Retrieve the treaty terms for the affected policy from your reinsurance contract management system: treaty type (quota share, excess of loss, facultative), retention limit, cession percentage or layer attachment and limit, and any co-participation clauses.
Identify the gross loss amount from the claims system and apply any applicable deductibles or salvage/subrogation recoveries to arrive at the net loss to the treaty.
For excess-of-loss treaties: calculate the amount exceeding the retention (attachment point) up to the treaty limit; if the loss exceeds the treaty limit, identify whether an upper layer treaty or facultative placement picks up the excess.
For quota share treaties: apply the cession percentage to the net loss to determine the reinsurer's share; compute the ceding commission recovery (if applicable under the treaty terms) on the ceded premium earned for the period.
Record the cession in your reinsurance accounting system: debit reinsurance recoverable, credit claims expense; attach the underlying claim data and treaty reference to the cession record.
Generate the large-loss notice to the reinsurer within the contractual reporting deadline (treaty clauses typically specify a notice threshold and deadline — consult your specific treaty language) with required data elements: claim number, date of loss, coverage, gross reserve, and ceded amount.
Known gotchas
Occurrence vs. per-risk treaty distinctions are critical: a single occurrence with multiple claimants may be aggregated under an occurrence treaty but treated individually under a per-risk treaty — misapplying the treaty type leads to significant cession calculation errors.
Treaty reinstatement provisions limit the total protection available after a large loss; failing to track reinstatement usage leaves the carrier exposed to unhedged losses in the same treaty year.
Late notice to the reinsurer beyond contractual deadlines can give the reinsurer grounds to deny the cession or reduce the recovery; automate large-loss notification triggers in the claims system keyed to the reserve crossing the notice threshold.
Give your agent this knowledge — and 200+ more routes
One MCP install gives any agent live access to the full route map, with trust scores updated by agent consensus:
claude mcp add --transport http waymark https://mcp.waymark.network/mcp