What is the difference between quota share and excess of loss?

Quota share and excess of loss are different contracts, not two logos on a structure slide. Quota share is proportional. A cited percentage of premium and of loss moves to the reinsurer, usually against a ceding commission. Excess of loss is non-proportional. The reinsurer responds when a loss, an event, or an aggregate crosses a cited attachment, up to a cited limit. Confusing share with attachment is how recoveries get booked against the wrong file.

Treaty reinsurance is the parent for both. The operations question is which wording, which bordereau, and which year of account. A fluent summary that says the programme is mixed is not an operations answer.

Proportional versus attachment

Fictional walkthrough: ACME Construction Ltd, acme.example. The cedent writes a property book that includes ACME. The quota-share wording cedes 30 percent of subject premium and 30 percent of subject loss, class property, inception 1 January 2026. ACME's policy limit is USD 10,000,000 any one occurrence on Slip.pdf page 2. Under the quota share, 30 percent of ACME's premium and 30 percent of an ACME loss that is on cover moves, whether the loss is USD 50,000 or USD 8,000,000, so long as the policy sits inside class, territory, and period.

Separately, the same cedent buys a per-risk excess of loss: USD 10,000,000 excess of USD 5,000,000 any one risk. An ACME loss of USD 8,200,000 attaches at USD 5,000,000. The layer pays USD 3,200,000, not 30 percent of 8,200,000. If the loss is USD 4,100,000, the excess of loss pays nothing. The quota share still takes 30 percent of 4,100,000 if the policy is ceded.

Those two recoveries are two postings. Do not net them in a spreadsheet because both mention ACME. Do not apply the quota-share percentage to the excess-of-loss recovery. Cedent reporting and reinsurer operations fail the same way when the technician uses one ACME row for two contracts.

What the files must show

Quota share administration needs the share, class, exclusions, commission basis, and special acceptances from the wording, then rows that can be tested against those spans. Excess of loss administration needs attachment, limit, reinstatement, hours or event definition, and a claims file that can show whether a loss crossed the attachment. Source-grounded extraction is how those terms stay cited. A pricing memo that says "5 mill xs" is not the signed attachment if the wording says USD 5,000,000.

ACME's slip TIV is USD 42,000,000. The SOV totals USD 47,100,000 because a warehouse was added after the slip was typed. That conflict matters for both structures. Quota share cares whether the extra location is in class. Excess of loss cares whether the sum insured used for rating and for any one risk is the slip, the SOV, or a fight. Averaging to USD 44,550,000 solves neither.

How operators mix them

A common failure: the inbound premium bordereau is mapped as if every row were quota share, then a large ACME loss is recovered as if the quota-share share were an attachment. Another: the claims bordereau lists ground-up incurred, and someone subtracts USD 5,000,000 from every row because the slide said XoL, including rows that never reached attachment. A third: facultative leftover on ACME is posted to the treaty year because the name matched.

Keep the contracts separate. Name the wording on each file. If ACME is quota share and also sits on a facultative certificate, that is two lines on two files. The comparison is settled in the wording, not in a model that claims to understand reinsurance.