Ceding Company
Updated: 20 October 2024
What Does Ceding Company Mean?
A ceding company is an insurance company that transfers or shares risks with another company through a transaction called reinsurance. In return, the ceding company pays a premium to the reinsurance company.
Insuranceopedia Explains Ceding Company
To avoid depleting its resources on future claims, an insurance company may transfer or share some of its risks with a reinsurance company. However, reinsurance is not a guaranteed solution for an insurance company seeking protection. If the reinsurer fails to pay the claims transferred by the ceding company, the ceding company remains responsible for settling them.
