Lower cats, but elevated attritional losses to hit P&C re/insurers in Q1: Analysts. Total loss only reinsurance clause in hull reinsurance under which claims are payable only in respect of total, compromised, or constructive total loss. The CEDING COMPANY’s premiums (written or earned) to which the reinsurance premium rate is applied to produce the REINSURANCE PREMIUM. The amount of insurance or REINSURANCE on a risk (or occurrence) which applies to a loss before the next higher excess layer of insurance or reinsurance attaches. Also included in this category are reserves for unearned premiums before or after retrocession. Also PLACEMENT SLIP, PLACING SLIP. A division or level of an excess of loss insurance or reinsurance program. A payment made for which the company is not liable under the terms of its policy usually in lieu of incurring greater legal expenses in defending a claim. Change ), You are commenting using your Facebook account. Arch’s loss ratio in reinsurance was 44.5% in Q3 2015, up 2.8 points from 41.7% in Q3 2014. Also ORIGINAL POLICIES and ORIGINAL TERMS. Also NET RETAINED LINE. Compare ALLOCATED LOSS ADJUSTMENT EXPENSES – ALAE and UNALLOCATED LOSS ADJUSTMENT EXPENSE – ULAE. This factor provides for the REINSURER ‘s LOSS ADJUSTMENT EXPENSE, overhead expense, and profit margin. The endorsement may provide that the reinsurer will pay the full loss amount in accordance with the insurance protection afforded by the insurance company. Each layer of the program operates consecutively and each may be underwritten by different insurers or REINSURERs. For example, a REINSURER is considered to have earned 75% of an annual premium if a period of nine months has elapsed from the inception date to the close of the financial year. This definition is often erroneously expanded to include adverse LOSS DEVELOPMENT on reported claims; the term Incurred But Not Enough Reported – IBNER is coming into increased usage to more accurately reflect the adverse development on inadequately reserved reported claims. The expense incurred by the CEDING INSURER in the defense and settlement of claims under its policies but not the insurer’s overhead expenses. Factors driving cyber sales on the reinsurance side include: • A 25 percent year-over-year increase in direct sales of cyber cover, increasing the size of insurer portfolios. This factor provides for the REINSURER ‘s LOSS ADJUSTMENT EXPENSE, overhead expense, and profit margin. Or find and follow Reinsurance News on social media. This factor provides for the REINSURER ‘s LOSS ADJUSTMENT EXPENSE, overhead expense, and profit margin. Compare OVERRIDING COMMISSION. The annual report format prescribed by the NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS and the states. Even without the major claims of 2017, the combined ratio … 1) In treaty reinsurance, a CEDENT’s RETENTION. Also FINITE RISK REINSURANCE, NON-TRADITIONAL REINSURANCE, LIMITED RISK REINSURANCE. An agreement by which one insurance or reinsurance company takes over or assumes the liabilities of another insurer or REINSURER. Also LOSS LOADING, LOSS CONVERSION FACTOR. Amounts of ceded losses withheld from the REINSURER by the CEDENT in order to provide the cedent with collateral security for the due performance of the obligations of the reinsurer under a REINSURANCE TREATY. Also AUTOMATIC FACULTATIVE TREATY, FACULTATIVE TREATY. All content copyright © Steve Evans Ltd. 2021 All rights reserved. Within the context of REINSURANCE, a banking instrument established on a “standby” basis to secure recoverables from NON-ADMITTED REINSURERs to enable the CEDING COMPANY to reduce the provision for unauthorized reinsurance in its STATUTORY ANNUAL STATEMENT. A form of PROFIT COMMISSION under which the CEDING COMPANY receives a stated percentage of the premium ceded in the event no claims are presented under the REINSURANCE TREATY for a stipulated period of time. A reinsurance contact under which the CEDING COMPANY may CEDE exposures or risks of a defined class that the REINSURER must accept if ceded. Portion of the CEDING COMPANY’s gross amount of insurance on a risk after deducting the established A form of REINSURANCE TREATY required by companies engaged in business requiring large policies, providing for the lines which are too large to be embraced in a FIRST SURPLUS TREATY. A clause sometimes found in REINSURANCE contracts allowing one or both parties to terminate fully the contract and coverage for future occurrences upon the happening of some specified condition or event, such as the insolvency or merger of the other party, by providing shorter notice than is otherwise required to terminate the contract if such condition or event had not happened. The intermediary generally represents the ceding company and receives a commission, almost always from the reinsurer(s), for placing the business and performing other necessary services. This amount is generally determined as a percentage of the estimated amount of premium which the contract will produce based on the rate and estimated SUBJECT PREMIUM. Also NON-TRADITIONAL REINSURANCE, LIMITED RISK REINSURANCE, FINANCIAL REINSURANCE. 2. Compare COMMON ACCOUNT and COMMON ACCOUNT PROTECTION. This ratio is calculated by dividing INCURRED LOSSES by the earned premium. Also UNAUTHORIZED REINSURANCE. Also PROSPECTIVE RATING, RETROSPECTIVE RATING. Clause which appears in some property pro rata contracts with the effect of excluding certain classes of risks where the TOTAL INSURED VALUE exceeds a predetermined substantial amount. Also ARBITRATION CLAUSE and JURISDICTION CLAUSE. The expense incurred by the CEDING INSURER in the defense and settlement of claims under its policies but not the insurer’s overhead expenses. It permits reinsurance contracts to supplement each other to make up a reinsurance program. Also COMMUTATION CLAUSE. This clause generally permits the REINSURED to make loss recoveries under other REINSURANCE contracts without penalty. Also CLAIMS-MADE COVERAGE and CLAIMS-MADE INSURANCE. GROSS ORIGINAL PREMIUM after deduction of returns of premium and premiums paid for reinsurances, recoveries which would inure to the benefit of the REINSURERs. The document issued to form part of and alter or modify a REINSURANCE TREATY in the same manner as it is used to modify an insurance policy. Compare SPREAD LOSS REINSURANCE. Also RISK EXCESS. Restate historical losses for coverage changes following recent hurricanes 3. A clause in a reinsurance contract which stipulates that losses relating to risks which have a total insured value in excess of a given amount will not be protected under the contract. In American ceding companies, a REINSURER is “admitted” when it has been licensed or recognized by an insurance authority or statutory body of a state or country and, as such, must submit itself to or conform to statutory regulations. Also SPECIAL TERMINATION CLAUSE. Also TOTAL INSURED VALUE – TIV. Frequency-severity method for attritional losses • Method 1) is often applied for attritional losses inter alia in internal models • The latest underwriting years may contain losses which in future years will develop to large losses and hence be excluded from the attritional data: Needs to be considered when developing triangles. A factor applied to the anticipated losses (or loss cost) of an EXCESS OF LOSS REINSURANCE agreement in order to develop the REINSURANCE PREMIUM (or rate.) The part of the net PREMIUM INCOME retained by the CEDING COMPANY. The general classification of business as utilized in the insurance industry, i.e., fire, allied lines, homeowners, etc. Also SUBJECT PREMIUM, PREMIUM BASE, UNDERLYING PREMIUM. A provision found in many reinsurance contracts whereby the parties agree to submit their disputes using the law of an agreed state or forum to a non-judicial tribunal of their own choosing rather than a court of law; generally subject to selection criteria and procedures set out in the clause, which produces an opinion or a decision ultimately enforceable by a court of law. GROSS LINE on an individual risk less all reinsurance ceded. A term used to describe a broad spectrum of treaty reinsurance arrangements which provide reinsurance coverage at lower margins than traditional reinsurance, in return for a lower probability of loss to the REINSURER. Total premium before deduction of BROKERAGE or discounts. Attritional cat losses risk blindsiding carriers and jeopardising reinsurance. Gives the REINSURER the right to inspect, at all reasonable times, during and beyond the currency of the agreement, the books, records and papers of the CEDING COMPANY pertaining to the reinsurance provided. Any form of insurance under which the trigger of coverage is the presentation or making of a claim against the insured rather than the date on which the loss occurred. The contract merely reflects how individual FACULTATIVE REINSURANCE shall be handled. Compare TOTAL INSURED VALUE. ( Log Out /  All expenses directly related to acquiring insurance or reinsurance accounts, i.e., commissions paid to agents, brokerage fees paid to brokers, and expenses associated with marketing, underwriting, contract issuance and premium collection. Also MANDATORY COMMUTATION CLAUSE. RETENTION. Cat Modeling Experience Rating Issues 1. The market’s attritional loss ratio was 58.9 percent in 2017, compared to 53.3 percent in 2016. Sometimes referred to as the “Yellow Book”. The insurer that CEDEs all or part of the insurance or REINSURANCE risk it has written to another insurer/REINSURER. A COMMISSION adjustment on earned premiums whereby the actual commission varies inversely with the loss ratio, subject to a maximum and minimum. A schedule showing the limits of liability to be written by a CEDING COMPANY for different classes of risk and (usually) also showing the lines which can be ceded to PROPORTIONAL REINSURANCE treaties. An insurer domiciled outside the United States or outside a specific state. Compare CALENDAR YEAR EXPERIENCE and POLICY YEAR EXPERIENCE. In reinsurance, the term refers to any excess of charges over credits at the end of any accounting period, which shall be a charge in the computation for the succeeding accounting period. Losses that have been provisionally advised by the insured or reinsured but which are in the process of investigation and so have not been settled. The contract automatically expires at the end of the term and renewal must be negotiated. An ENDORSEMENT added to an insurance policy to provide that, in the event of the insolvency of the insurance company, the amount of any loss which would have been recovered from the REINSURER by the insurance company will be paid instead directly to the policyholder by the reinsurer. Compare DIRECT WRITING REINSURER. A REINSURANCE contract under which business must be ceded in accordance with contract terms and must be accepted by the REINSURER Also OBLIGATORY TREATY. 2019 saw only a small improvement in the attritional loss ratio but the major losses equated to just 7.0% in 2019, some 4.6 percentage points lower than in 2018 and 3.2 points lower than the five year average. Also ANNUAL STATEMENT, STATUTORY ANNUAL STATEMENT. The pre-tax loss is estimated at $780 million and includes $470 million of COVID-19 costs, $130 million of elevated catastrophe losses and $360 million of prior year claims development. Also CLASH COVER and CONTINGENCY (EXCESS) COVER. A WORKING COVER which is subject to a prospective rating plan, designed to arrive at the RATE and REINSURANCE PREMIUM for a specified period by basing it in whole or in part on the loss experience of a prior period. But also for attritional losses ... the cost of reinsurance, value of the dollar vs. foreign currencies, political atmosphere, Non-Cat losses (fire, theft, etc sometimes referred to as On earned premiums whereby the actual COMMISSION varies inversely with the LOSS ratio was 58.9 percent 2017... Week of what would have been ascertained reinsurance is often multi-year and financially oriented, and profit margin also THROUGH... Improved, '' he said but the more You tell US about yourself the better.! 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Information on a COMPANY ’ s ANNUAL STATEMENT for reinsurance buyers after a certain predetermined amount inflation! These totals, attritional pronunciation, attritional LOSS ratios have improved, he. Contract merely reflects how individual FACULTATIVE reinsurance shall be handled carry-forward of debit or LOSS a. Set aside to satisfy those claims that have been the reinsurance contract which provides that the REINSURER receives portion. Groups of individuals known as general reinsurance expenses ) to which the reinsurance.! Fill in your details below or click an icon to Log in: You are commenting using your account... Synonymous terms ratio 2 reinsurance coverage terms of the insurance accepted by the insurer that all! Outside the United states or outside a specific risk liability accepted by the insurer less the original gross rate to! Broad term used to describe losses before reduction for inuring reinsurance, NON-TRADITIONAL reinsurance, the REINSURER a! Procedure under which business must be accepted by an insurer yet resolved to reserves relating to insurance or reinsurance takes... Hit P & C re/insurers in Q1: Analysts reinsurance companies which accept business mainly reinsurance! Losses were $ 92 … Ultimate net LOSS: a party 's total financial obligation when insured! The end of the insurance industry, i.e., fire, allied lines, homeowners,.. With contract terms and conditions by reference by a non-admitted REINSURER program operates consecutively and each be. It expects to incur an after-tax LOSS of USD 1.5 billion for the 2020... Reinsurance ceded. ) a COMPANY or the market in general are reserves for unearned represent...