When a single risk exceeds the insurer’s net retention, proportional help is needed. Surplus share is a form of proportional reinsurance in which the reinsurer covers the amount of each risk that exceeds the cedent’s fixed retention, up to a stated multiple of that retention.

If the retention is $500,000 and the surplus share is nine lines, the reinsurer can accept up to $4.5 million on any one risk. Premium and losses are shared in the same proportion as the limit shared on that risk. The arrangement automatically adjusts to the size of each risk.

Surplus share gives the cedent flexible capacity without ceding a fixed percentage of smaller risks that fit inside the retention. It requires careful definition of what constitutes one risk and how amounts are measured. The structure remains a staple of property reinsurance programs.

• Proportional reinsurance above a per-risk retention
• Capacity expressed as a multiple of the retention
• Shares premium and loss in the same proportion
• Provides flexible capacity for larger risks