Ace the Alberta General Insurance Level 1 Exam 2025 – Insure Your Success Today!

Non-proportional reinsurance is a type of reinsurance in which the reinsurer's portion of the loss is not determined by a fixed percentage, unlike proportional reinsurance. It is calculated based on the size of the loss, meaning that the reinsurer will only cover losses that exceed a certain threshold. This allows the reinsurer to limit their exposure and only cover larger and more catastrophic losses, rather than smaller and more frequent ones. Option A is incorrect because it implies that non-proportional reinsurance is based on a fixed percentage. Option B is incorrect because it only takes into account the number of claims and not the size of the loss. Option D is incorrect because the initial premium paid does not necessarily determine the reinsurer's portion of the loss in non-proportional reinsurance. Therefore, C is the most accurate and relevant choice.