An insurer that issues a policy and cedes all or a substantial part of the risk to another insurer. Certain types of statutory coverages requiring evidence of insurance from admitted insurers are fronted and reinsured by captives. A “pure front” is one that delegates underwriting and claims handling authority to the reinsurer or a managing general agent (MGA). Most insurers that front for captives are not pure fronts.
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An insurer that issues a policy and cedes all or a substantial part of the risk to another insurer. Certain types of statutory coverages requiring evidence of insurance from admitted insurers are fronted and reinsured by captives. A “pure front” is one that delegates underwriting and claims handling authority to the reinsurer or a managing general agent (MGA). Most insurers that front for captives are not pure fronts.
Insurance Encyclopedia
Front-end edits
Electronic check of transmitted insurance claims to screen the incoming data or claims before they enter a system for errors, conflicting code entries, and a match of diagnosis to medical service(s) provided. This electronic examination has the capability to accept or reject each transaction or claim based on whether or not it complies with the checks. Also called claim edits and edit check .
Front-loaded policy
Universal life insurance policy in which the majority of the expense charges are deductions from each premium payment. These deductions continue throughout the premium payment period.
Fronting
REINSURANCE “Arrangements by which an insurer, for a specified fee or premium, issues its policies to cover certain risks underwritten or otherwise managed by another insurer or reinsurer. The insurer then transfers all, or substantially all, of the liabilities thereunder to such insurers by means of reinsurance.
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UK: an arrangement whereby one insurer agrees to accept business on behalf of others, or to cede the business to others; such an arrangement may be used in markets where the fronting company is well established and finds it easier to obtain business than the companies for which it agrees to front, or to conceal the identity of the company to which the business is being channelled.”
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“Often the entities an insured does business with want a policy written by a major carrier with an acceptable rating with Best’s or another insurance rating service. If the insured is using a captive, this can present a problem.Many insurance companies will “”front”” for the captive. That is, the policy is written on the company’s paper, but the company reinsures the majority of the risk with the captive.
For example, a commercial developer may want a building contractor to provide liability insurance with an A++ rated insurance company before building a new 10-story office building. If the contractor is covered by a captive, he or she pays a fee to an A++ company who then issues the liability policy. The fee covers, other than just expenses, the risk that the rated company will not be able to collect from the captive in the event of a loss.”
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UK: The issue of a policy by an authorised insurer who cedes 100 per cent (or nearly that amount) to a second insurer or a reinsurer who is not an admitted insurer in the state concerned. The authorised insurer ‘fronts’ the risk for a specified fee or premium.
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The practice, in reinsurance, of the ceding company retaining only a small portion of a risk and ceding the remainder to a reinsurer.
Fronting Company
Insurance which, for a fee or percentage of the premium, agrees to issue an Insurance Policy with the prior knowledge that the Policy will be substantially Reinsured by the insured’s captive or by a Reinsurer selected by the insured. Fronting arrangements are designed to comply with the letter of regulations requiring that certain exposures be commercially insured while, at the same time, permitting the insured to retain, or control the Reinsurance or transfer of that exposure. (2) An arrangement whereby one licensed insurer issues a policy on a risk for an at the request of one or more other unlicensed insurers with the intent of passing the entire risk by way of reinsurance to the other insurer(s). Such an arrangement may be illegal if the purpose is to frustrate regulatory requirements.
Frozen pension
See: Deferred Pension.
Frozen Products Food/Meat Clauses
01.01.0986 (Institute of London Underwriters) : This insurance covers all risks of loss of or damage to the subject matter insured other than loss or damage resulting from any variation in temperature howsoever caused. Loss of or damage to the subject matter insured resulting from any variation in temperature is covered if attributable to (i) breakdown of refrigerating machinery resulting in its stoppage for a period of not less than 25 consecutive hours (ii) fire or explosion (iii) vessel or craft being standard grounded sunk or capsized (iv) overturning or derailment of land conveyance (v) collision or contract of vessel craft or conveyance with any external object other than water (vi) discharge of cargo at a port of distress. Since it covers temperature variation losses arising out of machinery breakdown of refrigerated machinery, inherent vide exclusion is not applicable for such losses. Rest of the exclusions are same as ICC-B. The risk attaches from the time the cargo pass into the cooling and/or freezing chamber of the works at the place named herein. Also the time limit till which the insurance will remain in force after getting discharged from the overseas vessel has been altered from 60 days under ICC to 30 days for cargo moving to US and Europe and 15 days for other geographies. Also, there is an adjustment provision which allows the assured to get indemnity where the cargo or a part of cargo does not get boarded on the vessel due any peril.
Frustration
The premature determination of a contract owing to the occurrence of an intervening event or a fundamental change in circumstances not contemplated by the parties at the outset.
Frustration clause
Marine war risks cargo insurance clause stating that there is no loss because of the termination (or frustration) of the transit due to an outbreak of hostilities. The property is not irretrievably lost but is prevented from reaching its destination. There must be actual physical loss/damage to the cargo to constitute an insured loss.
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A marine Policy clause which excludes claims based on frustration of the adventure by the operation of war perils.
FSA
Abbreviation that means flexible spending account. See dependent-care spending account .
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UK: See: Financial Services Authority.