What is ceded reinsured auto insurance?

Answer 1

The insurance definition of "ceded": An insurance company may not wish to insure a risk (client or business) directly, and therefore transfers the responsibility (partially or completely) to another insurance company or group of companies (known as reinsurers) that have a higher tolerance for such risks. Ceded auto insurance is the only option for "high risk" drivers who wish to obtain insurance, because standard insurers do not want to insure drivers with poor driving records (speeding, accidents, DUI, etc.) or who have allowed their insurance to lapse due to non-payment. Ceded auto insurance fulfills an important role in insurance markets because insurance is required to operate a vehicle. Standard insurance companies have higher underwriting (risk screening) standards, and therefore are expected to pay fewer claims and to perform well from a financial perspective. Reinsurers, because they underwrite unusual and often high risk insurance contracts are not held to the same loss expectations, altough they are typically very strong financially. In all cases, the business of insurance is to make money, but the business models and methods are somewhat different in each case.