Products

A transaction encompassing a block of the ceding company’s book of business. The reinsurer must accept all business included within the terms of the reinsurance contract.

 

There are two distinct types of reinsurance:

1) Pro rata or proportional

2) Excess of loss or non-proportional reinsurance.

 

A term describing all forms of quota share and surplus share reinsurance in which the reinsurer shares the same proportion of the premium and losses of the ceding company. Proportional reinsurance is also known as "pro rata reinsurance". Along with sharing proportionally in premium and losses, the reinsurer typically pays a ceding commission to reimburse for expenses associated with issuing the underlying policy.

Quota share reinsurance is a form of pro rata reinsurance whereby the ceding company is indemnified for a fixed percent of loss on each risk covered by the treaty contract. All liability and premiums are shared from the first money. "Quota" or "definite" share relates to the fixed percentage as stated in the treaty.

Under a surplus share type of treaty, the pro rata proportion ceded depends on the size and type of risk. The ceding company has the right to decide how much it wants to retain on any one risk. This retention is called a “line.” Any risk that falls within this retention or line is handled totally by the primary company. Whenever the company insures a risk that is larger than the retention, the amount over the retention is ceded to the surplus share treaty as a multiple of the retention. All losses between the insurer’s retention on the risk and reinsurer’s participation are pro-rated.

A term describing a reinsurance transaction that, subject to a specified limit, indemnifies a ceding company against the amount of loss in excess of a specified retention. Excess of loss reinsurance is also called "non-proportional reinsurance"

In excess of loss reinsurance, premiums are typically negotiated as a percentage of the primary insurer's premium charge.

This excess of loss cover is designed to protect a company's overall underwriting results after application of other types of reinsurance it may have. It provides reinsurance for losses incurred during the treaty term, usually one year, in excess of either a specified loss ratio or a predetermined money amount.

Reinsurance transacted on an individual risk basis. The ceding company has the option to offer an individual risk to the reinsurer and the reinsurer retains the right to accept or reject the risk. The ceding company and reinsured share premium and losses on specific risks in proportion to an agreed percentage.

Catastrophic protection in addition to individual risk capacity.

 

The purpose of a catastrophe treaty is to protect a primary company against adverse loss experience resulting from the accumulation of losses arising from a single, major natural disaster or event such as a hurricane, tornado, earthquake, flood, windstorm, etc. For a given event, the treaty applies once the accumulation of losses paid by the primary company, less insuring reinsurance (the amount the ceding company expects to receive via other reinsurance agreements), reaches a predetermined retention.