Inward Reinsurance — Claim Paid to Cedant
Paying a claim to the original insurer (cedant) under an accepted reinsurance treaty.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Claims Expense — Inward Reinsurance | Expense (+) | 25,000.00 | - |
| Cash / Bank (Payment to Cedant) | Asset (-) | - | 25,000.00 |
💡 Accountant's Note
When the reinsurer accepts claims from cedants, the claims are expensed against the inward reinsurance premium income. Combined ratios are calculated separately for the direct and assumed reinsurance books.
Practitioner & Systems Framework
💻 ERP Architecture
Claims on the assumed reinsurance book are received from cedants via loss advices. The claims are entered into the reinsurance claims module and validated against the treaty terms (retention, cession percentage, attachment and limit for XL). Payment to the cedant is authorised by the claims department after treaty validation and processed through AP. The combined ratio for the assumed book is reported separately from the direct book in management accounts.
⚠️ Audit Flags
Auditors test assumed reinsurance claims against the treaty terms — the reinsurer pays only its share per the accepted treaty. Verify that the cedant's loss advice is supported by adequate documentation of the underlying loss. Confirm that the assumed claims reserves are adequate — the reinsurer's access to underlying claim data is limited, requiring greater reliance on the cedant's reserves, which may be less conservative. Review the commutation option in any assumed treaties — commuting a treaty at a discount reduces the exposure but creates a settlement gain/loss.
📄 Required Documentation
Loss advice from cedant, treaty terms confirming the reinsurer's share, claims validation against treaty, payment authorisation, cedant's claims documentation (summary of underlying losses), assumed claims reserve, and retrocession recovery calculation (if retrocession applies).
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.