A fund into which all premiums for a Lloyd’s syndicate in a given underwriting year are paid. No moneys may be released from the fund other than any profit on closure and ongoing claims and expenses.

In reinsurance, this term is applied to the nouns: insurer, insured, policy and insurance and means respectively: 1) the insurance company that initially originates the business, i.e., the ceding company; 2) the policyholder insured by the primary insurer; 3) the initial policy issued by the primary insurer to the primary insured; 4) the insurance covered under the primary policy issued by the primary insurer to the primary insured (sometimes called “underlying insurance”).
***
Basic, fundamental; an insurance policy that pays first with respect to other outstanding policies.

A clause whereby the Reinsurer agrees that he will be Directly liable to the original assured in the event that the reassured is unable to pay a loss.
***
UK: A clause under which the reinsurer agrees to pay losses directly to the insured. The clause is rarely used.

The term used in some reinsurance markets outside the U.S. to mean the retention of the primary company in a reinsurance agreement.
***
Legal preference.

A priority cession is Reinsurance which is ceded before Ceding to the Company’s normal treaties.

A generic term describing all forms of reinsurance in which the reinsurer shares a pro-rata portion of the losses and premiums of the ceding company. Also called Share and Participating Reinsurance. Pro rata Reinsurance includes Quota Share Reinsurance and Surplus Reinsurance.
***
See: “Reinsurance, Pro-rata.”

An additional commission payable by the Reinsurers to the Ceding Company as a percentage of profits derived from the business. It is a pre-determined percentage of the reinsurer’s net profits after a charge for the reinsurer’s overhead, derived from the subject treaty.Overriding Commission : Commission payable in addition to the original commission particularly under retrocession treaties.Sliding Scale Commission : A ceding commission which varies inversely with the loss ratio under the reinsurance agreement, the scales are not always one to one; for example, as the loss ratio decreases by 1%, the ceding commission might increase only 5%.Super Profit Commission : Overriding profit commission payable in addition to the original profit commission particularly under retrocession and/or reciprocal treaties.Reinsurance, Commission Reinsurance Intermediary : (a) Agent’s commission: A percentage of premium paid to an agent for insurance placement services (b) Brokerage: A percentage or a fee paid to a broker for insurance or reinsurance placement services.

As a pricing factor (along with expenses and losses) the return the reinsurer expects from the degree of net risk taken. As with any investment, the reinsurer expects a larger return from risky than safe investments.

Pro-rata or Risk Sharing Treaty : Which provide for sharing of risk between the Ceding Company and the Reinsurer, on lines similar to those under the facultative method.

Tentative amounts applicable to either rate, premium or commission set at the start of the contract and subject to subsequent adjustment.