A provision in a reinsurance agreement that allows the Reinsurer access to the Ceding Company’s books, records, and other reinsurance-related documents and information. This includes related accounting, underwriting, and claims information for the purpose of obtaining information about the reinsurance agreement or its subject matter from the Reinsurer.
Tag: REINSURANCE
Accident Year Experience
Measures premiums and losses relating to accidents that occurred during a twelve-month period. Earned premiums and ultimate losses from loss events occurring within the same twelve-month accounting period are used to calculate underwriting results, regardless of when the losses are actually reported, booked, or paid.
See also Calendar Year Experience and Policy Year Experience.
Acquisition Costs
All expenses directly related to acquiring insurance or reinsurance accounts; i.e., commissions paid to agents, brokerage fees paid to brokers, premium taxes and expenses associated with marketing, underwriting, contract issuance and premium collection.****Insurer’s/Reinsurer’s cost of securing business including commission to Agents and brokers and other marketing expenses. It also can be accounting charge for placing a new Policy as on Insurer’s books.
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The expense undertaken to acquire new business. The concept applies to both agents and companies. The largest portion of an insurer’s acquisition cost is agent’s or sales representative’s commission or bonus.
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Expenses incurred by an insurer in obtaining new business and issuing policies. Commission to intermediaries accounts for the largest portion of acquisition costs.
Admitted (Authorized) Reinsurance
Reinsurance for which credit is given in the ceding company’s Annual Statement because the reinsurer is licensed or otherwise authorized to transact business in the jurisdiction of domicile of the ceding company. (See also Non-Admitted Reinsurance)
Admitted Reinsurer
A Company is deemed to be “admitted” in India when it has been licensed and accepted by IRDA. In determining its financial condition a ceding insurer is allowed to take credit for the unearned premiums and unpaid claims on the risks reinsured if the reinsurance is placed in an admitted reinsurance company.
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US, MEDICAL: Reinsurer licensed to accept reinsurance in a given region in the United States. Also called an authorized reinsurer.
Agency Reinsurance
A contract of reinsurance that is confined to business produced by a named agent of the insurer generated by that agent and administered directly with the reinsurer as allowed by the insurer. While there are other reasons for such practice, the facility allows an agent to issue larger policies that his insurer would otherwise restrict. Usually, agency reinsurance is written on pro-rata basis for property or other first party insurances.
Aggregate Excess of Loss Reinsurance (also known as Excess of Loss Ratio Reinsurance, Stop Loss Reinsurance)
A form of excess of loss reinsurance which, subject to a specified limit, indemnifies the ceding company for the amount by which all of the ceding company’s losses (either incurred or paid) during a specific period (usually 12 months) exceed either 1) a predetermined dollar amount or 2) a percentage of the ceding company’s subject premiums earned (loss ratio) for the specific period.
Alien (Insurer)
An insurer domiciled outside the United States and incorporated under the laws of any other country.
Alternative Risk Financing
Use of the capacity available on capital markets to cover insurance to cover insurance risks e.g. through the securitization of natural catastrophe risks. See Also: “Risk Management: Alternate Risk Transfer (ART).”
Anniversary Reinsurance
This is the date for renewal of a reinsurance contract whether the contract actually expires or is continuous. The date is usually twelve months from the effective date of the contract. In provisions dealing with run off of contracts the anniversary date is that of the underlying policies and not the reinsurance contract.