| 4 buildings, namely
(1) Kuangfu Junior High School
(2) Veteran’s Hospital in Puli
(3) Hisicun Science Park
(4) Several residential estates
were reinsured by Trust Alliance under the Fire and Allied Perils First Surplus Treaty.
Nowadays, companies seldom use Quota Share treaties of proportional reinsurance to protect their main lines of business because an insurance company with a Quota Share treaty may have to resort to using the Faculative Method frequently due to the size of the risks and their values.
The capacity of a Quota Share Treaty would by necessity not be very large as the insurance company’s retention is governed by its shareholders’ funds. Therefore insurance company would prefer to increase their automatic reinsurance facilities by way of a surplus treaty whereby its capacity is expressed as a multiple of the insurance company’s retention.
Quota Share and Surplus Treaty (Proportional reinsurance) can be viewed as insurance company’s partnership with reinsurance company, as the reinsurer participates in every risk that the cedant accepts. Acceptance of risk is automated.
Hence, most treaties are said to be “blind”. “Follow the fortune” principle applies.