Reinsurance cession is the act of a primary insurer transferring a defined portion of risk on a policy or block of business to a reinsurer under the terms of a reinsurance treaty or facultative agreement. The ceded portion includes corresponding premiums and liabilities, while the primary carrier retains a specified net amount. Cessions may be automatic, based on treaty rules for certain face amounts and risk classes, or individually negotiated on facultative cases that fall outside normal guidelines. Accurate cession practices and reporting are essential to ensure that claims are shared correctly, capital relief is realized, and regulatory and contractual requirements are met.

Operationally, reinsurance cession occurs behind the scenes through underwriting systems and treaty logic, but it affects how much net risk a carrier holds on each policy. When advisors are told that a case needs facultative reinsurance, it means the reinsurer will receive a detailed file and may issue its own offer, which the carrier then incorporates. If multiple reinsurers are involved, the carrier decides how to allocate cessions among them. Claims departments later reference cession records to bill reinsurers for their share of large death claims. Understanding reinsurance cession helps wholesalers explain why big or unusual cases may require extra steps and why final offers sometimes depend on reinsurer participation.