Definition of Treaty reinsurance:
Treaty reinsurance is insurance purchased by an insurance company from another insurer. The company that issues the insurance is called the cedent, who passes on all the risks of a specific class of policies to the purchasing company, which is the reinsurer.
An automatic reinsurance contract that establishes the conditions under which a class of businesses will be reinsured.
Treaty reinsurance is one of the three main types of reinsurance contracts. The two others are facultative reinsurance and excess of loss reinsurance.
How to use Treaty reinsurance in a sentence?
- Treaty reinsurance is one type of reinsurance, the others being facultative reinsurance and excess of loss reinsurance.
- The issuing company is called the cedent, while the reinsurer is the purchasing company, which assumes the risks specified in the contract for a premium.
- Treaty reinsurance is insurance purchased by an insurance company from another insurer.
- The two types of treaty reinsurance contracts are proportional and non-proportional contracts.
- Treaty reinsurance gives the ceding insurer more security for its equity and more stability when unusual or major events occur.
- Treaty reinsurance is less transactional and less likely to involve risks that can be rejected.
Meaning of Treaty reinsurance & Treaty reinsurance Definition