Reinsurance
Definition
Insurance for insurance companies: a cedent transfers part of its risk to a reinsurer in exchange for premium. The same legal entity can be cedent on one contract and reinsurer on another.
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Related Terms
The insurance company that transfers (cedes) risk to a reinsurer. Also called the ceding company or reinsured. Primary insurers are cedents to reinsurers.
Company that accepts insurance risk transferred from cedents. Provides capacity and risk diversification to the insurance market.
A reinsurance agreement covering a specified portfolio of risks over a period of time. The reinsurer agrees to accept all risks within the treaty terms, providing automatic coverage.
Reinsurance negotiated separately for each individual risk or policy, as opposed to treaty reinsurance which covers a portfolio. Provides flexibility for unique or large risks.