If a reinsurer retrocedes a part of his business, he will perhaps wish to earn a profit commission over and above the original profit commission, which naturally belongs to the cedant. This is called a super profit commission and in principle it is calculated in the same way as the profit commission. The formula contains … Read more
Maximum amount agreed upon by the parties, which will be paid by the insurer at the occurrence of the insured event and which in property insurance is determined by the value of the insured property, while it corresponds to the insurance benefit in personal insurance. Total amount of exposure for a block of business. Usually associated … Read more
Also known as base premium. A cedant’s premiums (written or earned) to which the reinsurance premium rate is applied to calculate the reinsurance premium. Often, Subject Premium is gross/net written premium income (GNWPI) or gross/net earned premium income (GNEPI), where the term “gross/net” means gross before deducting reinsurance premiums for the reinsurance agreement under consideration; … Read more
A form of reinsurance under which the reinsurer pays some or all of a cedant’s aggregate retained losses in excess of a predetermined dollar amount or in excess of a percentage of premium.
Employers, who choose to self-fund their employee benefit plans but don’t want to assume 100% of the liability for losses arising from it, purchase Stop Loss coverage. Stop Loss is an excess risk product that provides the self-funded employer protection against catastrophic or unpredictable losses. The agent and/or TPA work with the carrier to obtain … Read more
The selling of insurance in multiple areas to multiple policyholders to minimize the danger that all policyholders will have losses at the same time. Companies are more likely to insure Perils that offer a good spread of risk. Flood insurance is an example of a poor spread of risk because the people most likely to buy it are the … Read more
A form of reinsurance in which the Ceding Company pays premiums to the reinsurer and, if the Ceding Company experiences total losses in a given Year which are greater than a certain limit, the reinsurer remits the amount of the excess loss to the Ceding Company in a lump sum. The Ceding Company pays back such losses … Read more
A Clause sometimes found in reinsurance contracts allowing one or both parties to terminate fully the contract and coverage for future occurrences upon the happening of some specified condition or event, such as the insolvency or merger of the other party, by providing shorter notice than is otherwise required to terminate the contract if such … Read more
Special retrocession by means of which the reinsurer arranges in advance the retrocession of his accepted share (possibly as a supplement to obligatory retrocession). Special retrocession normally occurs by means of the cedant giving his reinsurance 100% to the reinsurer. If the reinsurer either cannot or will not accept the whole of the reinsurance, the … Read more
The facultative extension of a reinsurance treaty to embrace a risk not automatically included within its terms.
