Also known as: retrocessionaire · reinsurance of reinsurance
Retrocession is the reinsurance that reinsurers buy to pass on a portion of the risk they have already assumed.
Retrocession is reinsurance for reinsurers: a reinsurer that has taken on risk from a primary carrier passes a portion of it to yet another reinsurer, called a retrocessionaire. It sits one layer above reinsurance in the chain that spreads catastrophic risk across the global market. You will never see it on your policy, but a healthy retrocession market is part of what keeps your carrier and its reinsurers solvent after major, correlated loss events.
Retrocession is when a reinsurer transfers part of the risk it has already assumed to another reinsurer, known as a retrocessionaire. It is essentially reinsurance purchased by reinsurers, forming a second layer of risk spreading above the primary carrier and its reinsurer. This chain lets very large or catastrophic exposures be shared across many companies worldwide.
Reinsurance is coverage a primary insurance carrier buys to offload part of the risk on the policies it issues. Retrocession is the next step up: it is coverage a reinsurer buys to offload part of the risk it accepted through reinsurance. Both are forms of risk transfer between insurers, just at different points in the chain.
Retrocession happens entirely behind the scenes, so it does not change your policy terms or how you file a claim. You deal only with your own carrier. Indirectly it benefits you, because a functioning retrocession market helps your carrier and its reinsurers stay solvent and keep writing coverage after major loss events, which supports pricing and capacity across the whole market.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
Last updated: July 2026.