Non-proportional reinsurance is reported on which one of the following three lines:

Question

Options

• AReinsurance assumed property, assumed liability, and assumed financial lines
• BProportional reinsurance, assumed liability, and assumed financial lines
• CReinsurance assumed property, assumed liability, and international business
• DReinsurance assumed property, non-proportional reinsurance, and assumed financial lines

• A
  72% (28)
• B
  5% (2)
• C
  8% (3)
• D
  15% (6)

Explanation

Option A is correct because non-proportional reinsurance (e.g., excess of loss) is classified and reported across three coverage-based lines: reinsurance assumed property, assumed liability, and assumed financial lines - reflecting the nature of the underlying risk rather than the reinsurance structure itself.

Why the distractors fail:

• B is wrong because "proportional reinsurance" is a type of reinsurance, not a reporting line - it cannot be a line on which non-proportional reinsurance is reported.
• C is wrong because "international business" is not one of the three standard reporting lines for non-proportional reinsurance; the correct third line is financial lines, not a geographic category.
• D is wrong because listing "non-proportional reinsurance" as one of its own reporting lines is circular - you wouldn't report non-proportional reinsurance on a line called "non-proportional reinsurance."

Memory tip: Think PLF - Property, Liability, Financial. Non-proportional reinsurance is sorted by what risk is covered, not how the reinsurance is structured, so the three lines are all coverage-type categories. Any option mixing in a structural term (like "proportional") or a geographic term (like "international") is a trap.

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