Treaty Structures
Surplus Treaty
Definition
A proportional treaty where the cedent retains a fixed amount per risk and cedes the surplus to reinsurers. Provides flexibility for varying policy sizes.
Practical Example
Cedent retains $1M per risk, cedes surplus up to $9M to reinsurers across 9 lines.
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Related Terms
Treaty Structures
Quota Share
A proportional treaty where the reinsurer accepts a fixed percentage of all policies within the treaty scope. Simple and automatic coverage.
Underwriting
Lines
In surplus treaties, multiples of the cedent's retention that can be ceded. Also refers to reinsurer's participation share.