Definitions for "Treaty reinsurance"
An agreement in which the ceding company agrees in advance to cede certain classes of business or types of insurance to a reinsurance company. The reinsurer agrees to accept all risks or losses that fall within the terms of the agreement.
The reinsurance of a class of business by a cedant that the reinsurer must automatically accept. Also known as obligatory reinsurance.
Treaty reinsurance is reinsurance of specified types or classes of insured exposures that are automatically "ceded”or accepted by the Reinsurer within the terms of the reinsurance contract or "treaty" without evaluation of each individual exposure. The reinsurance takes effect as soon as the primary insurance is sold. Treaty reinsurance is a general term used to discuss several types of coverages that can include profit sharing features.