Insurance and reinsurance business carried out on a face-to-face basis in the city of London.

Outwards excess of loss reinsurance in the London Market.

A term used to describe certain type of third party liability exposures (e.g., malpractice, products, error and omissions) where the incidence of loss and the determination of damage are frequently subject to delays which extend beyond the term the insurance or reinsurance was in force. An example would be contamination of a food product which occurs when the material is packed but which is not discovered until the product is consumed months or years later.

All expenditure of an insurer associated with its adjustment, recording and settlement of claims, other than claim payment itself. The term encompasses both allocated loss adjustment expenses (ALAE) which are loss adjustment expenses identified by a claim file in the insurer’s records, such as attorney’s fees and unallocated loss adjustment expenses (ULAE) which are operating expenses not identified by claim file, but functionally associated with settling losses, such as salaries of claims department.
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The total expenses associated with adjusting a claim. The actual amount of the loss is not included in this amount.

A factor applied to the anticipated projected losses (or loss cost) for an excess of loss reinsurance agreement in order to develop the reinsurance premium (or rate). This factor provides for the reinsurer’s loss adjustment expense, overhead expense, and profit margin as well as the perceived “riskiness” of the loss projection, i.e. the degree to which the loss projection lacks confidence or credibility. See also Rating.

A mechanism contained in a proportional or an excess of loss agreement that requires the ceding insurer to be responsible for a certain amount of ultimate net loss above the company’s designated retention and below the designated reinsurance limit, and which would otherwise be reimbursed under the reinsurance agreement. A loss corridor is usually expressed as a loss ratio percentage of the reinsurer’s earned premium, or a combined ratio if the reinsurance agreement provides for a ceding commission to the company. Loss corridors are employed to mitigate the volatility or variability of reinsurance loss projections and pricing risk and to enhance the alignment of interests of the ceding insurer and the reinsurer.

Another name for claims reserve. The expression is also often used in association with the reserve deposited by a reinsurer with the cedant to cover in part outstanding claims (exact terms would indicate which party received the investment income on associated assets).

An amount of loss which exceeds the original policy limits, but is otherwise covered under the policy, for which the insurer is potentially responsible by reason of its action or omissions, including failure to settle within the policy limits, in defending the insured under the policy. Typically an Excess Policy Limits loss is awarded by a court after an insured brings suit against its insurance carrier.

A factor applied to the pure loss cost to produce a reinsurance rate of premium.