As per IRDA’s General Insurance-Reinsurance Regulations, 2000 “Indian re-insurer” means an insurer which has been granted a certificate of registration under sub-section (2A) of Section 3 by the Authority to carry on exclusively the re-insurance business in India and is approved in this behalf by the Central Government.
Tag: REINSURANCE
Inflation Factor
A loading to provide for increased medical costs and loss payments in the future due to inflation.
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An adjustment of premium to allow for a rise in costs due to inflation.
Insolvency Clause
REINSURANCE A clause that holds that a reinsurer is liable for his share of a loss assumed under a treaty even through the primary insurer has become insolvent.
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REINSURANCE A provision appearing in most reinsurance contracts (because most if not all states require it) stating that in the event the reinsured is insolvent the reinsurance is payable directly to the company or its liquidator without reduction because of its insolvency or because the company or its liquidator has failed to pay all or a portion of any claim.
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A provision in reinsurance agreements that provides for the continuance of payments of the obligations of the reinsurer as though no insolvency had occurred, with appropriate recognition of additional expenses of the reinsurer caused by the insolvency. Required in New York and in certain other states.
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UK Clause, common in the US, whereby the reinsurer agrees, in the event of the cedant’s insolvency, to pay its obligations to the liquidator or other specified party.
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MEDICAL,USA Provision in many reinsurance contracts that specifies if the ceding company becomes insolvent, the reinsurer must pay the ceding company or its liquidator all reinsurance that comes payable even if the ceding company has failed to pay all or a portion of any claim. This provision is required by most state regulations.
Interest and Liabilities Agreement
A reinsurance contract between the ceding insurer and one or multiple reinsurers in which the percentage of participation of each reinsurer is specified.
Interlocking Clause
A provision in a reinsurance agreement designed to allocate loss from a single occurrence between two or more reinsurance contract periods. The provision prorates the reinsured’s retention and reinsurance coverage between two or more reinsurance agreement periods, i.e., when one loss affects policies assigned to different reinsurance periods, so that the company will have one retention and one recovery for the loss involving the two reinsurance periods.
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UK: Clause applicable to ‘risks attaching’ reinsurances. The clause allows apportionment of a loss between years of account when a loss arises on policies attaching to different underwriting years. This is achieved by proportionately reducing the deductible and the reinsurer’s liability for each of the two years by the percentage that the loss to each year of account bears to the total amount of the loss.
Intermediary Clause
REINSURANCE: A contractual provision in U.S. reinsurance agreements in which the parties agree to effect all transactions through an intermediary and the credit risk of the intermediary, as distinct from other risks, is imposed on the reinsurer. Most intermediary clauses shift all credit risk to reinsurers by providing that (1) the ceding company’s payments to the intermediary are deemed payments to the reinsurer, (2) the reinsurer’s payments to the intermediary are not payments to the ceding company until actually received by the ceding company. This clause is mandatory in some states.
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A provision in reinsurance agreements that identifies the intermediary negotiating the agreement. Most intermediary clauses shift all credit risk to reinsurers by providing that 1. the cedant’s payments to the intermediary are deemed payments to the reinsurer and 2. the reinsurer’s payments to the intermediary are not payments to the cedant until actually received by the cedant. This clause is mandatory in some states.
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REINSURANCE: A provision in reinsurance agreements which identifies the specific intermediary or broker involved in negotiating the contract, communicating information, and transmitting funds. The clause should state clearly whether payment to the broker does or does not constitute payment to the other party of the reinsurance contract. Currently a widely used clause provides that payments by the reinsured insurer to the intermediary shall be deemed to constitute payment to the reinsurer(s) and the payments by the reinsurer(s) to the intermediary shall be deemed to constitute payment to the reinsured insurer only to the extent that such payments are actually received by the reinsured insurer.
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UK: Treaty clause that identifies the intermediary who negotiated the agreement. Most clauses shift all credit risk to reinsurers by providing that: (a) the reinsured’s payments to the intermediary are deemed to be payments to the reinsurer; and (b) the reinsurer’s payments to the intermediary are not payments to the reinsured until received by the reinsured.
International Capital Standard (ICS)
The ICS is the proposed permanent international capital standard that is intended to apply to all IAIGs. The goal is to develop a global capital standard that will allow comparability of insurers’ capital position so that international insurance supervisors can understand and rely on for solvency regulation.
Inuring Reinsurance
A list of additional reinsurance contracts that are initially implemented in accordance with the conditions of a certain reinsurance agreement in order to lessen the loss covered by that specific reinsurance agreement.
These additional “inuring” reinsurances essentially insure the specific reinsurance contract they insure. It is argued that the other reinsurances only benefit the reinsured if they are to be ignored in regards to loss under that specific arrangement.
For instance: A ceding insurer has a per occurrence excess of loss contract (catastrophe reinsurance) for £80 million over £20 million and a 50% quota share agreement. There is a £100 million disaster loss.
In the event that the quota share contract benefits the catastrophe reinsurer, the ceding insurer bears the £20 million catastrophe retention, the catastrophe reinsurer reimburses the ceding insurer to the extent of £30 million, and the quota share reinsurer receives the first £50 million of the £100 million gross loss.
The catastrophe reinsurer would have suffered a loss of £80 million following the ceding insurer’s £20 million retention, and the QS cession would have applied to the remaining £20 million, netting the cedent’s loss to £10 million, had the quota share not inured to the catastrophe reinsurer’s benefit.
Inwards
Reinsurance business accepted or written by an insurer or reinsurer, as opposed to outwards reinsurance which is ceded to a reinsurer.
IRDA Cession
As per IRDA Cession means the unit of insurance passed to a reinsurer by the insurer which issued a policy to the original insured, and accordingly, a cession may be the whole or a portion of a single risk, defined policies or defined divisions of business, as agreed in the reinsurance contract.