- 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 Findalink.net
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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