An agreement made between the Ceding Company and the Reinsurer under which the former agrees to cede obligatorily a portion of risk up to agreed limit to the Reinsurer, who in turn agrees to accept such cessions.
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UK: Under treaty arrangements the cedant agrees to offer, and the reinsurer agrees to accept, all risks of a defined class. This enables the cedant to grant immediate cover for ‘large’ risks without first seeking the reinsurer’s consent. See QUOTA SHARE; SURPLUS LINE; EXCESS OF LOSS, and compare with FACULTATIVE REINSURANCE.
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UK: a type of reinsurance under which the reinsurer agrees in advance to accept a specified proportion of all risks or losses falling within a category defined in the contract (contrast facultative reinsurance).
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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. A treaty contains common contract terms along with a specific risk definition, data on limit and retention, and provisions for premium and duration.