01 / The meaning
What it means.
It operates between insurance businesses, rather than being an ordinary business policy bought by a shop, consultancy or contractor. The contract can respond to an individual risk, an event or an aggregate of losses, depending on its structure. This differs from proportional reinsurance, where an agreed share of premium and covered losses is transferred.
For a business owner, the key distinction is between the policy issued to the business and the insurer’s separate risk-transfer arrangements. Reinsurance does not by itself increase the business’s sum insured or remove its excess. How losses are grouped, reinstatements and the reinsurer’s financial strength matter to the insurer. They should not be mistaken for additional benefits owed directly to the policyholder under the original contract.
02 / Put it in context
A practical example.
Hypothetical example: an insurer purchases catastrophe reinsurance above a retained event amount. A storm affects many customers, but each customer’s claim is still assessed under their own policy before any separate reinsurance recovery is calculated.
This example illustrates the term. It does not predict a claim outcome.
03 / Read the detail
What to check.
- Identify whether the document is insurance or insurer-to-insurer reinsurance.
- Distinguish the insurer’s retention from your own policy excess.
- Use your issued policy to establish your limits and claim rights.
04 / Start a useful conversation
A question for your broker.
Is this amount part of our insurance protection or the insurer’s separate reinsurance programme?
05 / Connect the terms
Keep the meaning in context.
06 / Apply it to your business
Related insurance guides.
Further reading
Read the source guidance alongside the relevant policy wording.
General information only. This does not take into account your objectives, financial situation or needs. Before acting, consider whether the information is appropriate for you. Cover is subject to insurer acceptance and the policy terms, conditions, limits and exclusions. Read the Financial Services Guide and the relevant PDS (where applicable) and/or policy wording before deciding.
Let’s start with your business
A clearer conversation
about your insurance.
Tell us what you do, what has changed and what you need to understand.