Loss corridor

A loss corridor is a provision by which the cedant takes back for its own account, inside a proportional treaty, the losses falling between two loss ratio levels. Below the corridor the proportional split works normally; inside it, the cedant bears all or part of the burden; above it, sharing resumes. The problem it solves is the intermediate loss zone, where results deteriorate without anything catastrophic happening, and where the reinsurer suspects loosening underwriting rather than bad luck. By making that band expensive for the cedant, the corridor restores the incentive exactly where it was being lost, without giving up protection against extreme scenarios, which remains intact above. It is a powerful negotiating tool in a hard market, since it lets a presentable commission rate be maintained while transferring risk back to the cedant, and it must therefore always be read together with the commission, never on its own.

A 2026 liability quota share carries a corridor between 70 and 85 percent loss ratio, taken back 100 percent by the cedant. On 50 million euros of ceded premium, a final ratio of 90 percent leaves the cedant absorbing 7.5 million euros of losses, the corridor's 15 points. The headline commission stays at 28 percent, against the 21 percent the reinsurer would have demanded without the corridor.

Loss corridor, Corridor de perte, Bande de rétention, Corridor