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What is a reinsurance company

what is a reinsurance company

Accounting earned

This is the most common and widely understood method. The unearned premium reserve at the beginning of the period is added to the premium written (booked) during the period, and the unearned premium reserve at the end of the period is subtracted. Accounting earned is the figure used in the Annual Statement.

Account Executive

The individual, either as employee of a reinsurer or a reinsurance intermediary, who is responsible for all matters pertaining to the reinsurance account of a particular insurer.

Acquisition costs

All expenses incurred by an insurance or reinsurance company that are directly related to acquiring insurance accounts (insured, or reinsured) for the company.

Administration expenses

Costs incurred in conducting an insurance operation other than loss adjustment expenses, acquisition costs, and investment expenses.

Admitted assets

Assets recognized and accepted by state insurance laws in determining the solvency of insurers or reinsurers.

Admitted company

1. An insurer licensed to conduct business in a given state.

2. A reinsurer licensed or approved to conduct business in a given state.

Advance deposit premium

An amount paid by a reinsured to a reinsurer that is held for the payment of the reinsured's losses. At some time in the future, any balance in the fund remaining after paying losses and any agreed upon reinsurance expenses will be returned to the reinsured. Also known as BANKING PLAN.

Adverse selection

The conscious and deliberate cession of those risks, segments of risks, or coverages that appear less attractive for retention by the ceding company.

Agent commission

In insurance, an amount paid an agent for insurance placement services.

Aggregate excess of loss reinsurance

A form of excess of loss reinsurance that indemnifies the reinsured against the amount by which the reinsured's losses incurred (net after specific reinsurance recoveries) during a specific period (usually 12 months) exceed either an agreed upon amount or an agreed upon percentage of some other business measure, such as aggregate net premiums over the same period or average insurance in force for the same period. This form of reinsurance also is known as STOP LOSS REINSURANCE, STOP LOSS RATIO REINSURANCE, or EXCESS OF LOSS RATIO REINSURANCE.

Aggregate working excess (Annual aggregate deductible)

A form

of per-risk excess reinsurance under which the primary company retains its normal retention on each loss and additionally retains an aggregate amount of the losses that exceed such normal retention.

Alien company

An insurer or reinsurer domiciled outside the U.S. but conducting an insurance or reinsurance business within the U.S.

Amortization period

Synonymous with payback period, this term is used in the rating of per-occurrence excess covers and represents the number of years at a given premium level necessary to accumulate total premiums equal to the limit of liability of the reinsurance cover. See PAYBACK PERIOD.

Annual statement

A summary of an insurance company's (or reinsurer's) financial operations for a particular year, including a balance sheet supported by detailed exhibits and schedules, filed with the state insurance department of each jurisdiction in which the company is licensed to conduct business. Also known as CONVENTION BLANK.

Arbitration clause

A provision sometimes appearing in reinsurance treaties whereby the parties agree to submit any dispute or controversy to an unofficial tribunal of their own choosing in lieu of the tribunals provided by the ordinary processes of law. Although the wording of the clause may vary, it normally provides for the appointment of two arbitrators, one selected by each party, who in turn appoint an umpire, and the decision of a majority of the arbitrators is binding on the parties to the reinsurance treaty.

A term used to describe the recalculation of prior years of loss experience to demonstrate what the underwriting results of a particular program would have been "as if" the proposed program had been in force during that period.

To accept all or part of a ceding company's insurance or reinsurance on a risk or exposure.

Assumed portfolio

The transfer of in-force insurance liability by an insurer to a reinsurer (or vice versa) by the payment of the unearned premium reserve on those policies alone, or by the concurrent transfer of liability for outstanding losses under those policies by the payment of the outstanding loss reserve by the insurer to the reinsurer (or vice versa). The former is a premium portfolio, the latter a loss portfolio.

The amount at which excess reinsurance protection becomes operative; the retention under an excess reinsurance contract.

Category: Insurance

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