A fund set aside by Insurer from total premium earned as a reserve to mitigate the severity of strain on his Underwriting account.
Insurance Encyclopedia
Catastrophe futures
A financial instrument purchased by insurance companies as a form of protection against large-scale future losses
Catastrophe hazard
The danger of a large-scale loss due to a hazard that could affect a very large number of insured people; for example, an earthquake.
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The hazard of large loss by reason of occurrence of a peril to which a very large number of insureds are subject. An example would be widespread loss due to a hurricane or tornado.
Catastrophe insurance
a form of excess of loss reinsurance under which the ceding insurer is indemnified, subject to a specified retention and an over-riding limit, against an accumulation of losses arising from a catastrophic event (for example, an earthquake or hurricane).
Catastrophe insurance policy
Insurance that provides coverage for earthquake, flood, hailstorm, hurricane, nuclear accident, riot and civil commotion, tornado, and volcanic eruption. Some homeowners’ policies cover some of these catastrophes.
Catastrophe layer
Non-proportional reinsurance layer of cover with an excess point so high that the layer will only be affected by rare catastrophic losses.
Catastrophe loss
A difficult-to-predict, severe loss that is best covered by an insurance company; for example, an earthquake or hurricane.
Catastrophe options
Options traded on the Chicago Board of Trade (CBOT) and the Bermuda Commodities Exchange (BCOE) the value of which is linked to the occurrence of defined losses caused by natural disasters.
Catastrophe or Per Event Covers
Which protect a Company against very large losses caused by events like conflagrations, cyclone, floods etc. The distinction between a ‘per event’ cover and a ‘per risk’ cover is that in the former, the loss may cover one or more than one risk, but when it affects more than one risk, it should have arisen from one event. See Also: “Per risk or working cover.”
Catastrophe Policy
An older name for Major Medical Expenses Policy. This Policy is to pay all medical or hospital costs above a certain deductible amount and up to the maximum provided in the Policy. The term catastrophe as applied to them is in reference to the economic catastrophe of huge medical expenses. It is not related to catastrophe as used in catastrophe hazard.