A form of reinsurance contract written for a stipulated term (usually one year). The contract automatically expires at the end of the term and renewal must be negotiated. See also Continuous Contract.

A type of financial Reinsurance, which had widespread use in the London Market and Lloyd’s, whereby an insurer pays a single premium in return for a fixed schedule of future payments matched to the estimated dates and amounts of the insurer’s claims outgo. The purpose of such contracts was to achieve the effect of discounting in arriving at the reserves for outstanding claims. Since Lloyd’s changed its rules so that the credit allowed for tie and distance policies in a syndicate’s accounts was limited to the present value, such policies have become less popular.

The total values for insured perils and coverages for a particular risk, whether or not insurance limits have been purchased to that amount.
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US: A property insurance term referring to the sum of the full value of the insured’s covered property, business income values, and any other covered property interests.

An exclusion that prevents a reinsurer’s over-lining on a single large risk (usually excess of $250 million) caused by a potential accumulation of property limits from two or more ceding companies. The customary exception to the exclusion applies to risks insured 100 percent by one insurer or specifically listed classes (such as apartments, offices, hotels, hospitals, etc.).

A term used in Marine Hull Insurance and reinsurance limiting cover to payment for a total loss. A clause is likely to define whether the cover is to include arranged or compromised total losses and whether sue and labour charges and salvage charges are recoverable.
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UK: Marine insurances, particularly hull facultative reinsurances, are sometimes arranged on the basis that the (re)insurer is liable only in the event of a total loss. Cover may or may not include arranged or compromised total losses, sue and labour charges, and salvage charges.

The sum due from a reinsurer to an original insurer or vice versa, under an account of premium and claims payment relating to a reinsurance treaty.

An agreement made between the Ceding Company and the Reinsurer under which the former agrees to cede obligatorily a portion of risk up to agreed limit to the Reinsurer, who in turn agrees to accept such cessions.
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UK: Under treaty arrangements the cedant agrees to offer, and the reinsurer agrees to accept, all risks of a defined class. This enables the cedant to grant immediate cover for ‘large’ risks without first seeking the reinsurer’s consent. See QUOTA SHARE; SURPLUS LINE; EXCESS OF LOSS, and compare with FACULTATIVE REINSURANCE.
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UK: a type of reinsurance under which the reinsurer agrees in advance to accept a specified proportion of all risks or losses falling within a category defined in the contract (contrast facultative reinsurance).
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An agreement in which the ceding company agrees in advance to cede certain classes of business or types of insurance to a reinsurance company. The reinsurer agrees to accept all risks or losses that fall within the terms of the agreement. A treaty contains common contract terms along with a specific risk definition, data on limit and retention, and provisions for premium and duration.