Quota Share
A proportional reinsurance treaty where the reinsurer takes a fixed percentage of all premiums and losses.
A quota share is a proportional reinsurance treaty in which the reinsurer takes a fixed percentage of all premiums and losses from a defined portfolio. If a reinsurer writes a 30% quota share, it receives 30% of all premiums and pays 30% of all losses across the entire portfolio.
Quota shares are commonly used by primary insurers managing capital — the cession releases regulatory capital while maintaining underwriting relationships. In the ILS market, sidecars are typically structured as quota shares of specific books of business.
Unlike excess-of-loss reinsurance (which kicks in above a threshold), quota share responds to every loss, providing more stable cession income but less protection against catastrophe frequency.
Example usage
“The ILS sidecar wrote a 25% quota share of the reinsurer's US property catastrophe treaty book for the 2026 renewal year.”
Frequently asked questions
What is Quota Share?
A proportional reinsurance treaty where the reinsurer takes a fixed percentage of all premiums and losses. A quota share is a proportional reinsurance treaty in which the reinsurer takes a fixed percentage of all premiums and losses from a defined portfolio. If a reinsurer writes a 30% quota share, it receives 30% of all premiums and pays 30% of all losses across the entire portfolio.
How is Quota Share used in practice?
The ILS sidecar wrote a 25% quota share of the reinsurer's US property catastrophe treaty book for the 2026 renewal year.
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