Category: Claims handling · Reviewed by Al Jabbar, Broker · Specialist Risks · Last reviewed 2026-06-11
Cession notification is the formal communication from a cedant insurer to its reinsurer about claims activity ceded under a treaty or facultative cover — through periodic bordereaux for treaty business and individual claim filings for excess-of-loss and facultative business.
Reinsurance cessions are the mechanism by which a cedant transfers part of its claims liability to a reinsurer. The notification of cessions is the formal recordkeeping that supports the reinsurance accounting cycle. Without timely accurate cession notification, the reinsurer cannot reserve appropriately, the cedant cannot recover, and the chain of recoveries to retrocessionaires is compromised.
For different types of reinsurance, cession notification operates differently:
The framework includes:
The cession notification’s contractual basis is usually a “Notification of Loss” or similar clause in the treaty or facultative wording. The clause defines when notification must be given, what information must be provided and any consequences of late notification.
For Solvency II purposes, the cedant’s reinsurance recoverables are recognised on the balance sheet based on the cession notifications and the expected recoveries. The PRA expects rigorous cession discipline and accurate recoverables estimation.
For quarterly proportional treaty bordereaux:
The cedant produces a bordereau at each quarter-end listing ceded premiums, ceded claims paid in the period, ceded reserves and (for some treaties) ceded recoveries. The bordereau is delivered to the reinsurer through the LMA or company-market accounting systems.
The reinsurer reviews the bordereau, accepts or queries specific items, and pays the net amount due (premiums received, claims paid). For most quarters the bordereau-driven process is routine; queries are typically resolved through normal accounting channels.
For XL treaty individual claim notifications:
The cedant identifies claims that have or may exceed the cedant’s retention. The cedant notifies the reinsurer with the claim details, the supporting documentation and the cedant’s reasoning on cession.
The reinsurer acknowledges, reviews and (where appropriate) accepts the cession. The reinsurer may query the cession (coverage, aggregation, allocation between claims) before accepting.
Once accepted, the cession is recorded; the reinsurer’s case reserve is set; payment will follow once the cedant has actually paid the underlying claim above its retention.
For facultative cessions, the notification is claim-specific. The cedant sends the reinsurer the claim file (or summary), the coverage opinion if relevant, and the cedant’s recommendation. The facultative reinsurer reviews and accepts or queries.
The cession notification interacts with the “follow the settlements” doctrine. A cedant that properly notifies and settles in good faith binds the reinsurer to follow the settlement; a cedant that does not notify (or notifies inaccurately) loses the protection of the doctrine.
“Quarterly bordereau notification” — for proportional treaties.
“Excess-loss notification” — for XL treaties triggered by individual claim development.
“Catastrophe notification” — for cat XL programmes, with rapid notification after the event.
“Facultative notification” — for individual facultative cessions.
“Reinstatement notification” — for treaties with multiple reinstatement events.
A casualty insurer’s XL treaty has a $5m retention with the reinsurer’s layer of $15m xs $5m. A serious PI claim is notified at $8m gross exposure.
Initial cession notification at month 3 when the case reserve crosses $5m. The cedant notifies the reinsurer with:
The reinsurer reviews and accepts the cession. The reinsurer’s case reserve is set at $2.5m. No immediate payment because the cedant has not yet paid the underlying claim above retention.
At month 14 the claim settles for $7.2m. The cedant pays its retention of $5m and claims $2.2m from the reinsurer. Final claim documentation submitted; reinsurer reviews and pays within 30 days.
Total reinsurance recovery $2.2m; cedant’s net loss $5m. The recovery improves the cedant’s combined ratio for the year and supports the line’s treaty renewal.
By Matt Bartlett, Director, on 2026-06-11. Next review: 2026-12-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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