REINSURANCE

The premium rate expressed as a percentage of the LIMIT OF INDEMNITY.

See REINSURED

A part of the notice of cancellation provisions whereby, if one party has given notice then it is assumed that notice is mutually given. It prevents one party giving notice and then withdrawing such after the time limit for notice, thereby pre-empting the other party. The term can also be used to apply to a part of the notice of cancellation provisions whereby, if the parties have a number of reinsurances in force, then if notice has been given on one contract then it is assumed that notice is mutually given on all the other contracts. This allows the parties to maintain a flexibility in their negotiations.

The practice whereby underwriters agree to exchange business with each other.

The business that is exchanged in a reciprocal exchange.

The first clause in the treaty wording which names the parties to the contract.

A clause sometimes found in treaties where the PREMIUM RATE is based upon prior years' loss experience. This Clause allows that, if subsequently it is found that the rate is inadequate because the loss data was inaccurate or incomplete, the premium rate will be renegotiated or increased proportionately. Also known as the Special Records Clause.

The restoration of the full policy limit after loss.

A coverage effected to protect the reinsured against the contingency of having to pay REINSTATEMENT PREMIUMS. The usual intention is that the purchase of such a cover establishes a fixed total reinsurance cost to the reinsured at inception. Without such cover a reinsured would not know the cost of his reinsurances until such time as they had expired. In terms of English law this is considered to be a form of insurance rather than one of reinsurance.

Reinsurance premiums paid to reinstate the treaty limits to the full amount. Reinstatement premiums are usually payable at the time of settlement of the claim, and may be calculated pro rata as to amount only or pro rata as to both amount and time. The terms for Reinstatement Premiums are usually negotiated. Thus "1 Free" means one full reinstatement is allowed without any additional premium becoming payable and "1 @ 75%" means that the Reinstatement Premium is to be a pro rata share of 75% of the original reinsurance premium.

An insurance of an insurance. Insurers seek to limit their exposure to claims which might arise on policies of insurance (or life assurance) which they have issued. This exposure could be a single large loss or to an accumulation of smaller losses. The reinsurance protection can be purchased for a single risk (FACULTATIVE reinsurance) or for the whole or part of a portfolio (TREATY reinsurance). See also EXCESS OF LOSS and PROPORTIONAL. A reinsurance protection of a reinsurance account is called RETROCESSION.

REINSURANCE FOR COMMON
ACCOUNT

See COMMON ACCOUNT.

See ORDER

The practice adopted by Lloyd's syndicates of transferring the liabilities from one year to the next open year and thus between one syndicate and another syndicate by way of a transfer of funds thus "closing" the earlier year.

Where a reinsurance programme consists of a number of treaties, these protections usually operate in an order of precedence. Thus a reinsured may have a Quota Share treaty protecting the gross account with an excess of loss protecting its retention after the cession to the Quota Share. The Quota Share treaty is then the Reinsurance in Priority.

REINSURED - The insurer who purchases reinsurances from another insurer (referred to as the REINSURER). The term CEDING COMPANY is also sometimes used although this term is not really appropriate for EXCESS OF LOSS reinsurances

The insurer who accepts by way of reinsurance the whole or part of risks or exposures assumed by another insurer.

That part of the year when most reinsurance contracts come up for renewal (usually September to January). This is determined by the London and New York practice of renewing reinsurances for periods commencing 1st January. For countries such as Australia, where most reinsurances are renewed at July 1, the renewal season arises at a different part of the year.

A reinsurance where coverage is given only on risks which have been declared to the contract. Risks would be reported to the reinsurer and premiums paid as they became due.

A record showing the amount of PREMIUM RESERVE DEPOSIT currently being held by the REINSURED.

See PREMIUM RESERVE DEPOSIT and LOSS RESERVE DEPOSIT

RESERVES - Often used as a synonym for RESERVE DEPOSITS. However can also be used as "loss reserve" meaning the total of the estimated outstanding losses and "premium reserve" meaning the total of the unearned premiums..

The combined Capital and retained Profits of an insurance or reinsurance company, i.e. its financial strength.

The proportion of a risk that the reinsured retains for its own account.

See RETROCESSION

The REINSURED who cedes to a RETROCESSIONAIRE under a RETROCESSIONAL REINSURANCE contract.

To cede to a RETROCESSIONAIRE.

A cession under a retrocessional reinsurance contract.

A REINSURER of a RETROCESSIONAL REINSURANCE.

A REINSURANCE of a contract or policy which is itself a reinsurance contract or policy

A premium refund made to the policyholder as a result of cancellation or amendment under the policy.

The process of restating the losses under a contract to represent the quantum of those losses at current values. This assists in generating a valid current loss experience for the purposes of premium rating

A system whereby a LETTER OF CREDIT is kept open to provide security for the REINSURED under a TREATY.

The uncertainty of whether a loss will arise or not, the risk of loss.

The property being insured or reinsured.

The peril being covered (e.g. fire department risks).

A form of reinsurance that protects the reinsured for losses arising on individual risks rather than from claims arising from ANY ONE EVENT. It is a form of excess of loss reinsurance often used as a substitute for proportional reinsurance. It can also be used as a supplement to a proportional treaty and thereby protect the reinsured against the effect of an incorrect ESTIMATED MAXIMUM LOSS.

An analysis of business which tabulates risks into bands of similar value showing, inter alia, the number of risks in each category, average values, aggregate values and aggregate premiums.

This form of REINSURANCE covers those losses arising on policies issued or renewed during the contract period. Unless otherwise agreed the reinsurer's liability continues until the expiry of such policies. This is an alternative to LOSSES OCCURRING forms of excess of loss reinsurance.

See REINSURANCE TO CLOSE

The Reinsurance Offices Association which was set up in 1969 to provide a forum for exchange of information between reinsurers. It has now been absorbed by LIRMA.

Return of Premium

A termination provision in a reinsurance contract which stipulates that the reinsurer shall remain liable for loss under each reinsured policy in force until its expiration date.

A term used to describe the business of handling cancelled accounts which may well be active for many years after the business has been cancelled or indeed after the company has ceased active underwriting.