Type of group annuity contract that provides for the accumulation of contributions in an undivided fund out of which annuities are purchased as the individual members of the group retire.
Insurance Encyclopedia
Deposit administration group annuity (Pensions)
A group agreement that offers a deposit account before retirement. After retirement, annuities are then purchased from this deposit account.
Deposit administration scheme
A defined contribution scheme also called a cash accumulation policy, used for employee groups or individual personal pensions. Contributions are held by the life office to accumulate with interest. When benefits become payable money is withdrawn to purchase annuities and pay lump sums. The life office carries no risk but acts as investor. The pre-retirement mortality risk is left to the scheme trustees who usually arrange separate cover.
Deposit against third party risks
Motor Vehicles (Third Party Risks) Deposit Regulations 1992 provide for a deposit of £500,000 with the Accountant General of the Supreme Court by an individual or entity as an alternative to effecting compulsory motor insurance (Road Traffic Act 1988 (as amended)).
Deposit back
in reinsurance, a deposit of the whole or part of the premiums paid by a cedant company with that company as surety for payment by the reinsurer (also called treaty deposit).
Deposit back arrangement
Amounts deposited by reinsurers with cedants to help finance the reinsurers’ proportion of claims. The amount retained is usually such proportion of the agreed premium. The deposit is released annually in arrears.
Deposit Bond
Guaranteeing payment of bonds to depositors in accordance with the terms of a deposit in a bank.
Deposit company
Also called a community deposit company it means an insurance company (other than a pure reinsurer) whose head office is not in an EC State and which has made a deposit in a member State other than the United Kingdom in accordance with regulatory requirements. If the deposit is lodged in the UK the company is called a UK deposit company.
Deposit or provisional premium
A premium amount derived from an approximate value of the final premium. This premium is paid at the start of the policy.
Deposit premium
US: (1) In property and casualty insurance, the premium deposit required by the insurer on forms of insurance subject to periodic premium adjustment. Also called “provisional premium.” (2) In reinsurance, the amount of premium (usually for an excess of loss reinsurance contract) that the ceding company pays to the reinsurer on a periodic basis during the term of the contract. This amount is generally determined as a percentage of the estimated amount of premium that the contract will produce based on the rate and estimated subject premium. It is often the same as the minimum premium but may be higher or lower. The deposit premium will be adjusted to the higher of the actual developed premium or the minimum premium after the actual subject premium has been determined by audit or reporting of the actual exposures insured during the coverage period.
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MEDICAL,USA: 1. Amount that is paid by a prospective insurance policyholder when an application is made for an insurance policy. It is usually the first month’s estimated premium and is applied toward the actual premium when a statement is sent to the insured. 2. Funds left on deposit with the insurance company for plans subject to premium adjustment. Also called premium deposits .
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UK: 1. Payment under an adjustable policy to an insurer at the inception based on an estimate of fluctuating values, activities or costs that may be adjusted up or down at the end of the term. 2. In non-proportional reinsurance it is the amount paid by a cedant to a reinsurer representing all or part of premiums expected to be earned under the contract. The premium is adjusted at the end of the contract term or periodically within a multi-year contract to reflect actual premiums earned. If the parties work on an adjustable rate basis the deposit premium may be tiated quarterly. nego
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A premium that is payable at the inception (start) of an insurance or reinsurance contract and in respect of which an adjustment premium (usually an additional premium) is due depending on the performance of the contract including, possibly, the amount of the business that is ceded thereunder. Compare minimum premium.
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REFERENCE: See: “Premium, Deposit premium.”
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REINSURANCE: The amount of premium (usually for an excess of loss reinsurance contract), that the ceding company pays to the reinsurer on a periodic basis (usually quarterly) during the term of the contract. This amount is generally determined as a percentage of the estimated amount of premium that the contract will produce based on the rate and estimated subject premium. It is often the same as the minimum premium but may be higher or lower. The deposit premium will be adjusted to the higher of the actual developed premium or the minimum premium after the actual subject premium has been determined.
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REINSURANCE: This arises when the actual premium awaits the outcome of the completion of the treaty or contract period. AT inception the reinsurer therefore receives premium as a deposit subject to its adjustment on completion of treaty or contract period.
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When the price of insurance is tied to fluctuating values or costs that cannot be known until the end of the policy period, inventory or payroll being two common examples, a deposit or provisional premium or estimated premium may be charged at the outset of a policy with final adjustment to come at the end of the term.