What is prior cession in SAP FS-RI - Reinsurance?

SAP Term: prior cession

• Component: FS-RI

• Component Name: Reinsurance

• Description: A category that is used to distinguish between different types of risk transfer. A prior cession is used if you want to create a dedicated reinsurance policy for a risk before you apply the obligatory reinsurance programs. Reinsured risks with this category are transferred to the aggregated liability of reinsured risks with the category "Assumed" by one or more owner companies. This liability is distributed to reinsurance treaties before it is transferred and distributed by reinsured risks with the category "Cession".

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• Key Concepts: 
  Prior cession is a feature of the FS-RI Reinsurance component of SAP. It allows an insurer to transfer a portion of their risk to a reinsurer before the policy is issued. This helps to reduce the insurer’s risk exposure and can also help to reduce the cost of the policy for the insured. 
  
  How to use it: 
  Prior cession can be used in SAP by setting up a reinsurance contract in the FS-RI Reinsurance component. The insurer will then enter the details of the policy they wish to transfer, including the amount of risk they wish to transfer and the reinsurer they wish to transfer it to. Once this is done, the insurer can then issue the policy with the reduced risk exposure. 
  
  Tips & Tricks: 
  When setting up a prior cession in SAP, it is important to ensure that all of the details are correct and that all parties involved are aware of their obligations. Additionally, it is important to ensure that all relevant documents are signed and that any payments due are made on time. 
  
  Related Information: 
  Prior cession is just one of many features available in SAP’s FS-RI Reinsurance component. Other features include treaty reinsurance, facultative reinsurance, and retrocession. Additionally, there are various reports available in SAP which can help insurers manage their reinsurance contracts more effectively.