Treaty reinsurance is an agreement covering a defined portfolio or class of insurance business according to pre-agreed terms. Individual qualifying risks are included under the arrangement rather than negotiated separately each time. Treaties can be proportional or structured through excess of loss reinsurance.
A Nepalese insurer might arrange a treaty for a specified property portfolio to help manage aggregate exposure. Scope, exclusions, retention, and recovery limits remain important. Treaty protection is an agreement between insurers and does not rewrite the coverage promised to an individual policyholder.