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Compulsory cession

A regulatory obligation on insurers to cede a set fraction of their treaties to a national, regional or continental reinsurer.

Definition

Compulsory cession, or legal cession, requires a country's insurers to reinsure a fixed share of their business with a designated reinsurer, often state-owned. Its stated aims are to retain premium on national territory, build local capacity and reduce foreign-exchange outflows. Its structural limit is that, by keeping the risk inside the very economy that produces it, it rebuilds the correlation reinsurance exists to break, especially where the peril is regional.

Its 1 cross-references, woven across the glossary's 18 categories
Compulsory cession: Reinsurance glossary illustration, AlgoPolis
Example

Kenya decided in late 2025 to lift from 20 to 25% the share of non-life business its insurers must reinsure with Kenya Re, its state reinsurer, until that company is privatized, while Uganda stacks three superimposed cessions.

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