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Insurance Glossary

Quota Share

Industry

Definition

A proportional reinsurance arrangement where the reinsurer accepts a fixed percentage of every policy written by the ceding company, sharing premiums and losses proportionally. For example, in a 40% quota share, the reinsurer receives 40% of premiums and pays 40% of losses.

Definición en Español

ES

Cuota Parte

Un arreglo de reaseguro proporcional donde el reasegurador acepta un porcentaje fijo de cada póliza escrita por la compañía cedente, compartiendo primas y pérdidas proporcionalmente. Por ejemplo, en una cuota parte del 40%, el reasegurador recibe el 40% de las primas y paga el 40% de las pérdidas.

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Related Terms

Proportional Reinsurance
A reinsurance arrangement where the reinsurer shares premiums and losses with the ceding company in a fixed proportion. Includes quota share and surplus share arrangements. The reinsurer participates proportionally in both the income and the risk.
Surplus Share
A proportional reinsurance arrangement where the reinsurer covers the amount of risk that exceeds the ceding company's retention limit, up to a specified multiple. This allows the ceding company to write larger policies while maintaining consistent retention levels.
Treaty Reinsurance
A reinsurance agreement where the reinsurer automatically accepts all risks within a defined category that the ceding company underwrites, without evaluating each risk individually. This provides automatic coverage for a portfolio of policies.
Actuary
A business professional who analyzes probabilities of risk and risk management, including calculation of premiums, dividends, and other applicable insurance industry standards.
Underwriting
The process by which an insurer evaluates the risk of insuring a person or property and determines coverage terms and premium rates.
Loss Ratio
The ratio of losses paid plus loss reserves to premiums earned, used by insurers to measure underwriting profitability and pricing adequacy.
Combined Ratio
The sum of the loss ratio and expense ratio, measuring an insurer's overall underwriting profitability. A ratio below 100% indicates underwriting profit.
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