Proportional Treaty:

• The reinsurer agrees to take on a specific percentage share of policies, for which it will receive that proportion of premiums.
• Original risks, premiums, and claims in a pre-agreed proportion are shared/ceded – it is Risk sharing.
• High volume of business but low profit margin.

Example:

> Quota share treaty is a purest form of a proportional treaty where a certain percentage % of each and every risk is transferred/shared with reinsurer.