Adding incentive mechanism in an insurance contract can make policy holder participate in the insurance contract dynamically. It gives policy holder the option of whether to execute a claim when facing claimant events, which changes the single right of policy holder to execute claims in traditional insurance contracts. Meanwhile, it increases the potential liquidity risk of the insurer. The reinsurance arrangement in the insurance contract further disperses the risk of the insurer and helps the insurer to operate steadily. Based on this, this paper establishes an optimal insurance contract design model with dividend incentive mechanism and reinsurance arrangement, finding that the optimal insurance contract is an insurance contract with the optimal form of being deductible. The results show that there is a positive relationship between the optimal deductible and the dividend incentive in the incentive mechanism, and a significant negative relationship between the premium, retention and the optimal deductible.