift from proportional to non-proportional reinsurance. Contractual reinsurance is a comprehensive agreement covering part of a given class (or class of activity), for example. B all the indemnification or real estate activities of an insurer. Reinsurance contracts automatically cover all risks defined by the insured that are covered by the contractual conditions, unless they expressly exclude certain exposures. Both contractual and optional reinsurance contracts may be concluded in proportion to or on the basis of an excess of losses (or a combination of both).

The insurance company may be motivated by arbitration to acquire reinsurance coverage at a lower rate than it charges the insured for the underlying risk, regardless of the category of insurance. Reinsurance agreements, both optional and contractual, may be entered either on a pro rata basis or in excess of losses. All claims arising from basic policies of assignors that arise during the term of the reinsurance contract are covered even if they arise after the expiry date of the reinsurance contract. . . .