REINSURANCE: (01) The working cover subject to a prospective rating plan. (02) A form of excess reinsurance wherein each year’s premium rate is determined by the amount of the ceding insurer’s excess losses for a specified number of preceding years. A form of experience rating.
***
A form of reinsurance under which premiums are paid during good years to build up a fund from which losses are recovered in bad years. This reinsurance has the effect of stabilizing a cedant’s loss ratio over an extended period of time.
***
UK: Aggregate excess of loss financial reinsurance under which premiums, under a multi-year contract, are paid during the good years to build up a fund from which losses are recovered in poor years. Premiums accumulate in an investment fund as well as additional premiums paid if losses exceed the fund balance. Cover is fixed on a per year basis, often stop loss. The key is to stabilise the cedant’s losses over time.
Insurance Encyclopedia
Spread loss reinsurance (Reinsurance)
A type of excess loss reinsurance. In this type of reinsurance, each year’s premium rate is established based on the amount of excess losses the ceding insurance company has sustained during the past years.
Spread of Risk
One of the basic functions of a sound Underwriting Policy. A system whereby the total amount at risk in any one exposure is spread amongst a large groups of Insurers and Reinsurers so that the ultimate net loss rests lightly on many rather than heavily on a few.
****
The selling of insurance in multiple areas to multiple policyholders to minimize the danger that all policyholders will have losses at the same time. Companies are more likely to insure perils that offer a good spread of risk. Flood insurance is an example of a poor spread of risk because the people most likely to buy it are the people close to rivers and other bodies of water that flood. See Adverse selection.
Spread vehicle
A corporate member which participates in a number of syndicates.
****
UK: Corporate member or a group of corporate members writing alongside individual members on a spread of syndicates across the market.
Spreader Clause
A clause in an Aviation Passenger liability policy which provides that if more than the declared number of passengers is carried in an aircraft the limit of liability per passenger is automatically reduced.
****
UK: An aviation policy clause providing that if the declared number of passengers is exceeded, the insurer’s limit of liability per passenger will be automatically reduced.
Sprinkler Insurance
Coverage for property damage caused by untimely discharge from an automatic sprinkler system.
Sprinkler leakage coverage
iNSURANCE that covers damage due to the accidental discharge from an automatic sprinkler system.
Sprinkler Leakage Insurance
Property Insurance covering accidental flow of water or other extinguishment from a Fire-fighting sprinkler when there is no Fire or certain other specified causes.
****
UK: Covers damage caused by the accidental discharge of water from a sprinkler leakage system. The installation attracts reduced premiums from the fire insurer but introduces the accidental discharge risk.
Sprinkler leakage insurance (Property Insurance)
Insurance that covers water damage due to a leak in the sprinkler system, but not due to the sprinkler being discharged due to a fire.
Sprinkler Leakage Legal Liability Insurance
Insurance covering the legal liability of an insured who has a sprinkler leakage loss that damages the property of others.