Automatic binding authority is the contractual authority a primary insurer or intermediary has to automatically cede specified risks to a reinsurer without obtaining case'by'case approval, as long as the risk falls within predefined treaty terms. These terms specify maximum face amounts, rating limits, ages, product types, and underwriting classes eligible for automatic reinsurance. Within those boundaries, underwriters can treat reinsurance capacity as pre'approved, streamlining large'case decisions and avoiding delays associated with facultative submissions. Automatic binding authority helps carriers manage risk concentration, improve capital efficiency, and support higher line sizes in the market while still honoring their own retention limits.

Underwriters reference automatic binding authority when considering large applications that exceed internal retention but fall within treaty limits. They verify that the risk profile, medical impairments, and final rating stay inside automatic guidelines; otherwise, the case must go facultative. BGAs may hear that a case is automatic versus fac when discussing capacity and expected turnaround times. In product and treaty negotiations, carriers work with reinsurers to adjust automatic limits to stay competitive for jumbo cases. Understanding automatic binding authority helps advisors and case designers appreciate why some large cases move quickly while others require extended review and negotiation.