https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AReinsurance_cessionDefinition:Reinsurance cession - Revision history2026-05-05T02:47:56ZRevision history for this page on the wikiMediaWiki 1.43.8https://www.insurerbrain.com/w/index.php?title=Definition:Reinsurance_cession&diff=8157&oldid=prevPlumBot: Bot: Creating new article from JSON2026-03-10T13:46:40Z<p>Bot: Creating new article from JSON</p>
<p><b>New page</b></p><div>🔄 '''Reinsurance cession''' is the act by which a [[Definition:Ceding company | ceding company]] transfers a defined portion of [[Definition:Risk | risk]] — and the corresponding share of [[Definition:Premium | premium]] — to a [[Definition:Reinsurer | reinsurer]] under a [[Definition:Reinsurance contract | reinsurance agreement]]. Each individual transfer of risk constitutes a cession, and the term also refers to the portion of business that has been ceded. A cession can occur automatically under a [[Definition:Treaty reinsurance | treaty]] arrangement, where risks falling within agreed parameters are transferred without case-by-case approval, or on an individual basis through [[Definition:Facultative reinsurance | facultative reinsurance]].<br />
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⚙️ Under a [[Definition:Quota share reinsurance | quota share treaty]], for example, the ceding company cedes a fixed percentage of every risk in a specified [[Definition:Line of business | line of business]], along with the same percentage of premium, and the reinsurer pays back a [[Definition:Ceding commission | ceding commission]] to cover the cedent's [[Definition:Acquisition cost | acquisition]] and administrative expenses. In an [[Definition:Excess of loss reinsurance | excess of loss]] structure, the cession operates differently: the cedent retains losses up to a [[Definition:Retention | retention]] level and cedes only the layer above that [[Definition:Attachment point | attachment point]]. The mechanics of each cession — what triggers it, how premium is calculated, and what [[Definition:Terms and conditions | terms]] govern the reinsurer's liability — are spelled out in the underlying treaty or [[Definition:Facultative certificate | facultative certificate]]. Accurate tracking of cessions is critical for [[Definition:Bordereaux | bordereaux]] reporting, which provides reinsurers with detailed data on the business they have assumed.<br />
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📈 Getting cessions right has far-reaching consequences for a [[Definition:Primary insurer | primary insurer's]] financial health and strategic flexibility. Each cession directly affects the cedent's [[Definition:Net retention | net retention]], [[Definition:Loss ratio (L/R) | loss ratio]], and [[Definition:Solvency | solvency]] metrics, so errors or ambiguities in recording cessions can distort financial statements and lead to disputes during [[Definition:Reinsurance recovery | loss recoveries]]. Regulators scrutinize cession arrangements to ensure that [[Definition:Risk transfer | risk transfer]] is genuine and that cedents are not using reinsurance purely for cosmetic balance-sheet relief. For technology-forward insurers and [[Definition:Insurtech | insurtech]] platforms, automating cession workflows — from policy-level data capture through to reinsurer reporting — has become a competitive priority, reducing manual reconciliation and accelerating the speed at which reinsurance programs can scale.<br />
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'''Related concepts'''<br />
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* [[Definition:Ceding company]]<br />
* [[Definition:Treaty reinsurance]]<br />
* [[Definition:Quota share reinsurance]]<br />
* [[Definition:Ceding commission]]<br />
* [[Definition:Bordereaux]]<br />
* [[Definition:Risk transfer]]<br />
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