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Reinsurance Glossary

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Errors and Omissions Clause
A provision in reinsurance agreements which is intended to neutralize any change in liability or benefits as a result of an inadvertent error by either party.  To the extent possible the parties are placed in the position they would have held if the error had not occurred.  Also known as Oversight.

Excess (of Loss) Reinsurance
Method whereby a ceding company pays the amount of each claim for each risk up to a limit determined in advance and the reinsurer pays the amount of the claim above that limit up to the maximum amount reinsured.

Excess (of Time) Reinsurance
Method whereby a ceding company pays the full benefits on a claim for a set period of time, after which the reinsurer pays the reinsured portion of the benefits.  Most commonly used for disability or long-term care reinsurance.

Excess of Retention
A type of proportional reinsurance in which a ceding company establishes a dollar amount retention limit, and a reinsurer agrees to assume amounts over this limit, up to the reinsurer's automatic binding limit.

Expense Allowance
An amount payable to the ceding company by the reinsurer in lieu of actual commissions and expenses incurred by the ceding company.  See Ceding Commission.

Expense Charge
See Risk Charge.

Experience Rated
A reinsurance arrangement in which the ceding company shares in the claims experience of reinsured benefits, typically under a formula specified in the reinsurance agreement.

Experience Refund
The portion of a reinsurance premium that is returned to the ceding company when claims experience is better than had been expected.  See Profit Commission and Risk Charge.

Experience Refund Reinsurance
A form of reinsurance under which the premium rates are subject to an experience refund as opposed to being fixed (non-refund).

Extra Contractual Obligations (ECO)
Damages awarded by a court against an insurer that go beyond the coverage provided by the policy, typically for bad faith in dealing with the insured or beneficiary.  A reinsurance agreement may specify the extent to which the reinsurer must participate in such damages awarded in connection with a reinsured policy.  See Losses in Excess of Policy Limits and Punitive Damages.



  Glossary of Reinsurance Terms compiled by
the American Council of Life Insurers (ACLI) Reinsurance Committee
and presented by Findalink.net


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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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