Treaty Insurance

Treaty Insurance, commonly known as Treaty Reinsurance, is an arrangement in which an insurance company agrees with a reinsurer to automatically transfer a specified category or portfolio of risks according to pre-agreed terms. Unlike facultative reinsurance, individual risks usually do not need to be separately reviewed and accepted by the reinsurer. The treaty defines the types of risks covered, limits, premiums, and responsibilities of both parties. Treaty reinsurance helps insurance companies manage large volumes of policies, spread risks, increase underwriting capacity, and maintain financial stability. It is commonly used for portfolios such as life, health, property, and other insurance business.