Final answer:
The statement is false because proportional reinsurance involves sharing of both risks and premiums between the insurer and the reinsurer from the first dollar, not from a designated threshold.
Step-by-step explanation:
The statement provided is false. Proportional (pro rata) reinsurance is a type of reinsurance where the reinsurer shares a proportionate amount of the risks and losses with the insurer, as well as the premiums collected for those risks. This means that losses are shared from the first dollar up to the policy limits, rather than starting from a designated threshold. Contrast this with non-proportional reinsurance, such as excess of loss reinsurance, where the reinsurer is only obliged to pay out when losses exceed a specified threshold.
In the context of coinsurance, when an insurance policyholder pays a percentage of a loss, the insurance company pays the remaining cost. This is different from proportional reinsurance, as coinsurance typically involves cost-sharing between the policyholder and the insurer on an individual claim basis, not the sharing of risks between an insurer and a reinsurer.