REINSURANCE: A binder often including more than one reinsurer. At Lloyd’s of London, the slip is carried from underwriter to underwriter for initialing and subscribing to a specific share of the risk.
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A binder often including more than one reinsurer. At Lloyd’s of London, the slip is carried from underwriter to underwriter for initialing and subscribing to a specific share of the risk. See Binder and Cover note.
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REINSURANCE: A document showing details of Reinsurance proposed to be offered which is circulated to the Reinsurers by the brokers/Ceding Company.
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A term used within Lloyd’s of London for a piece of paper identifying the syndicate who has accepted a risk. This paper is submitted by a broker to the Lloyd’s underwriters.
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UK: Document submitted by a Lloyd’s broker to underwriters containing particulars of a risk proposed for insurance. The leading underwriter signifies his acceptance and the broker seeks further acceptances until the risk is fully subscribed. Insurance companies and Lloyd’s syndicates may appear on the same slip. LMP slips have been introduced following LMP 2001. The slip’s standardised layout is to clarify responsibilities and timescales and deliver certainty at point of contact. The slip can incorporate either the General Underwriters’ Agreement or Leading Underwriters’ Clauses. See SLIP EPS; SLIP POLICY; SLIP CREATION GUIDELINES.
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The document used by the broker negotiating placing of the business in the London market. The underwriter signifies his acceptance on the broker’s slip.
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There are two types of underwriting slip: a placing slip and a signing slip. A placing slip is a document created by a broker that contains a summary of the terms of a proposed insurance or reinsurance contract which is then presented by the broker to selected underwriters for their consideration. Underwriters may delete, amend or add terms on a slip as they consider appropriate for the purpose of providing an indication or a quotation. A signing slip is a document that is created by a Lloyd’s broker after a quotation has been accepted for the purpose of processing premiums under the contract that is evidenced by the placing slip. It is a cleaned up version of the final placing slip and shows underwriters’ stamps, signed lines and underwriting references, these details being inserted by each underwriter at the request of the broker. Provided that it shows the underwriters’ stamps, signed lines and underwriting references a placing slip may be used as a signing slip.

The NAIC’s Solvency Modernization Initiative, which began in 2008, is “a critical self-examination of the United States’ insurance solvency regulation framework and includes a review of international developments regarding insurance supervision, banking supervision, and international accounting standards and their potential use in U.S. insurance regulation.” The SMI is focused on five key solvency areas: capital requirements, international accounting, insurance valuation, reinsurance, and group regulatory issues.

A clause that may be included in a non-proportional reinsurance treaty, providing for the indexation of monetary limits (i.e., excess point and/or the upper limit) in line with a specified index of inflation.

An initiative of the E.U. to undertake a “fundamental review of the capital adequacy regime for the European insurance industry.” It aims to establish a revised set of EU-wide capital requirements and risk management standards that will replace the current solvency requirements. The Solvency II Directive is intended to become effective on January 1, 2016.
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UK: Ongoing review of solvency regulation that appears likely to lead to the implementation of a risk-based capital model for solvency purposes in the EC in the next few years.

A clause found in reinsurance contracts providing that, upon the happening of some specified condition or event, such as the insolvency, merger, loss in credit rating or decline in policyholder surplus of one party, the other party may fully terminate the contract earlier than would otherwise be required, had such condition or event not happened. The clause should state which party may initiate the termination, the notice requirements, the triggering conditions or events necessary, the effective date of termination, and the method of terminating existing business (i.e., whether on a cut-off or run-off basis). Termination by the reinsurer of a contract may be detrimental to the liquidation of a ceding company and may be rejected by regulators.

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.
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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.
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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.

An aggregate excess of loss reinsurance that provides protection based on the total claims, from all perils, arising in a class or classes over a period. The Excess Point and the Upper Limit are sometimes expressed as a percentage of cedant’s premium income rather than in monetary terms, e.g. cover might for a claim ratio in excess of 110% up to a limit of 140%. Where this form of reinsurance exists in practice, it is usual for the cedant to be required to retain a proportion of the risk in the reinsured layer called the coinsurance proportion, to avoid any moral hazard. Also, refer “Reinsurance, Aggregate Excess of Loss.”

The settlement of a casualty or workers’ compensation claim involving periodic annuity payments over an extended period of time, rather than in one up-front, lump sum cash payment. There may be certain advantages to a claimant under a structured settlement, including tax treatment of interest under the Internal Revenue Code, that are not present under a lump sum cash settlement. Structured settlements are designed to guard against the early dissipation of settlement proceeds by recipients, who are often minors or those in need of life-time care as a result of their injuries.