Treaty Validation Engine
Treaty Validation Engine — Automated Clause-Level Enforcement for Reinsurance.
CedeOS extracts treaty rules automatically and applies them at ingestion — catching aggregate breaches, reinstatement errors, and exclusion misclassifications before they become disputes.
Net retained premium at 30% — applies to all classes except excluded classes per Annex A.
Motor Commercial vehicles exceeding 3.5 tonnes GVW excluded. Classes 06, 07 in bordereaux classification.
One full reinstatement at pro-rata premium. Calculated on original annual premium at inception — not post-endorsement.
Net aggregate retention USD 385,000. Accumulation monitored per treaty year. Alert threshold: 80%.
Bordereaux must be submitted within 30 days of quarter end. Late submission triggers provisional coverage clause.
The Condition
The aggregate breach happened in week 10. Nobody knew until the annual audit.
Your XL treaty aggregate retention is USD 385,000. A senior analyst tracks accumulation in a spreadsheet — updated manually after each claims cycle. At week 9, the running total is USD 369,600. Two motor claims settle in weeks 10 and 11. The spreadsheet is not updated until the month-end reconciliation.
When the quarterly close runs, cumulative settlements total USD 415,800. The XL treaty should have responded for USD 30,800. It did not. The dispute takes 8 months. Recovery comes at 40–60 cents on the dollar — if at all.
No single person failed. The process had no mechanism to watch accumulation in real time. The infrastructure gap is the failure.
XL Aggregate Accumulation — Cede RE Motor Portfolio Q3 · Retention USD 385K
BREACH UNDETECTEDBreach detected at annual audit — 8 months after Wk 10. USD 30,800+ XL recovery in dispute. With CedeOS: alert fires at Wk 9 (80% threshold), treaty responds at Wk 10 automatically.
The Cost
Three failure modes. One gap: no system linking the treaty to the data.
Aggregate retention breaches go undetected until settlement
Accumulation tracked in spreadsheets has no real-time signal. The threshold is breached across multiple claims events with no alert. The dispute starts when the reinsurer receives the submission.
USD 30K–500K aggregate breach exposure per event — treaty structure analysis, African XL programmes
Reinstatement calculations applied to wrong premium basis
The treaty specifies reinstatement on original annual premium. A mid-term endorsement changes the current premium. Your system calculates on the post-endorsement figure. The clause on page 47 is never checked against each policy's endorsement history.
USD 850 per XL trigger event — treaty structure analysis, CedeOS 2024
Treaty clauses applied inconsistently across quarters
Three different actuaries have run the quarterly treaty review over two years. Each applies their own reading of the exclusion schedule. An IFRS 17 audit traces the CSM variance back to inconsistent treaty application. No system of record exists.
IFRS 17 CSM traceability required — not optional from 2023
The Standard
What treaty compliance looks like when the treaty is actually linked to the data.
Aggregate accumulation monitoring
Alert at 80% of threshold
Treaty clause interpretation gaps
Every clause extracted and applied consistently
Treaty document extraction time
vs. 2–3 actuary days per quarter for manual review
Bordereaux rows validated against applicable clauses
Each row, each applicable rule
Projected Outcome
What treaty validation prevents — modelled against real treaty structures.
Based on analysis of African and Asian XL treaty programmes, an aggregate retention breach of USD 30,000–500,000 per event is the average undetected exposure when accumulation is tracked manually in spreadsheets.
With CedeOS treaty validation active:
- Accumulation monitored continuously (not quarterly)
- Alert generated at 80% of retention threshold
- Treaty responds correctly at breach — zero dispute
Average aggregate breach exposure per event
Treaty structure modelling: USD 385K aggregate retention, typical motor claims accumulation patterns in African XL programmes. CedeOS 2024. Pilot validation in progress.
The Mechanism
Treaty parsed clause by clause. Every rule indexed against every bordereaux row.
Not keyword matching. Clause-type identification, cross-reference resolution, and structured rule extraction — applied at ingestion.
Designed for the treaty structures and regulatory requirements of IRA Kenya, NAICOM Nigeria, SAMA Saudi Arabia, and DIFC UAE markets.
Retention limits
Per-risk and aggregate thresholds extracted from the treaty schedule. Applied row-by-row as claims accumulate. The XL threshold is a live counter — not a quarterly reconciliation.
Reinstatement conditions
Premium basis, number of reinstatements, pro-rata conditions extracted. Each XL trigger recalculates against the policy's endorsement history.
Exclusions
Named peril, class of business, and geographic exclusions indexed against bordereaux classification fields. Flagged before submission.
Aggregate caps
Event and occurrence limits monitored as each claims batch processes. Alert at 80% with clause reference and current accumulation figure.
Treaty Extraction Pipeline — Cede RE XL 2025.pdf
Treaty PDF
83 pages · 14 clause types
Cede RE XL 2025.pdf
Clause Extract
Retention · Reinstatement · Exclusions · Caps
14 rules indexed
Rule Index
Cross-refs resolved · §14.2 → §4.1 → Annex A
AI reasoning trace
Row Validation
1,847 rows × 14 rules applied
3 FAILs · 2 REVIEW
Sample clause application — live row
Bordereaux row
CA-LIF-00441 · Motor Commercial · USD 1,692 premium · cession 35%
§9(b) Exclusion triggered
Motor Commercial — exceeds 3.5t GVW. Class 06 excluded per Annex A. Impact: USD 1,692.
How it works
From treaty document to row-level validation in three steps.
Upload treaty document
CedeOS parses clause by clause. Retention limits, reinstatement conditions, exclusions, aggregate caps — extracted, cross-referenced, indexed. Minutes, not days.
Apply at ingestion
Every bordereaux row validated against applicable clauses. Cession rates checked. Reinstatement recalculated. Aggregate accumulation updated in real time.
Alert before breach
80% of retention threshold reached — alert with current figure, clause reference, and projected breach date. The threshold is never silently crossed.
Regulatory Frameworks
Treaty accuracy is a regulatory requirement in every market we serve.
IRA Kenya
XL aggregate retention monitoring required under IRA treaty reporting guidelines.
NAICOM Nigeria
40% minimum cession rate validated per row against treaty terms.
SAMA Saudi Arabia
XL treaty structure for Takaful and conventional entities. Reinstatement for Takaful native.
IFRS 17
CSM and Loss Component require accurate treaty application. Every clause application logged.
The Path
From treaty document to validated submission in four weeks.
Day 0
Technical Brief
Architecture, treaty extraction methodology, data residency, IFRS 17 approach.
Week 1
Pilot Assessment
One treaty + one quarter of data. We return a gap analysis and projected exposure.
Week 2
Live Demo
Your treaty, your data. See exactly how clauses are extracted and applied.
Week 4
First Validated Submission
Pilot go-live. Treaty-validated bordereaux. Full clause citation on every exception.
Get started