What Is a Fronting Carrier?
How a licensed insurer can issue a policy as insurer of record and cede the risk while remaining liable to the policyholder.
What Fronting Does
In a fronting arrangement the insurer of record puts its name on the policy, then passes the risk to a reinsurer, often in exchange for a commission. The company on the policy is frequently admitted where the risk sits; the reinsurer often is not.[1]
Reinsurance is a contract between that issuing insurer and the reinsurer. The reinsurer's duty arises after the issuing company has incurred liability on the original policy. The policyholder's claim still runs to the insurer of record.[3][2]
What It Does Not Prove
Not every reinsurance cession is fronting. Ordinary quota-share or excess-of-loss covers can leave the ceding company with a large retained share. Ceding most of the premium is not, by itself, a legal test that the arrangement is a front.[2]
A cut-through is a separate contractual path that can let the original insured look to the reinsurer. Without that path, the reinsurer generally has no direct obligation to the policyholder.[2]
The fronting company's license is not the reinsurer's license.[1]
What to Confirm
Sources
- Glossary of Insurance Terms. National Association of Insurance Commissioners; Fronting: a primary insurer acts as the insurer of record by issuing a policy, but then passes the entire risk to a reinsurer in exchange for a commission; often the fronting insurer is licensed where the risk is located and the reinsurer is not. Accessed 2026-09-21. Source 1.
- Receivers' Handbook materials — Reinsurance Basics. National Association of Insurance Commissioners; Fronting: remaining financial liability to the policyholder; Schedule F disclosure of contracts ceding 75 percent of direct written premiums; cut-through distinguished. Accessed 2026-09-21. Source 2.
- Insurance Topics | Reinsurance. National Association of Insurance Commissioners; Reinsurance is a contract between reinsurer and insurer (cedent); the reinsurer's obligation arises when the company's liability under the original policy has been incurred; last updated 10/24/2025. Accessed 2026-09-21. Source 3.
