Commutation (Life Insurance)

The trade of a series of payments for a lump sum settlement.

Commutation Agreement

An agreement between the ceding insurer and the reinsurer that provides for the valuation, payment and complete discharge of some or all current and future obligations between the parties under particular reinsurance contract(s). Commutation may be required by the reinsurance agreement or may be effected by mutual agreement.

Commutation Clause

REINSURANCE: A clause in a reinsurance agreement that provides for the valuation, payment, and complete discharge of some or all obligations between the ceding company and the reinsurer, including current and future obligations for reinsurance losses incurred.
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REINSURANCE: A Clause in a reinsurance agreement, which provides for estimation, payment and complete discharge of all future obligations for reinsurance losses incurred regardless of the continuing nature of certain losses such as unlimited medical and lifetime be Worker’s Compensation.
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UK: Reinsurance contract clause facilitating the termination of all obligations between the parties, normally accompanied by a final cash payment in respect of reinsured losses incurred. The clause is usually optional but can be mandatory.

Commutation Clause, Reinsurance

Refer: “Reinsurance, Commutation Clause.”

Commutation factor

The rate of exchange that determines the amount of pension that needs to be sacrificed to provide a given lump sum benefit at retirement. The commutation factor indicates how much cash is available for each £1 of pension exchanged. Scheme rules specify the commutation factor that will apply either to all members or specifically to individuals. The commutation factor is a ratio, e.g. 12:1 mean a pension of £883 per annum can be exchanged for a lump sum of £10,000.

Commutation right (Life Insurance)

The beneficiary’s right to exchange a series of payments for a lump sum.

Commutation Rights

In life insurance, the right of the beneficiary to receive in a lump sum the cash value of the remaining payments under an insurance option chosen by the insured.

CoModCo

A combination of coinsurance and modified coinsurance under which some part of the reserves, for example, deficiency reserves, are a liability of the reinsurer (“co” portion) while some are returned to the cedant (“modco” portion).

Comorbid condition (CC)

Medical condition that coexists with the primary cause for hospitalization and affects the patient’s treatment and length of stay.

Comorbidity

Underlying condition or other condition that exists along with the condition for which the patient is receiving treatment. Used in diagnostic-related group (DRG) reimbursement. Sometimes referred to as comorbidity condition or concurrent condition.