Reinsurance is considered as a significant process which provides necessary securities to insurer which safeguards them from financial problems that arises from any future unexpected events. Comment on the statement and explain the meaning and benefits of the term Reinsurance. Also read the following statements and identify the relevant reinsurance type/contract for each case.

1. Under this contract, the pro rata basis is being used to share the premium and losses by the reinsurer and insurer.