hardConceptDesignMidSeniorStaff
What is the difference between treaty and facultative reinsurance, and where does cession show up in the systems you build?
Treaty reinsurance covers a class of business automatically, while facultative reinsurance covers one named risk by negotiation. Systems must calculate cession from the right treaty version and store gross, ceded and net transactions for audit.
6 min readUpdated 2026-08-15
Answer
Short answer
Treaty reinsurance automatically covers qualifying business in a defined portfolio. Facultative reinsurance is negotiated for one named risk. In systems, the key is cession: compute the reinsurer share using the treaty or facultative placement in force on the governing date, then store gross, ceded and net transactions rather than deriving them casually at read time.
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