Quota-Share Reinsurance
An Insurance Company may enter into a quota-share reinsurance agreement to limit its retained risk on an insurance policy. The Insurance Company and Reinsurer agree upon the quota-share percentage stated in the reinsurance agreement. The percentage of premium ceded by the Insurance Company proportionately agrees to the amount of losses and loss adjustments assumed by the Reinsurer. The Insurance Company typically collects a ceding commission from the Reinsurer pursuant to the reinsurance agreement.
This OnDemand Learning session provides examples of quota-share reinsurance premium and loss transactions, including the journal entries required by the Insurance Company to reflect the activity in its financial statements.
