Quota share
Encyclopedia
A quota share is a specified number or percentage of the allotment as a whole (quota
), that is prescribed to each individual entity (see Non-tariff barriers to trade
).
For example, the US imposes an import quota
on cars from Japan
. The Japanese government may see fit to impose a quota share program to determine the amount of cars each Japanese car manufacturer may export to the US. Any extra amount that a manufacturer wishes to export must be negotiated with another manufacturer that did not or cannot maximize its share of the quota.
Also there are quota share insurance programs. Where the benefit and the premiums are divided proportionally amongst the insured. For example, three companies take out a $1,000,000 fire insurance policy on a quota share basis with company A assuming 50% ($500,000), company B 30% ($300,000), and company C 20% ($200,000). If the annual premium was $5000, company A would receive $2,500 in premium, B would receive $1,500, and C would receive $1,000.
Import quota
An import quota is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time....
), that is prescribed to each individual entity (see Non-tariff barriers to trade
Non-tariff barriers to trade
Non-tariff barriers to trade are trade barriers that restrict imports but are not in the usual form of a tariff. Some common examples of NTB's are anti-dumping measures and countervailing duties, which, although they are called "non-tariff" barriers, have the effect of tariffs once they are...
).
For example, the US imposes an import quota
Import quota
An import quota is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time....
on cars from Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
. The Japanese government may see fit to impose a quota share program to determine the amount of cars each Japanese car manufacturer may export to the US. Any extra amount that a manufacturer wishes to export must be negotiated with another manufacturer that did not or cannot maximize its share of the quota.
Also there are quota share insurance programs. Where the benefit and the premiums are divided proportionally amongst the insured. For example, three companies take out a $1,000,000 fire insurance policy on a quota share basis with company A assuming 50% ($500,000), company B 30% ($300,000), and company C 20% ($200,000). If the annual premium was $5000, company A would receive $2,500 in premium, B would receive $1,500, and C would receive $1,000.