Category: Reinsurance structures · Reviewed by Simon Temme, Account Executive · Last reviewed 2026-06-05
Quota share reinsurance is the simplest form of proportional reinsurance: the reinsurer takes a fixed percentage of every risk in the cedant’s portfolio falling within the treaty scope, receiving the same percentage of premium and paying the same percentage of every loss.
Category: Reinsurance structures Also known as: QS, quota share treaty Related concepts: proportional reinsurance, surplus treaty, variable quota share
A quota share treaty defines a cession percentage (commonly 20–50 per cent), a treaty period, a class of business and a territorial scope. The reinsurer accepts the cession percentage of every risk falling within the scope and the cedant retains the balance. The cedant typically receives a ceding commission and may receive a profit commission if the treaty performs well.
Quota share is administratively simple: there is no need for individual risk underwriting at cession, only a determination that the risk falls within scope. The cedant and reinsurer share the entire result — premium and losses — on a fixed proportion basis.
Quota share contracts are governed by general principles of English law and by the Insurance Act 2015. Solvency II recognises the cession as reducing the cedant’s underwriting risk SCR in proportion to the cession share, subject to the counterparty default adjustment.
In practice the quota share treaty is placed at renewal across a panel of reinsurers, with each reinsurer signing a percentage of the cession. The cedant prepares quarterly bordereaux of premium and claims, with net settlement to the reinsurer.
Quota share is particularly valuable for: growing books where the cedant requires capacity but does not yet have the capital; new entrants to a class who wish to share early experience with a more experienced reinsurer; and capital-constrained cedants seeking SCR relief. It is less efficient where the cedant is seeking protection against peak risks — for that purpose, excess of loss is more appropriate.
Quota share is the dominant proportional structure in personal lines (motor, household) and in many commercial lines.
An illustrative example: a UK home insurer writes £100m of gross premium and cedes 40 per cent under a quota share treaty at a 32.5 per cent ceding commission. The reinsurer receives £40m of premium less £13m commission (£27m net), and pays 40 per cent of every claim. If gross losses on the treaty year are £65m, the reinsurer pays £26m, producing a marginal underwriting result of £1m before expenses.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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