Spread Loss Reinsurance

Definition - What does Spread Loss Reinsurance mean?

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.

Insuranceopedia explains Spread Loss Reinsurance

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.

Connect with us

Insuranceopedia on Linkedin
Insuranceopedia on Linkedin
Tweat cdn.insuranceopedia.com
"Insuranceopedia" on Twitter


'@insuranceopedia'
Sign up for Insuranceopedia's Free Newsletter!