Quota Share Reinsurance

What Does Quota Share Reinsurance Mean?

Quota share reinsurance is a reinsurance arrangement in which the reinsurer agrees to pay a specified percentage of all losses sustained by the insurer, regardless of the type of loss.

This type of agreement is also referred to as an obligatory reinsurance contract.

Insuranceopedia Explains Quota Share Reinsurance

Quota share is a form of pro rata reinsurance in which the ceding company is indemnified for a fixed percentage of losses on all risks covered by the contract. Both liability and premiums are shared proportionally.

The quota share treaty requires the primary insurer to cede, and the reinsurer to accept, every policy underwritten by the ceding company. Typically, the treaty includes a maximum limit beyond which the reinsurer is not obligated to pay for any individual risk.