REINSURANCE: (i) Largest amount of Insurance or Reinsurance available from an Insurer or group of Insurers. In a broader sense, the largest amount of Insurance or Reinsurance available in the market. (ii) Maximum amount of Insurance that a Company will write on a single risk.(iii) The percentage of surplus or the rupee amount of exposure that an insurer or reinsurer is willing to place at risk. Capacity may apply to a single risk, a program, a line of business, or an entire book of business.
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MEDICAL,USA: 1. Maximum amount of insurance an insurer or reinsurer is capable of underwriting for either one individual (single risk) or for all of its business. 2. Ability of a health care facility to provide necessary medical services.
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UK: Amount of insurance or reinsurance that can be underwritten by an entity or a market. The maximum amount of business that may be accepted by a Lloyd’s member is equivalent to his overall premium income limit. See CAPACITY BOOSTING; CAPACITY TRANSFER MARKET.
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Capacity refers to the amount of capital an insurance company or the insurance industry as a whole has to write coverage. Property and casualty insurance companies are required by state regulators to maintain certain levels of capital and policyholder surplus to underwrite risks. The combination of capital and surplus is known as capacity.When capacity declines, the cost of insurance tends to rise as insurers attempt to make up for losses. Capacity can decline due to extraordinary losses like Hurricane Katrina or reductions in investment income. Capacity can be increased through higher premiums, increased investment return, or increases in reinsurance.Thus, capacity determines the amount of insurance available. Large losses in one area (e.g., medical malpractice) can affect the capacity, and therefore availability, of that type of insurance without affecting other lines of coverage. Capacity is often seen as a test of an insurance company’s financial strength.
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The amount of premium income that insurer is permitted to write or the maximum exposure that could be accepted. It could refer to an insurance company, a reinsurance company, a Lloyd’s Name, A Lloyd’s syndicate, or a whole market. Also Refer: “Reinsurance, Capacity”
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REINSURANCE: The largest amount of insurance or reinsurance available from a company or the market in general. Also refers to the maximum amount of business (premium volume) that a company or the total market could write based on financial strength or regulatory limitations.
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US: The largest amount of insurance or reinsurance available from a company or the market in general. Capacity is determined by financial strength and is also used to refer to the additional amount of business (premium volume) that a company or the total market could write based on excess (unused) capital—that is, surplus capacity.
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The largest quantity of insurance or reinsurance available for purchase, either from one company or from the entire market.
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This term may refer to: (a) a member’s allocated capacity (b) syndicate allocated capacity (c) the total underwriting capacity of all syndicates combined; or (d) the underwriting capacity of an insurance company or reinsurance company.