Quota share reassurance meaning

In legal practice, a quota share reassurance (also called quota share reinsurance) is a proportional treaty under which the ceding insurer retains a fixed percentage of each policy or risk within an agreed portfolio and cedes the balance to the reinsurer. Premiums, claims and, where specified, expenses are shared pro rata from first loss across all in-scope policies. It is a market term rather than one defined in legislation or case law, and its effect depends on the wording of the reinsurance contract governed by the law of England and Wales, Scotland, Northern Ireland or Ireland. Key features typically include: a fixed retention and matching cession on every risk; the reinsurer’s obligation to accept that share (subject to stated limits, exclusions and event caps); ceding commission (often with profit or sliding-scale adjustments); and reporting via bordereaux. Underwriting control usually remains with the cedant. This is not a surplus reinsurance arrangement (which cedes only the amount above a stated line). Usage and legal understanding are broadly consistent across the UK and Ireland. Quota share reassurance is commonly used for capacity management, loss‑ratio stabilisation and regulatory capital efficiency.