Spread loss reinsurance is a type of reinsurance in which the reinsurer gets paid by the ceding company for a period of time until the latter collects a lump sum from the former when it experiences a financial loss.
This payment scheme is a way for insurers and reinsurers to protect themselves from future losses.
The insurer (the ceding company) pays the reinsurer (the cedant) money for premiums over a long period of time. It usually does this while doing good business. When the insurer experiences a considerable financial loss, the reinsurer gives it a large sum of money to cover that loss. Afterwards, the insurer resumes paying the reinsurer, making relatively small payments spread out over several years.
Share this Term
Stay informed with Insuranceopedia!
The world of insurance can be complicated. Subscribe to the Insuranceopedia newsletter and stay in the know! Access expert content, industry term definitions and answers to your questions from knowledgeable insurance insiders. Arm yourself with what you need to know to keep your assets and your family safe.
Latest Articles
