Reinsurance broking concepts
Bright is organised around the vocabulary of the reinsurance market rather than around a generic CRM or accounting model. This page explains the terms you will meet on every screen.
Who is who
Section titled “Who is who”Reinsurance is insurance bought by an insurer.
| Party | Role |
|---|---|
| Original insured | The policyholder whose risk started the whole chain |
| Cedant / ceding company | The insurer that issued the original policy and passes on part of the risk |
| Reinsurer | The party accepting that risk |
| Reinsurance broker | The intermediary that structures and places the risk on the cedant’s behalf |
| Retrocessionaire | A reinsurer’s reinsurer — the same relationship, one level up |
A broker sits between two counterparties and owes duties in both directions. That is why almost every record in Bright carries a “which party” axis, and why balances are tracked per party rather than netted.
Ceding is the act of passing risk on. A cession is the portion passed. Retention is what the cedant keeps for its own account.
In Bright all six party types — client, ceding, reinsurer, agent, customer, vendor — are
unified by the vparty view, discriminated by PARTY_TYPE.
Facultative versus treaty
Section titled “Facultative versus treaty”This is the first fork, and it determines almost everything that follows.
Facultative covers a single risk, negotiated one at a time. The reinsurer assesses that one risk and chooses whether to accept it — the word facultative means “optional” for exactly that reason. Used for large, unusual or excluded risks that fall outside a treaty.
Treaty covers a portfolio of risks under a standing agreement. The cedant does not offer risks one at a time and the reinsurer does not select them one at a time: risks falling within the treaty’s scope are automatically covered.
In Bright the two are distinguished by CONTRACT_TYPE:
| Code | Meaning |
|---|---|
FAC |
Facultative |
FACILITY |
Facility |
TREATY |
Treaty |
Proportional versus non-proportional
Section titled “Proportional versus non-proportional”The second fork determines how premium and losses are shared.
Proportional
Section titled “Proportional”The reinsurer takes an agreed share of premium and pays the same share of every loss. If its share is 30%, it receives 30% of the premium and pays 30% of every claim.
- Quota share — a fixed percentage of every risk in the portfolio.
- Surplus — the cedant retains a fixed amount (a line) and cedes the surplus above it, so the ceded percentage varies by risk size.
Proportional treaties normally involve ceding commission: the reinsurer pays the cedant a commission for the acquisition and administration costs already incurred.
Non-proportional (excess of loss)
Section titled “Non-proportional (excess of loss)”The reinsurer pays only when a loss exceeds an agreed threshold. Written as layers: “USD 5m excess of USD 5m” means the reinsurer bears the portion of a loss between 5m and 10m.
The terms that come with it: the attachment point (where cover starts), the limit (how much cover), reinstatement (whether the layer refreshes after a loss, and at what cost), and the priority or deductible (the cedant’s retained amount below the layer).
In Bright the discriminator is CodeCriteria on the TREATY_TYPE LOV:
| Code | Name | Nature |
|---|---|---|
QS |
Quota Share | PR proportional |
SUR |
Surplus | PR |
FOB |
Facultative Obligatory | PR |
XOL |
Occurrence XOL | NP non-proportional |
XOLR |
Risk XOL | NP |
CAT |
Cat XOL | NP |
STL |
Stop Loss | NP |
NXL |
Net XOL | NP |
A slip is the document of terms and conditions exchanged between broker, cedant and reinsurer. There are several kinds: Quotation Slip, Proposal Slip, Closing Slip, and Reinsurance Confirmation Slip.
In Bright a slip is not stored as one whole document but as one row per field holding a fragment of HTML — see Slips & templates.
Claims and recoveries
Section titled “Claims and recoveries”When a loss hits the original policy, the cedant advises it, and the broker then applies it across the cessions to determine each reinsurer’s share.
- Claim advice — notifying each reinsurer of its share.
- Recovery — collecting that share, tracked per reinsurer because they pay at different times and occasionally dispute.
Bordereaux
Section titled “Bordereaux”A bordereau is a schedule listing the individual risks or claims under a treaty for a period — there are premium bordereaux and claims bordereaux. It is how detail moves between cedant, broker and reinsurer under treaty arrangements, where individual risks are never notified one at a time.
The practical problem: every counterparty wants a different format.
How these concepts map to Bright
Section titled “How these concepts map to Bright”| Concept | Bright module |
|---|---|
| Incoming enquiry, new business and renewal | Request / Order |
| Submission to the market, slip, quote | Quotation |
| The offer back to the cedant | Proposal |
| Cost calculation and share allocation | Costing |
| Single-risk facultative cover | Policy |
| Treaty structure, layers, panels, participations | Treaty |
| Facility agreements and scaling | Facility |
| Loss recording | Claim |
| Apportioning a claim across reinsurers | Claim Advice |
| Per-risk and per-claim schedules | Bordereaux |
| Premium, commission, brokerage, tax | Billing |
| Invoicing and settlement | Invoice |
| Money out and money in | Payment |