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The broad two types of reinsurance treaties are :-
1/ Proportional reinsurance treaties such as Quota share treaty and Surplus treaty.
2/ Non - proportional treaties such as Excess loss treaty and Stop loss treaty.
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The reinsurer accepts a specific level of risk from the primary insurer and it has a partnership in which the insurer and reinsurer share risks at an agreed-upon level.
In facultative reinsurance, the primary insurer identifies which risks it wants to cover and which risks are ceded to the reinsurer.
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