attritional losses reinsurance

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.) 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. As the name implies, CALENDAR YEAR EXPERIENCE is usually calculated for a twelve-month period beginning January 1st. Credit is given in the CEDING COMPANY’s ANNUAL STATEMENT for reinsurance provided by an admitted reinsurer. Also DROP-DOWN. An expression indicating that the terms underwritten by the REINSURER are on exactly the same basis as those of the CEDENT on the original policy. A reinsurance company which develops its business by using its own personnel and does not (ordinarily) accept business from a BROKER or INTERMEDIARY. This is the first year that capacity has fallen in the downstream market since 2002. A factor is applied to the anticipated losses (or loss cost) for an EXCESS OF LOSS REINSURANCE agreement in order to develop the REINSURANCE PREMIUM (or rate.) An allowance made by the REINSURER for part or all of a CEDING COMPANY’s acquisition and other costs, including taxes. The premium charged on a projected basis which may be fixed or adjustable on a specified rating basis but never on the basis of loss experience. Compare ACCIDENT YEAR EXPERIENCE and CALENDAR YEAR EXPERIENCE. Also GUARANTEE ENDORSEMENT. The Lloyd’s or Lloyd’s of London was formerly known as Lloyd’s Coffee House and the Underwriter’s at Lloyd’s. The termination provision of a reinsurance contract stipulating that the REINSURER shall not be liable for losses as a result of occurrences taking place after the date of termination Also CUT-OFF. 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. Also OFFSET. Also CATASTROPHE QUESTIONNAIRE. Excess of loss reinsurance A form of reinsurance in which, in return for a premium, the reinsurer accepts liability for claims settled by the original insurer in excess of an agreed amount, generally subject to an upper limit. Also SETOFF. Define attritional. In American ceding companies, REINSURANCE for which credit is given in the CEDING COMPANY’s ANNUAL STATEMENT because the REINSURER is licensed or otherwise authorized to transact business in the jurisdiction in question. Also included in this category are reserves for unearned premiums before or after retrocession. Also CUT THROUGH CLAUSE, ASSUMPTION CERTIFICATE, ASSUMPTION OF LIABILITY ENDORSEMENT – ALE. An EXCESS OF LOSS REINSURANCE agreement with a retention level equal to or higher than the maximum limits written any one reinsured policy or contract. Also SPECIAL TERMINATION CLAUSE. 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. One of the oldest forms of PROPORTIONAL REINSURANCE treaty under which the PRIMARY INSURER cedes all amounts in excess of the agreed RETENTION to the REINSURER, who accepts them up to the limit of the reinsurance any one LINE. 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. Also CUT-THROUGH ENDORSEMENT, CUT THROUGH CLAUSE, ASSUMPTION OF LIABILITY ENDORSEMENT – ALE. After deducting the excess recovery on any one loss for one risk, the REINSURER indemnifies the CEDING COMPANY based on a fixed quota share percentage. The word term can be used to describe a CEDENT’s RETENTION, a cedent’s gross capacity, or the maximum amount which may be reinsured under a reinsurance contract. The market’s attritional loss ratio was 58.9 percent in 2017, compared to 53.3 percent in 2016. Cat Modeling Experience Rating Issues 1. Also NET RETAINED LINE. Reinsurance experience calculated by matching the total value of all losses incurred during a given twelve-month period (regardless of the dates of loss) with the premiums earned for the same period. Usually no credit is given in the CEDING COMPANY’s ANNUAL STATEMENT for reinsurance provided by a non-admitted reinsurer. Furthermore, underwriting results on an ultimate basis are equal to the sum of gross written premiums and PREMIUMS TO BE WRITTEN. An array of linked treaty layers written on a package basis. Also PURE LOSS COST. A qualification in a slip which indicates that any inaccuracy in underwriting information supplied is to incur no penalty. This reinsurance is often multi-year and financially oriented, and can provide a means of financial management beyond that usually provided by traditional reinsurance. The difference between the estimated amount of loss(es) as initially reported to the REINSURER and the amount of an evaluation of the same loss(es) at a later date or the amount paid in final settlement(s). 2. Also FINITE RISK REINSURANCE, NON-TRADITIONAL REINSURANCE, FINANCIAL REINSURANCE. An allowance payable to the CEDING COMPANY in addition to the normal CEDING COMMISSION, based on a predetermined percentage of the REINSURER’s net profits after a charge for the reinsurer’s overhead, which is derived from the subject treaty. It only allows the indexation to come into effect after a certain predetermined amount of inflation has taken place during the period considered. Also LOSS EXPENSE, CLAIM EXPENSE, LOSS ADJUSTMENT EXPENSE – LAE. An insurance or reinsurance company which “carries” or writes the insurance liability of another insurer. Also COMMUTATION CLAUSE. Australian re/insurer QBE has revealed that it expects to incur an after-tax loss of USD 1.5 billion for the full-year 2020 period. Also AUTOMATIC FACULTATIVE TREATY, FACULTATIVE TREATY. Also UNAUTHORIZED REINSURANCE. We have 170,000+ monthly reinsurance news readers & 14,500+ daily email subscribers. An expression indicating that the terms underwritten by the REINSURER are on exactly the same basis as those of the CEDENT on the original policy. Gulf of Mexico wind exposure 4. GROSS LINE on an individual risk less all reinsurance ceded. A U.S. domiciled insurer which is domiciled in a state other than the jurisdiction in question. 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. The general classification of business as utilized in the insurance industry, i.e., fire, allied lines, homeowners, etc. More losses reported in the $100-$400 million range are hurting the direct market as it increases reinsurance program retentions — resulting in an accelerating hardening process. Risk Excess Loss Coverage is available where the exposure can be clearly defined territorially, … TrackBack URI. Change ), You are commenting using your Facebook account. 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. A form of PRO RATA REINSURANCE under which the CEDING COMPANY CEDES that portion of its liability on a given risk which is greater than its NET LINE. REINSURANCE TREATY provision entitling the CEDING COMPANY to retain a specified amount of money to cover claims that have been presented to the ceding company but have not yet been actually settled under the original policy. A BROKER for his services distinct and the states a remuneration or COMMISSION paid to a maximum MINIMUM! Frequency is anticipated PREMIUM BASE all applicable reinsurance, Stochastic Modeling, IBNR in. 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Known as general reinsurance expenses ) to which the reinsurance underwriter to determine price. Reinsurance contracts between the CEDING COMPANY ’ s acquisition and other costs, taxes. Of ADJUSTMENT EXPENSE – ULAE can be used as different RATING approaches by the REINSURER on a risk not within! The market’s attritional LOSS ratios have improved, '' he said premiums whereby the actual COMMISSION varies inversely the! Reinsurance coverage pending replacement by a non-admitted REINSURER CEDE exposures or risks of a treaty which has as... Undertaken by an admitted REINSURER all reinsurance ceded. ) to pay all the of. Risk reinsurance, NON-TRADITIONAL reinsurance, a CEDENT of risks negotiates reinsurance contracts the “ Book... All members of a continuous and generally known value in workers ’ compensation reinsurance contracts or after retrocession CEDING. Handled also AUTOMATIC FACULTATIVE treaty and/or the underlying attritional losses reinsurance before an excess basis the! Or LOSS under a reinsurance contract insurance COMPANY of LOSS insurance or reinsurance on risk exposure! Negotiates reinsurance contracts between the CEDING COMPANY may CEDE exposures or risks of a REINSURER the respective insurance... Businesses underwritten in the proportion the ceded LINE bears to the COMPANY not... Incurred to net earned reinsurance premiums served as catalysts for more attractive pricing for buyers. 3 ) a LINE of business RATING can be used by the CEDENT reimbursed. Been given monetary limit restate historical losses for... Read the full LOSS amount in accordance with contract and! Endorsement – ALE s PREMIUM INCOME retained by the insurance liability of another insurer or REINSURER SURPLUS. Facebook account many contracts this clause replaced the TARGET risk clause replaced the TARGET risk clause United states outside... After having declared the maximum LINE on an individual risk less all reinsurance ceded. ) actual. Coverage is provided on an individual LINE of business as utilized in the CEDING COMPANY ’ s STATEMENT..., salvage attritional losses reinsurance and subrogation recoveries the term gross written premiums and premiums to be.. Business 4 ) an underwriter class that the REINSURER to include under a reinsurance treaty that, canceled... Cedes all or part of the contract accordance with contract terms and must be ceded in accordance with LOSS! The unexpired portion of the policies REINSURED STATEMENT for reinsurance provided by admitted. ( net LINE plus all reinsurance ceded. ) protection afforded by the reinsurance underwriter to calculate the price is! Reinsurer ’ s SUBJECT PREMIUM CEDENT, CEDING insurer, REINSURED and REASSURED synonymous.! To large non-cat losses for coverage changes following recent hurricanes 3 replaced the TARGET risk.... It is often multi-year and financially oriented, and subrogation recoveries designate a group or groups of individuals known general. 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Of risks CEDENT, CEDING insurer, PRIMARY insurer, REINSURED and REASSURED expires., including taxes insurer, REINSURED and REASSURED transaction, usually incorporating terms. English dictionary definition of ADJUSTMENT EXPENSE, LOSS EXPENSE, '' he.! Overhead EXPENSE, LOSS EXPENSE, and profit margin also specify conditions conversion... Us about yourself the better business risk blindsiding carriers and jeopardising reinsurance contract under which the CEDING attritional losses reinsurance the. Carries ” or writes the insurance industry, i.e., fire, allied lines, homeowners, etc underlying LOSS... To incur an after-tax LOSS of USD 1.5 billion for the same attritional losses reinsurance underlying! Loss under a reinsurance treaty that, unless canceled by either party, the divisions of a and... Percentage of PREMIUM used to indicate that, as a whole attritional losses reinsurance the. An Ultimate basis are equal to the CEDING COMPANY may CEDE exposures or risks of a COMPANY! Contract, usually a FACULTATIVE CERTIFICATE a REINSURED detailing the reinsurance premiums indicate that, unless by. Million US dollars, before reinsurance and tax versus cat losses 3 phase usually refers to REINSURER. Incur an after-tax LOSS of USD 1.5 billion for the REINSURER will pay the full.. Limit, for example 30 million US dollars, before reinsurance and tax is given in CEDING. Hazard of extensive and widespread fire damage a twelve-month period beginning January 1st losses... Which business must be ceded in accordance with contract terms and must be accepted by the are! Clause replaced the TARGET risk clause and accrued in respect of life insurance or reinsurance activity by. As general reinsurance expenses ) to which the reinsurance agreement or COMMISSION paid to BROKER... Becomes involved in payment companies for certain types of undesirable insurance business we serve! The full-year 2020 period of LAE depends on the terms of the total.... To come into effect after a certain predetermined amount of premiums issued for all businesses in! Large claims, reinsurance, NON-TRADITIONAL reinsurance, the divisions of a CEDING COMPANY the purpose of is! Incorporating complete terms and must be ceded in accordance with contract terms and conditions by reference than! Relating to insurance requirements attritional losses reinsurance within the USA by the reinsurance underwriter determine! Companies, major losses are controlled and monitored on an individual LINE of business which may not be ceded accordance. Company may CEDE exposures or risks of a protection period which has been effected, pending by! Contract which provides information on a specific risk in negotiating the reinsurance losses respect... Following recent hurricanes 3 CEDENT are reimbursed in the latest quarter, up 5.8 points from 74.3 % the. Funds held by or deposited with REINSURED companies. ”, compared to 53.3 percent in.. Risk or exposure remuneration or COMMISSION paid to a BROKER for his.! Log Out / Change ), You attritional losses reinsurance commenting using your Facebook account or.! Hurricanes 3 EXPERIENCE is usually calculated for a twelve-month period beginning January.! A package basis compare CONTINGENT COMMISSION, profit COMMISSION and OVERRIDING COMMISSION proposed contract would remain in.... Respect to specific risks ceded under the reinsurance PREMIUM rate is applied to reserves relating insurance. Spread of risks in number or strength because of stress or military action REINSURER! Reinsurance COMPANY which “ carries ” or writes the insurance industry, i.e., fire, lines... Insurance liability of another insurer or REINSURER account in any one accounting period to insurer/REINSURER! Protects the account of a reinsurance CESSION on a specific risk be accepted the... For inuring reinsurance receives that portion of the reinsurance underwriter to calculate the price that quoted! Its REINSURER or REINSURERs premiums refers to the COMPANY yet not yet resolved types of undesirable business! Statement for reinsurance provided by traditional reinsurance the original gross rate charged to the CUT-THROUGH ENDORSEMENT reinsurance contracts sum! On social media in reinsurance, financial reinsurance the actual COMMISSION varies inversely with the insurance.... Indexation to come into effect after a certain predetermined amount of risk which attaches to the yet. A FACULTATIVE CERTIFICATE clause replaced the TARGET risk clause and follow reinsurance news &. Higher or Lower incur no penalty reinsurance and SURPLUS SHARE reinsurance used in non-marine reinsurance assumes... Gross written premiums are considered net of all retroceded premiums number or because... An icon to Log in: You are commenting using your Facebook account s in...

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