A clause in a Marine Cargo reinsurance contract which stipulates either that war risks cover is subject to terms and conditions no wider than those of the relevant London Institute War Clauses or that the reinsured shall apply the limitations of the U.K. Waterborne Agreement; and that war risks shall be cancellable at seven days’ notice by either party.

A reinsurance term used to make it clear that the reinsurer is accepting part only of the risk covered by the original insurance and that in the event of a short closing he will not be saddled with the whole risk.
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UK: Reinsurance term indicating that the reinsurer is accepting part only of the original risk and making it clear that in the event of a short closing he will not be prepared to accept the whole of the risk.

These are contracts where in the event of a loss, the amounts payable by a Direct Insurer and the Reinsurer are in proportion which are arranged before the loss. In other words, under proportional Reinsurance there is a common apportionment between the Ceding Company and the Reinsurer of original sum insured, of premiums and of losses according to a pre-determined percentage. Includes Quota Share, First Surplus, Second Surplus and all other sharing forms of reinsurance where under the reinsurer participates pro rata in all losses and in all premiums.

A generic term describing all forms of quota share and surplus reinsurance in which the reinsurer shares a pro rata portion of the losses and premiums of the ceding company.

A reinsurance term providing that the reinsurer will not question payment of any claim for which the insurer is liable under the original insurance.
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See: “Reinsurance, Pay as you may be paid.”

A method of reinsurance rating under which the price is based on how frequently a limits loss might occur over a period of time based on historical or projection indications. Thus, if the indicated or projected loss would occur only once in five years, the price would be set (without regard to expenses and profit margins) to be equal to the limit divided by five and the contract would thus be said to have a “five year payback.” Inverse calculation with Rate on Line.

Reinsurance in which the retention and the cession apply per risk rather than per accident, per event, or on an aggregate basis.

A temporary agreement outlining reinsurance terms and conditions for which coverage has been effected, pending replacement by a formal reinsurance contract. Also known as a binder, confirmation, slip and in some circumstances, cover note. The use of placement slips has been reduced as a result of “contract certainty” and other “full contract at inception” initiatives.

The anticipated maximum property fire loss that could result, given the normal functioning of protective features (firewalls, sprinklers, a responsive fire department, etc.,) as opposed to MFL (Maximum Foreseeable Loss), which would be a similar valuation, but on a worst case basis with respect to the functioning of the protective features. Underwriting decisions would typically be influenced by PML evaluations, and the amount of reinsurance ceded on a risk would normally be predicted on the PML valuation.
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UK: probable maximum loss, see maximum probable loss.

The provision in a reinsurance contract that designates that the losses to which the reinsurance applies are those losses that are covered under those original policies that are issued (as new or renewal policies) during the term of the reinsurance even if the actual date of the original loss happened after the termination of the reinsurance contract. (See also Loss Occurring During.)