Liability Insurance Company (LIC) was approached by a regional airline

Liability Insurance Company (LIC) was approached by a regional airline to see if LIC would write the airline’s liability coverage. LIC agreed to write the coverage and entered into an agreement with a reinsurer.

Under the agreement, LIC retains 25 percent of the premium and pays 25 percent of the losses, and the reinsurer receives 75 percent of the premium and pays 75 percent of the losses. This reinsurance arrangement is best described as
A) excess-of-loss reinsurance.
B) surplus-share reinsurance.
C) quota-share reinsurance.
D) pool reinsurance.

ANSWER

Answer: C