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Reinsurance Glossary

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Recapture or Recapture Provision
In a reinsurance treaty, a provision that allows a ceding company to take back some or all of the reinsured business from a reinsurer.

A reinsurance arrangement by which two companies exchange risk and, in effect, reinsure each other.

Reevaluation of the pricing classification of an inforce policy on an insured life, based on current evidence of insurability.  The insurer may improve the classification or leave it unchanged.  The ceding company should consider the effects of reconsideration on the reinsurer.

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

Reinstatement Premium
An additional premium paid to replenish (reinstate) the limit consumed in the event of a loss.

The transfer of some or all of an insurance risk to another insurer.  The company transferring the risk is called the "ceding company"; the company receiving the risk is called the "assuming company" or "reinsurer."

Reinsurance Broker
See Reinsurance Intermediary.

Reinsurance Facility
(1) Pool that contains various reinsurance companies with each sharing reinsurance contracts on a pro rata basis as they are submitted to the pool; (2) Market that operates much like the New York Stock Exchange in that reinsurance contracts are bought and sold on a bid and asked basis.  See also Layering, Pool, and Reinsurance Wheel.

Reinsurance Intermediary
An independent contractor who matches the needs of ceding companies with the products of reinsurers.  Also known as a reinsurance broker.

Reinsurance Pool
See Pool.

Reinsurance Treaty
See Treaty.

Reinsurance Wheel
A procedure for retroceding individual life insurance risks in excess of a reinsurer's own retention to a group of retrocessionaires (up to their subscribed limits) in rotation, the order being determined by their positions as spokes on an imaginary wheel.  The spokes need not be of the same length, i.e. limit, and a company may have more than one spoke.  (A ceding company, as well as a reinsurer, may use this procedure.)  Contrast with Pool.  See also Layering and Reinsurance Facility.

An insurance company that accepts the risk transferred from another insurance company in a reinsurance transaction.  Also called the Assuming Company.

Reserve Adjustment Interest Rate
In modified coinsurance, the interest rate used to calculate the amount payable by the ceding company in consideration of the reserves being held by the reinsurer.  See Mod-co Reserve Adjustment.

Reserves are liabilities for amounts an insurance company is obligated to pay in acccordance with an insurance policy or annuity contract.  Reserves are established for both matured and unmatured obligations of an insurance company.  Reserves represent the present value of future expected payments less future expected premiums.

The dollar amount or percentage of risk retained by the ceding company under a reinsurance agreement.

To cede insurance risk from one reinsurer to another reinsurer.

A reinsurer that contractually accepts from another reinsurer a portion of the ceding company's underlying reinsurance risk.  The transfer is known as a retrocession.

Risk Charge
An amount identified in some reinsurance agreements as specifically to be retained by the reinsurer for assuming the risk under the policies reinsured; a share of the profits in excess of the risk charge is returned to the ceding company as an experience refund.  Also known as profit and expense charge, risk and profit charge, or risk and expense charge.  See Experience Refund and Profit Commission.

Risk and Expense Charge
See Risk Charge.

Risk Premium Reinsurance (RPR)
See Yearly Renewable Term (YRT) Reinsurance.

Risk and Profit Charge
See Risk Charge.



  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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