A provision in reinsurance agreements which permits each party to net amount due against those payable before making payment ; especially important in the event of insolvency of one party which ceases to remit amounts due to the other.
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Agreement between the reinsured and the reinsurer that debits and credits between them may be set off against each other with payment only of the balance. Premiums due to the reinsurer may be set off against claims payments due to the reinsured. Offsetting becomes important if one of the parties becomes insolvent.

The Office of Financial Research, created by the Dodd-Frank Act, is tasked with supporting the efforts of the FSOC in monitoring systemic risk, collecting and assessing data, performing applied research on these issues and developing tools for risk measurement and monitoring.

Reinsurance for which no credit is given in a ceding company’s annual statement because the reinsurer is not licensed or authorized to transact that particular line of business in the jurisdiction in question. Reinsurance is “non-admitted” when placed in a non-admitted company and therefore may not be treated as an asset against reinsured losses or unearned premium reserves for insurance company accounting and statement purposes.

A clause in a reinsurance treaty to provide that all losses during a short period, usually 72 hours, shall be considered as caused by one disaster or casualty, e.g., a riot, a cyclone, or an earthquake, for the purpose of applying the limit of liability under the reinsurance.

An open cover performs the same tasks as a facultative obligatory treaty from a technical point of view and the two can be considered as synonymous. However, open cover is more of a facility in a certain branch or category than the more general and wider treaty. Thus, an open cover may be confined to petrochemical risks or highly fluctuating stock risks in certain specific commodities such as cotton, or to certain types of cargo risks. Moreover, the Ceding Company has the liberty to make cessions up to a certain agreed amount without the maximum liability being expressed as a number of lines.

Term used by a reinsurer to indicate that he accepts not only the risk as it is presented to him but also any variation that may exist in the original policy. The wording protects the ceding insurer in case an error has arisen in transmission of the facts about the risk.

A term used in both treaty and facultative reinsurance which incorporates by reference all of the terms (as well as amendments, modifications, alteration, and waivers) of the original policy written by the insurer that are not modified in the reinsurance contract, i.e., the location of the property and the rate, among others.

A provision in a reinsurance agreement which incorporates by reference all of the terms (as well as amendments, modifications, alterations and waivers) of the original policy written by the ceding company that are not otherwise addressed in the reinsurance agreement. See also Follow the Fortunes.

The deductions or discounts allowed by a ceding insurer on a policy which is the subject of reinsurance.

The gross premium income received by an insurer in relation to business that is covered by a non-proportional reinsurance treaty. The reinsurance premium is calculated as a percentage of this OGPI.