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Reinsurance Glossary

Home | A B C D E F G H I J K L M N O P Q R S T U V W X Y Z | Index

 

Accident Year of Experience
Underwriting results allocated back to the given twelve-month accounting period when the losses occurred, regardless of when the losses are actually reported, booked, or paid.  Compare with Calendar Year of Experience and Underwriting Year of Experience.  See Stop Loss.

Acquisition Cost
Expenses incurred by a ceding company in the process of writing new or renewal business, including producer commissions.  These expenses may include commissions, medical and inspection fees, and field supervision costs.

Admitted Assets
Assets that are approved by a state insurance department.  Assets typically excluded from admitted assets include overdue receivables and furniture and equipment.

Admitted Reinsurance
Reinsurance provided by a reinsurer licensed or authorized in the jurisdiction in question.

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

Aggregate Coverage
A form of stop loss reinsurance under which the reinsurer pays a portion of the claims represented by a loss ratio in excess of a specified loss ratio.  For example, "20% in excess of 110%" will result in claims between 110% and 130% of premium being paid by the reinsurer.  Also known as Loss Ratio Coverage.

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

Aggregate Retention
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.

Alien Reinsurer
In the United States, a reinsurance company that is incorporated under the laws of any other country.

Allowance
See Ceding Commission and Expense Allowance.

Alphabet Split
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.

Amount At Risk
See Net Amount At Risk.

Arbitration Clause
A clause within a reinsurance agreement providing that if the ceding company and the reinsurer fail to agree, then they select neutral arbitrators with the authority to bind both parties to a solution.  Generally, this is in lieu of a judicial settlement.

Assume
To accept risk from a ceding company.

Assuming Company
See Reinsurer.

Assumption Certificate
Document given to a policyowner to show that another insurer is taking on all the rights and obligations under the policy.

Assumption Reinsurance
A reinsurance agreement by which one company permanently transfers full responsibility for a block of policies to another company.  This transfer is done in exchange for the assets underlying the liabilities and the right to receive future premiums; it is evidenced by an assumption certificate issued to the insured who, in some jurisdictions, has the right to refuse the change of insurers.  After the transfer, the ceding company is no longer a party to the reinsurance agreement.  While this is referred to as "reinsurance," it is actually a novation.  See Novation.

Attachment Basis
A provision in many nonproportional reinsurance agreements that defines the benefits that will be paid.

Attachment Point
In nonproportional reinsurance, an amount over which a reinsurer agrees to start paying benefits.

Automatic Acceptance Limit
See Binding Limit.

Automatic Binding Limit
See Binding Limit.

Automatic
A form of reinsurance in which the ceding company is obligated to cede, and the reinsurer is obligated to assume, risks which meet specific criteria based on the provisions of the reinsurance agreement and the ceding company's underwriting.

  

  


  Glossary of Reinsurance Terms compiled by
the American Council of Life Insurers (ACLI) Reinsurance Committee
and presented by Central Security Life Insurance Company (CSLIC).

 

This text, or any part thereof, may not be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, storage in an information retrieval system, or otherwise, without the prior written permission of the publisher.

While a great deal of care has been taken to provide accurate, current, and authoritative information in regard to the subject matter covered in this reinsurance glossary, the ideas suggestions, general principles, conclusions, and any other information presented here are for educational purposes only. This reinsurance glossary is provided  with the understanding that it is neither designed nor intended to provide the reader with legal, accounting, investment, marketing, or other types of professional business management advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought.

 

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