https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AReinsurance_treatyDefinition:Reinsurance treaty - Revision history2026-05-03T15:00:05ZRevision history for this page on the wikiMediaWiki 1.43.8https://www.insurerbrain.com/w/index.php?title=Definition:Reinsurance_treaty&diff=7085&oldid=prevPlumBot: Bot: Creating new article from JSON2026-03-10T05:10:02Z<p>Bot: Creating new article from JSON</p>
<p><b>New page</b></p><div>📜 '''Reinsurance treaty''' is a standing contract between a [[Definition:Ceding company | ceding company]] and one or more [[Definition:Reinsurer | reinsurers]] under which defined categories of [[Definition:Risk | risk]] are automatically ceded and accepted without the need for individual risk-by-risk approval. This distinguishes treaty business from [[Definition:Facultative reinsurance | facultative reinsurance]], where each risk is separately offered and underwritten. Treaties form the backbone of most insurers' [[Definition:Reinsurance program | reinsurance programs]], providing systematic protection across entire portfolios of [[Definition:Policy | policies]].<br />
<br />
🔧 Treaty structures generally fall into two broad families: [[Definition:Proportional reinsurance | proportional]] (or pro-rata) and [[Definition:Non-proportional reinsurance | non-proportional]] (or excess-of-loss). Under a [[Definition:Quota share | quota-share]] or [[Definition:Surplus share | surplus-share]] arrangement, the reinsurer assumes a fixed percentage of every risk within the treaty's scope and shares [[Definition:Premium | premiums]] and [[Definition:Loss | losses]] accordingly. In an [[Definition:Excess of loss reinsurance | excess-of-loss]] treaty, the reinsurer responds only when losses breach a specified [[Definition:Attachment point | attachment point]], up to an agreed [[Definition:Limit | limit]]. The contract's terms — including the [[Definition:Ceding commission | ceding commission]], [[Definition:Rate on line (ROL) | rate-on-line]], [[Definition:Reinstatement | reinstatement]] provisions, and [[Definition:Exclusion | exclusions]] — are documented in a [[Definition:Slip | slip]] or contract wording negotiated with the help of a [[Definition:Reinsurance broker | reinsurance broker]]. Most treaties renew annually, though multi-year deals exist where both parties seek pricing stability.<br />
<br />
🛡️ For an insurer, a well-constructed treaty portfolio accomplishes several objectives simultaneously: it smooths [[Definition:Earnings volatility | earnings volatility]], frees [[Definition:Regulatory capital | regulatory capital]], and expands [[Definition:Underwriting capacity | underwriting capacity]] so the company can write more business than its own [[Definition:Balance sheet | balance sheet]] would otherwise support. From the reinsurer's perspective, treaties provide a diversified stream of [[Definition:Premium | premium]] and exposure data that informs pricing across the broader market. Because treaties bind reinsurers to accept all qualifying risks, the accuracy of the cedant's [[Definition:Underwriting guidelines | underwriting guidelines]] and the quality of its [[Definition:Bordereaux | bordereaux]] reporting are critical to maintaining trust between parties — a dynamic that underpins the entire global [[Definition:Reinsurance market | reinsurance market]].<br />
<br />
'''Related concepts'''<br />
{{Div col|colwidth=20em}}<br />
* [[Definition:Proportional reinsurance]]<br />
* [[Definition:Non-proportional reinsurance]]<br />
* [[Definition:Facultative reinsurance]]<br />
* [[Definition:Ceding company]]<br />
* [[Definition:Reinsurance broker]]<br />
* [[Definition:Attachment point]]<br />
{{Div col end}}</div>PlumBot