Treaty Reinsurance

Standing agreements that automatically reinsure entire classes of business written inside the treaty terms.

Overview

Proportional treaties, quota share and surplus, share every risk by percentage or line, with ceding commissions and often profit sharing. Excess of loss treaties respond when losses from one event or one risk pierce a retention, the workhorse for catastrophe, clash, and per risk property covers. Treaties run annually, with hours clauses defining what counts as one event for storms. Underwriting is portfolio level: statistics, exposure data, catastrophe model output, and judgment about the cedent own discipline. Disputes follow the follow the fortunes and follow the settlements doctrines, which bind reinsurers to the cedent claim outcomes handled in good faith, doctrines litigated in famous cases from the workers comp pool crises of the 1990s.