Quota Share Reinsurance
At Stratis Risk we often deal with organizations that are looking to reduce risk over their entire book of business. A popular method to do that is via Quota Share reinsurance where an insurance company cedes an agreed-upon percentage of its risks, as well as its premiums, up to a set maximum dollar limit. (This is different from Stop Loss reinsurance where the reinsurance coverage kicks in when costs for a claim reach a predetermined deductible.) The strategy behind a Quota Share plan is to transfer a certain percentage of every risk in a defined category to the reinsurance company. This means that an insurer needn’t wait for costs to reach a predetermined deductible threshold (as with Stop Loss reinsurance). This also helps insurance companies mitigate costs by taking a smaller portion of the risk.
Considerations When Purchasing Quota Share Reinsurance
- Do you need to better balance your risk portfolio?
- Are you looking to help insulate your company from fluctuations in expensive catastrophic claims?
- Do you need to reduce capital requirements?
- Are you in need of a temporary source of capital?