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🔄 '''Flow reinsurance''' refers to [[Definition:Reinsurance | reinsurance]] arrangements — typically structured as [[Definition:Treaty reinsurance | treaties]] — that automatically cede a defined portion of a [[Definition:Cedent | ceding company's]] ongoing book of business to one or more [[Definition:Reinsurer | reinsurers]] as policies are written, without requiring individual risk-by-risk approval. Distinguished from [[Definition:Facultative reinsurance | facultative reinsurance]] (which addresses specific, individually negotiated risks) and large-transaction or portfolio-transfer deals, flow reinsurance provides continuous, systematic capacity that allows [[Definition:Insurance carrier | primary insurers]] and [[Definition:Managing general agent (MGA) | MGAs]] to manage their [[Definition:Net retention | net retention]], stabilize [[Definition:Loss ratio | loss ratios]], and deploy capital more efficiently across their standard book.

⚙️ Under a flow reinsurance treaty, the cedent and reinsurer agree in advance on the classes of business covered, the attachment and limit structure, [[Definition:Ceding commission | ceding commissions]], and the method of premium and loss sharing. The arrangement may take a [[Definition:Quota share reinsurance | quota share]] form — where a fixed percentage of every qualifying policy's [[Definition:Premium | premium]] and [[Definition:Loss | losses]] flows to the reinsurer — or an [[Definition:Excess of loss reinsurance | excess-of-loss]] form that triggers only when individual or aggregate losses exceed a specified threshold. Because these treaties operate on an automatic basis, administrative efficiency is paramount: [[Definition:Bordereaux | bordereaux]] reporting, premium settlement schedules, and [[Definition:Claims | claims]] notification protocols are all defined at inception. [[Definition:Reinsurance broker | Reinsurance brokers]] play a central role in placing flow treaties, negotiating terms during annual renewal cycles that typically align with January 1 or April 1 renewal dates, though mid-year placements occur for specific programs. Markets like [[Definition:Lloyd's of London | Lloyd's]], Continental European reinsurers, and Bermuda-based carriers are all active providers of flow capacity.

📊 For cedents, flow reinsurance is a strategic tool that shapes the economics and growth trajectory of the business. By automatically transferring a share of [[Definition:Underwriting risk | underwriting risk]], a carrier can write a larger gross book than its standalone capital would support, smooth earnings volatility, and present a more stable risk profile to [[Definition:Rating agency | rating agencies]] and [[Definition:Regulator | regulators]]. For reinsurers, flow treaties offer diversified, granular premium volume — a counterbalance to the lumpy, catastrophe-exposed nature of property [[Definition:Excess of loss reinsurance | excess-of-loss]] programs. The terms of flow treaties often reflect the strength of the trading relationship and the cedent's [[Definition:Underwriting | underwriting]] track record; a cedent with consistent, profitable results can command more favorable commissions and broader coverage. In the [[Definition:Insurtech | insurtech]] era, digitally native MGAs seeking to scale quickly are especially reliant on flow reinsurance to back their [[Definition:Delegated underwriting authority (DUA) | delegated authority]] programs, making the health of the flow reinsurance market a bellwether for innovation-driven growth across the industry.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Treaty reinsurance]]
* [[Definition:Quota share reinsurance]]
* [[Definition:Excess of loss reinsurance]]
* [[Definition:Facultative reinsurance]]
* [[Definition:Ceding commission]]
* [[Definition:Cedent]]
{{Div col end}}

Definition:Flow reinsurance - Revision history

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