Reinsurance Agreement Template for England and Wales

A Reinsurance Agreement transfers part of an insurer's risk to a reinsurer in exchange for premium. Under England and Wales law it is a non-consumer insurance contract governed by the Insurance Act 2015, and its value depends less on the headline limit than on how it interlocks with the underlying policies.

When do you need this document?

You need a Reinsurance Agreement when an insurer wants to write business beyond its own appetite or capital, to protect its results against a single large loss or an accumulation of losses, or to support a new class of business. Treaty cover suits a whole portfolio written automatically; facultative cover suits an individual risk that is too large or unusual for the treaty to absorb.

What does it cover?

The agreement defines the business reinsured and the structure, whether a proportional share of premium and losses or a layer that attaches above a retention. It sets premium and any adjustment, and the exclusions that carve risks back out. The provisions that decide recoveries in practice are operational: whether the reinsurer follows the cedant's settlements and on what conditions, what claims cooperation or control the reinsurer has, and how losses aggregate into a single event, which is what determines how many retentions and limits apply. It also covers reporting, inspection, the cedant's insolvency, and run-off after termination.

Common pitfalls

The classic failure is a gap between the reinsurance and the underlying policies, so the cedant pays a claim its own wording covers but the reinsurance excludes. Back to back drafting is what prevents it. The second is aggregation: an event definition or hours clause that does not match how losses actually arrive can turn one recovery into many retentions, or the reverse, and it is usually the largest number in dispute. The third is a follow the settlements clause qualified so heavily that the reinsurer can reopen every settlement, which removes much of the certainty the cedant was buying.