What Does Quota Share Reinsurance Mean?
Quota share reinsurance is a reinsurance plan under which the reinsurer commits to paying an agreed percentage of all losses the insurer sustains, regardless of their type.
It is also known as an obligatory reinsurance contract.
Insuranceopedia Explains Quota Share Reinsurance
Quota share is a form of pro rata reinsurance, where the ceding company is indemnified for a fixed percent of loss on all risks that are thereafter covered by the contract. All liability and premiums are shared.
The quota share treaty mandates that the primary company cedes and the reinsurer accepts each and every policy underwritten by the reinsured. The treaty usually includes a maximum amount over which the reinsurer is not committed to pay for any one risk.