Obligatory reinsurance is a form of agreement, which automatically binds both parties in advance.
The company to cede and reinsurer to accept reinsurance. An agreement as regards obligatory (binding) reinsurance as a rule runs for an indefinite period and is legally binding for both parties.
The contract between the parties contains the conditions one has agreed upon in detail including rules as regards cancellation of the contract.
Obligatory reinsurance is often called treaty reinsurance.