Cession Limit

What is Cession Limit?

Cession Limit is Property proportional reinsurance treaties nearly always contain large aggregate exposure to natural perils. In order to control and or limit aggregate amounts ceded to reinsurers in certain exposure zones, Cession Limit clauses may be introduced. In general these are more acceptable to cedants than event limits as they do not impose a dollar value limit on the amount of loss that may be recovered under the treaty, but are intended to impose discipline on the Cedant’s accumulation control and therefore restricts the amount of the aggregate sum insured that can be ceded to a pro-rata reinsurance contract.

 

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