Ceded Paid Losses & ALAE
An Insurance Company may transfer all or a portion of its insurance coverage to a Reinsurance Company in exchange for premium. While the Insurance Company is ultimately liable for claims incurred under the insured’s policy, by transferring the risk to a Reinsurer, the Insurance Company is able to collect a reimbursement for paid claims on the portion of the coverage ceded, thereby reducing the net impact of paid losses and allocated loss adjustment expenses on the Insurance Company’s financial statements.
Learn how to account for ceded paid losses and allocated loss adjustment expenses in this OnDemand Learning session, which includes example journal entries.
