Ceding Company


Definition - What does Ceding Company mean?

A ceding company is an insurance company that has shared or passed risks on to another company in a transaction called reinsurance. As compensation, 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 share or pass some risks it has taken to a reinsurance company. Reinsurance, howeve,r is not a guaranteed solution for an insurance company looking to protect itself. If the reinsurer fails to pay the claims passed on by the ceding company, the ceding company is once again responsible for settling them.

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