A term used to restate the treaty statistics for prior years to accord with the current (or proposed) limits, terms and conditions Sometimes also used to show results as if exceptional losses had not occurred.

Account. May sometimes refer to a year of account. For example the term "1997 a/c" refers to the 1997 underwriting account.

Annual Aggregate Deductible. See AGGREGATE DEDUCTIBLE

The Association of British Insurers

The amount which the REINSURED retains net for its own account after deduction of all reinsurance recoveries. Sometimes REINSURERS may stipulate a minimum RETENTION in order to ensure that a reinsured does not reduce, by the purchase of additional reinsurance, his retention to a purely nominal figure.

A line written on a less desirable risk or a risk that would normally be rejected but is accepted because of the overall profitability of the broker’s other business.

Statements of the business transactions between the parties. For a PROPORTIONAL TREATY they are prepared at regular intervals, usually on a quarterly or half-yearly basis.

The number of risks (or sums insured) which are exposed to claims arising out of a single loss occurrence.

Accumulations can arise in many ways - such as a number of:

Buildings destroyed in the same Fire or Earthquake;

Motor vehicles involved in the same collision;

Passengers in the same plane;

Cargoes on the same ship.

Potential known exposures, (e.g. buildings exposed to earthquake) can be more easily controlled than unknown accumulations (e.g. personal accident exposure in respect of passengers on the same plane). See also CATASTROPHE EXCESS OF LOSS.

That first part of the loss which is retained by the reinsured but expressed either as an aggregate of a number of potential losses or a monetary amount. See also STOP LOSS and BUFFER LAYER.

An additional deductible for claims that would otherwise be recoverable under the excess of loss reinsurance contract covering losses arising from an accident or event and which is retained by the reinsured before claims become payable by reinsurers. For example, a reinsurance may cover losses up to $900,000 any one event in excess of $100,000 any one event which in turn in excess of $2,500,000 in the aggregate (in effect, the reinsured has to bear the whole of the first 2.5 losses that would otherwise be recoverable under the reinsurance before it can recover under the reinsurance).

A form of EXCESS OF LOSS reinsurance where both the deductible and the reinsurer’s limit of liability are expressed as (usually annual) aggregate amounts. This form of contract would usually be used to protect an account that would not normally be exposed to major "event" losses but could be subject to major attritional loss. e.g. a Medical Expenses account. See also STOP LOSS

A clause that used to be included in per event excess of loss treaties that cover products liability where the original cover granted to the insured by the reinsured is on an aggregate basis. For such policies the clause allows for the deductible and limit of reinsurance to apply also on an aggregate basis. This clause has been generally replaced by the CLAIMS SERIES CLAUSE

A clause found, particularly in LMX contracts, which allows a Reinsured (who is himself a reinsurer) to extract from an aggregate loss that proportion of the aggregate loss which relates to any one occurrence so that the one occurrence loss can be accumulated into the ULTIMATE NET LOSS of the Reinsured for the specified loss occurrence.

A mutually agreed date at which the treaty is renewed. It is used as a measure of the annual period of the treaty; the date when premium adjustments are made; the date at which outstanding loss statements are submitted; and when notices of cancellation take effect.

A procedure used in the Lloyd’s Market to preserve equity between Names when a policy has been accepted which has a period for, say, three years. At the end of the first 12 months (i.e. at the end of the underwriting account) a premium portfolio transfer of the unexpired 24 months’ premium is made by way of a reinsurance from the first year’s NAMES to the second year’s Names. At the end of the second year the unexpired 12 months’ premium is then portfolio transferred by way of a reinsurance from the second year’s Names to the third year’s Names.

The definition of the conditions under which the reinsurer could become involved in a loss under an excess of loss treaty. Under "event" reinsurance all and any losses, even if arising under different policies, are aggregated to form one claim if arising from one insured event or cause or accident or occurrence. Thus, if two motor vehicles owned by different policyholders of the reinsured are in collision with each other, all the amounts paid under both policies are totalled so that one claim arises to the excess of loss treaty and the reinsured bears only a single DEDUCTIBLE. Certain types of loss, such as those arising from weather conditions persisting over a period (see HOURS CLAUSE) or personal injuries caused by a defective product or LATENT DISEASE claims arising from exposure to adverse working conditions over a long period, make an adequate definition of "any one event" or "cause/ accident/occurrence" very difficult to achieve.

AOE

AOL

An Agreement to allow for disputes to be settled amicably by reference to arbitration rather than resorting to action at Law. There are many versions in use. It is usually recommended that the Arbitration Agreement be a separate agreement to the treaty wording so that even a dispute as to the validity of the treaty itself can be referred to arbitration.

Asbestos Related Claim Form. A form used in the London Market for the reporting of Asbestos related claims. The form gives full details of all original insurances and all reinsurances that have given rise to the claim being reported thereon. It enables reinsurers to tract asbestos exposures.

As original. To follow the conditions set out in the original policy or policies.

The final clause of the treaty wording and which provides for the agreement to be signed in duplicate for and on behalf of each party.

A form of premium rating based upon the loss experience (BURNING COST) of the treaty year. A preliminary premium is paid in the form of a DEPOSIT PREMIUM which is subsequently adjusted according to the actual loss experience. Such adjustments may continue until all outstanding losses have been finally settled. The reinsurance premium due is expressed as a rate percent of the reinsured’s GPI (or the equivalent used) and which is obtained by applying a LOADING to the BURNING COST. The premium rate is usually subject to minimum and maximum limits so that if the loss experience were "Nil" the reinsurer would receive some premium and if the loss experience were very adverse there would be a limit to the amount of premium the reinsured would be liable to pay. The premium rating may be based upon the BURNING COST for the treaty year alone or on an average over a number of years or whatever may be negotiated. The rating may also be based upon the paid loss experience alone rather than upon paid plus outstanding (i.e. incurred) losses.

A term used in property insurance whereby in the event of under insurance the amount of the indemnity which is recoverable by the insured is reduced to proportion that the sum insured bears to the actual values at risk. Thus for example in a case where a loss amounting to 1,000 occurs on a policy with a sum insured of 10,000 but where the value at risk was not 10,000 but 20,000 the amount payable to the insured will not be 1,000 but will be 1,000 x 10,000/20,000 = 500

A term used in the marine market to refer to a partial loss whereby in the event of a loss to a vessel and its cargo the loss will be apportioned between all parties even though cargoes belonging to some insured’s may not be damaged by that incident.