Definitions

A method of allocating automatic reinsurance among several reinsurers, using the first letter of the insured’s last name. For example, last names beginning with letters A – L go to reinsurer #1.

An additional retention kept by the Ceding Company of losses otherwise recoverable from the reinsurer. Only after the aggregate retention is exceeded can the Ceding Company recover from the reinsurer.

The maximum sum of recoveries payable under those reinsurance agreements that provide an overall maximum loss limitation.

A form of Excess of Loss Reinsurance which indemnifies the Ceding Company against the amount by which all of the Ceding Company’s losses incurred during a specific period (usually 12 months) exceed either: a predetermined dollar amount or a percentage of the company’s Subject Premiums (loss ratio) for the specific period. This type of contract is also commonly referred to … Read more

Agent recognized by an insurer as its agent for a specific insured, usually formalized by an AOR letter, signed by the insured. An AOR is important when more than one agent attempts to solicit insurance from a specific insured for the same insurer.

Selling insurance through groups such as professional and business associations.

Reinsurance coverage provided internally among a group of insurers with some common ownership interests.

A company is “admitted” when it has been licensed and accepted by appropriate insurance governmental authorities of a state or country. In determining its financial condition a ceding insurer is allowed to take Credit for the unearned premiums and unpaid claims on the risks reinsured if the reinsurance is placed in an admitted reinsurance company.

Relationship of the actual performance compared to a specific table, typically an industry-based table. Used almost exclusively for benefit studies (mortality, morbidity, lapse).

Relationship of the actual performance of a contract compared to operating plan for the year. May be used for premium, claims, persistency, commissions, etc.