Definitions

Also known as Binder A Binder often including more than one reinsurer. At Lloyd’s of London, the Slip is carried from underwriter to underwriter for initialing and subscribing to a specific share of the risk. . See Cover Note.

A Ceding Commission which varies inversely with the loss ratio under the reinsurance agreement. The scales are not always one to one: for example, as the loss ratio decreases by 1%, the Ceding Commission might increase only 5%.

Size of a loss. One of the criteria used in calculating premiums rates.

Similar to a deductible but generally larger, e.g.$25,000 or $100,000. The insured tends to have more control over who handles the claim. On deductible policies, the insurance carrier pays the loss within the deductible and requires the insured to reimburse us. On SIRs, the insured pays the loss in the retention.

The concept of assuming a financial risk oneself, instead of paying an insurance company to take it on. Every policyholder is a self-insurer in terms of paying a deductible and co-payments. Large firms often self-insure frequent, small losses such as damage to their fleet of vehicles or minor workplace injuries. However, to protect injured employees state … Read more

A reinsurance arrangement where the Ceding Company provides the reinsurer with periodic reports for reinsurance ceded, giving premium, inforce, reserve, and any other information required by the reinsurer. See Bulk Administration and Bordereau.

Using the capital markets to expand and diversify the assumption of insurance risk. The issuance of bonds or notes to third-party investors directly or indirectly by an insurance or reinsurance company or a Pooling entity as a means of raising money to cover risks. See Catastrophe bonds

Stock held by shareholders.

Market for previously issued and outstanding securities.

In layering, an amount up to a specified limit that remains after the first excess has been ceded and that is ceded to another reinsurer or other reinsurers. See First Excess, Layer, and Layering.