PlumBot: Bot: Creating new article from JSON

2026-03-18T02:33:57Z

Bot: Creating new article from JSON

New page

🔄 '''Reinsurance policy''' is the contractual document — more commonly called a [[Definition:Reinsurance contract | reinsurance contract]] or reinsurance agreement — that sets out the terms under which one insurer (the [[Definition:Cedant | cedant]] or ceding company) transfers a defined portion of its [[Definition:Underwriting risk | risk]] to a [[Definition:Reinsurer | reinsurer]]. Although the word "policy" is standard when referring to the contract between an insurer and a [[Definition:Policyholder | policyholder]], the [[Definition:Reinsurance | reinsurance]] market more typically uses "contract," "treaty," or "slip" to describe its agreements. Regardless of terminology, the document governs the relationship between two sophisticated insurance professionals and addresses risk transfer, premium obligations, loss-settlement procedures, and the rights and duties of each party.

📑 A reinsurance policy or contract can take one of two broad forms. [[Definition:Treaty reinsurance | Treaty reinsurance]] covers an entire portfolio or class of business on an ongoing basis, with the cedant ceding risks automatically under agreed terms — common structures include [[Definition:Quota share | quota share]] and [[Definition:Surplus treaty | surplus]] arrangements on a proportional basis, or [[Definition:Excess of loss | excess-of-loss]] layers on a non-proportional basis. [[Definition:Facultative reinsurance | Facultative reinsurance]], by contrast, covers individual risks negotiated on a case-by-case basis. The contract specifies essential terms such as the period of coverage, the territorial scope, the [[Definition:Retention | retention]] or attachment point, the limit of liability, [[Definition:Premium | premium]] calculations (including [[Definition:Sliding scale commission | commission]] structures for proportional deals), [[Definition:Loss adjustment | claims cooperation]] and settlement clauses, and provisions for disputes — often referencing arbitration under the rules of bodies like the ARIAS (AIDA Reinsurance and Insurance Arbitration Society). Market practice varies: the London market relies heavily on [[Definition:Slip | slip]]-based placement through [[Definition:Lloyd's of London | Lloyd's]] and the company market, while continental European and Asian cedants may use more formal policy wordings. [[Definition:IFRS 17 | IFRS 17]] has added further contractual significance, since accounting treatment depends on whether a contract transfers sufficient [[Definition:Insurance risk | insurance risk]] to qualify as reinsurance.

🛡️ Getting the terms of a reinsurance policy right is fundamental to the financial health and [[Definition:Solvency | solvency]] of a ceding insurer. Ambiguities in coverage triggers, exclusions, or aggregation clauses can lead to costly disputes precisely when the cedant is facing large losses and needs recoveries most. Regulators across jurisdictions — from the [[Definition:National Association of Insurance Commissioners (NAIC) | NAIC]] in the United States to the European Insurance and Occupational Pensions Authority under [[Definition:Solvency II | Solvency II]] — scrutinize whether reinsurance contracts achieve genuine [[Definition:Risk transfer | risk transfer]], since only qualifying contracts provide [[Definition:Capital relief | capital relief]] and favorable reserving treatment. As [[Definition:Catastrophe risk | catastrophe]] exposures grow and the market introduces more complex structures such as [[Definition:Industry loss warranty (ILW) | industry loss warranties]] and [[Definition:Collateralized reinsurance | collateralized reinsurance]], the precision and clarity of reinsurance policy language have never been more consequential.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Reinsurance]]
* [[Definition:Treaty reinsurance]]
* [[Definition:Facultative reinsurance]]
* [[Definition:Cedant]]
* [[Definition:Risk transfer]]
* [[Definition:Excess of loss]]
{{Div col end}}

Definition:Reinsurance policy - Revision history

PlumBot: Bot: Creating new article from JSON