What does the term''reinsurance ceded'' mean in commerce explain it in detail.?

Question

this term comes under chapter ''accountancy of insurance companies''.

Answer 1

Insurance companies "cede" part of their risk to their reinsurers, which are insurance companies of insurance companies.  Say you have a $1,000,000 liability policy, your insurance company may only want to take the risk of $500,000 & they will re-insure (or insure again) the other $500,000 with another insurance company (the reinsurer) & pay them a premium (just like you pay to your insurance company) to insure this.  

This is one of the reasons many insurance underwriting guidelines are so strict.  The reinsurers tell the insurance companies what they will & will not insure & the insurance companies have to abide by these rules or not be able to purchase reinsurance.  It is one of their operating costs so it is in the accountancy section.

I hope this explains it for you.