Why it is used
It allows the cedant to retain more of smaller risks while gaining capacity for larger sums insured.
Reinsurance Intelligence · Proportional treaty
All conceptsSurplus Treaty
The insurer keeps a fixed line and cedes amounts above it in a variable number of lines, subject to treaty capacity.
Illustrative example
With a one-line retention and four-line treaty, the ceded share grows as the insured value exceeds the retained line.
Programme questions
- Line definition
- Maximum treaty capacity
- Accumulations and special acceptances
Educational overview only. Reinsurance effect depends on the complete contract, programme structure, accounting basis, law, facts, and counterparties. The original insurer normally remains responsible to its policyholder.