Cedent

What Does Cedent Mean?

A cedent is a party that transfers the responsibility for reimbursing certain risks to another party. In the context of insurance, the cedent is the party that pays a premium to an insurance company in exchange for coverage. Because a cedent pays premiums to offload risk, the financial strength of the insurer receiving those premiums matters to the policyholder too, which is why many buyers start by comparing the best life insurance companies before purchasing a policy.

Insuranceopedia Explains Cedent

The term “cedent” is most commonly used in the reinsurance industry. In reinsurance, cedents are insurance companies that transfer risks to reinsurers. For example, if a life insurance company transfers $5 million worth of risk to a reinsurance company in exchange for premium payments, the life insurance company would be the cedent. The premiums a cedent pays to a reinsurer are calculated using many of the same underwriting inputs consumers encounter when they look into what affects the cost of a life insurance premium.