Definitions

The portion of a reinsurance premium that is returned to the Ceding Company when claims experience is better than had been expected. See Profit Commission and Risk Charge.

A method of rating under which the reinsurance rate is based upon the reinsured’s own experience, actual or reconstructed, rather than upon the exposure inherent in the business. See also Retrospective Rating and Prospective Rating.

A reinsurance arrangement in which the Ceding Company shares in the claims experience of reinsured benefits, typically under a formula specified in the reinsurance agreement.

The loss record of an insured or of a class of coverage. Classified statistics of events connected with insurance, of outgo, or of income, actual or estimated. What figures show to have happened in the past.Experience may be compiled on different bases to provide various means of appraisal, viz. Accident Year, Calendar Year, or Policy Year, … Read more

An amount payable to the Ceding Company by the reinsurer in lieu of actual commissions and expenses incurred by the Ceding Company. See Ceding Commission.

Part of the social contract that forms the basis for Workers Compensation statutes under which employers are responsible for work-related injury and disease, regardless of whether is was the employee’s fault and in return the injured employee gives up the right to sue when the employer’s negligence causes the harm.

A provision in an insurance policy that eliminates coverage for certain risks, people, property classes, or locations.

A form of Excess of Loss Reinsurance which, subject to a specified limit, indemnifies the Ceding Company against the amount of loss in excess of a specified retention for each risk involved in each occurrence.

Method whereby a Ceding Company pays the full benefits on a claim for a set period of time, after which the reinsurer pays the reinsured portion of the benefits. Most commonly used for disability or long-term care reinsurance.

A payment made for which the company is not liable under the terms of its policy. Usually made in lieu of incurring greater legal expenses in defending a claim. Rarely encountered in reinsurance as the reinsurer by custom and for practical reasons follows the fortunes of the Ceding Company.