Welcome on PARIS RE
Glossary
A-C
D-F
G-I
J-L
M-O
P-R
S-U
W-Z
SCHEDULE
A document attached to and forming part of a treaty wording, listing all variable factors such as LIMIT, RETENTION, COMMISSIONS, rates of premium, commencement and termination dates.
SCHEDULE F [USA]
The ANNUAL STATEMENT schedule which provides information on a company's outstanding reinsurance recoverables.
SECOND EVENT RETENTION [USA]
An approach to establishing the retention level in EXCESS OF LOSS REINSURANCE (usually CATASTROPHE REINSURANCE) under which the amount of the RETENTION is reduced for the second (or subsequent) loss occurrence. The theory is that the CEDING COMPANY can afford to retain a given retention level on one loss, but for additional loss or losses needs protection over the lower RETENTION. Also DROP-DOWN.
SECOND SURPLUS TREATY [UK]
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. It follows on the plan of first surplus but provides to the REINSURERs a diminished spread of risks.
SELECTION OF RISK [UK]
In REINSURANCE this phase usually refers to the practice of ceding poorer business to the REINSURER while retaining the better business.
SELF RATING
A type of EXPERIENCE RATING used in arriving at the reinsurance rate and premium for a specified period, based in whole or in part, on the loss experience of a prior period. Also PROSPECTIVE RATING, RETROSPECTIVE RATING. Compare SPREAD LOSS REINSURANCE.
SELF-REINSURANCE [UK]
Creation of a fund by an insurer to absorb long beyond the insurer's normal RETENTION.
SEMI-AUTOMATIC TREATY [USA]
A reinsurance contact under which the CEDING COMPANY may CEDE exposures or risks of a defined class that the REINSURER must accept if ceded. Also FACULTATIVE OBLIGATORY TREATY and SEMI-OBLIGATORY TREATY.
SEMI-OBLIGATORY TREATY [USA]
A reinsurance contact under which the CEDING COMPANY may CEDE exposures or risks of a defined class that the REINSURER must accept if ceded. Also FACULTATIVE OBLIGATORY TREATY and SEMI-AUTOMATIC TREATY.
SETOFF [UK]
The reduction of the amount owed by one party to a second party by crediting the first party with amounts owed it by the second party. The existence and scope of offset or set off rights may be determined by contract language as well as statutory, regulatory and common law. Also OFFSET.
SEVERE INFLATION CLAUSE [UK]
A variation of the STABILITY CLAUSE. It only allows the indexation to come into effect after a certain predetermined amount of inflation has taken place during the period considered.
SHARE
An underwriter's interest in a risk.
SLIDING SCALE COMMISSION
A COMMISSION adjustment on earned premiums whereby the actual commission varies inversely with the loss ratio, subject to a maximum and minimum.
SLIP
A temporary record of reinsurance arrangements for which coverage has been effected, pending replacement by a formal reinsurance contract. Also PLACEMENT SLIP, PLACING SLIP. Compare BINDER.
SPECIAL ACCEPTANCE
The specific agreement by the REINSURER to include under a reinsurance contract a risk not included within the terms of the contract.
SPECIAL TERMINATION CLAUSE
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. Also SUDDEN DEATH CLAUSE.
SPECIFIC REINSURANCE [UK]
Reinsurance of individual risks by offer and acceptance wherein the REINSURER retains the "faculty" to accept or reject each risk offered by the CEDING COMPANY. Also FACULTATIVE REINSURANCE.
SPREAD LOSS REINSURANCE [UK]
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.
STABILITY CLAUSE [UK]
A clause used in an EXCESS OF LOSS REINSURANCE treaty contract and designed to maintain the monetary value of the RETENTION or/and the indemnity of the treaty as at an agreed base date by using a specified index figure. Also INDEX CLAUSE. Compare SEVERE INFLATION CLAUSE.
STATUTORY ANNUAL STATEMENT [USA]
The annual report format prescribed by the NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS and the states. Also ANNUAL STATEMENT, CONVENTION BLANK. Sometimes referred to as the "Yellow Book".
STOP LOSS REINSURANCE
A form of EXCESS OF LOSS REINSURANCE which indemnifies the CEDENT in respect of an annual loss ratio on a particular portfolio in excess of a stipulated level. Compare AGGREGATE EXCESS OF LOSS REINSURANCE.
SUBJECT PREMIUM
The CEDING COMPANY's premiums (written or earned) to which the reinsurance premium rate is applied to produce the REINSURANCE PREMIUM. Sometimes also called GNEPI or GNWPI (Gross net earned, or written, PREMIUM INCOME) or SMPI (Subject Matter Premium Income). Also BASE PREMIUM, PREMIUM BASE, UNDERLYING PREMIUM.
SUDDEN DEATH CLAUSE
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. Also SPECIAL TERMINATION CLAUSE.
SURPLUS [UK]
Portion of the CEDING COMPANY's gross amount of insurance on a risk after deducting the established
RETENTION.
SURPLUS LINE [UK]
Amount of REINSURANCE required after having declared the maximum LINE on a treaty or cover.
SURPLUS REINSURANCE
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. As consideration, the REINSURER receives that portion of the total premium which the surplus bears to the total liability. Also SURPLUS SHARE REINSURANCE.
SURPLUS RELIEF [UK]
The use of ADMITTED REINSURANCE on a portfolio basis to improve the CEDING COMPANY's solvency ratios (e.g., premium to surplus ratio) generally by reducing premium volume and thereby avoiding the necessity to increase capital.
SURPLUS SHARE REINSURANCE [USA]
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. As consideration, the REINSURER receives that portion of the total premium which the surplus bears to the total liability. Also SURPLUS REINSURANCE.
SWING PLAN
An approach to rating working excess of loss for casualty business when past experience is unavailable and flat rating would be too high to make it attractive. Under this plan, the REINSURER takes a three-year experience block of time, sets a minimum and maximum rate, and bases the developed rate on loaded losses.
TABLE OF LIMITS [UK]
A list attached to a REINSURANCE TREATY or FACULTATIVE CERTIFICATE, detailing the maximum limit of liability of an insurer in any one category of risk.
TARGET RISK [USA]
1) Certain high value risks e.g., bridges, tunnels and fine arts collections which are excluded from reinsurance contracts and release the REINSURER of any potential high accumulation of liability on any one risk from various sources, 2) a large hazardous risk on which insurance is difficult to place, or 3) a large attractive risk which is considered a target for competing insurance companies and producers. Compare TOTAL INSURED VALUE.
TECHNICAL RESERVES
General term applied to reserves relating to insurance or reinsurance activity. Technical reserves chiefly comprise CLAIMS RESERVES, reserves for claims expenses, IBNR reserves, the reserve for liquidity risk, equalization reserves and, where applicable, FUTURE POLICY BENEFITS AND OTHER POLICY LIABILITIES. Also included in this category are reserves for unearned premiums before or after retrocession.
TERM CONTRACT [USA]
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. Compare CONTINUOUS CONTRACT.
TICKET REINSURANCE [UK]
A notation in the form of a separate piece of paper attached to the daily report setting forth the details of REINSURANCE that have been affected.
TOTAL INSURABLE VALUE - TIV [USA]
A clause in a reinsurance contract which stipulates that losses relating to risks which have a total insurable value in excess of a given amount will not be protected under the contract. In many contracts this clause replaced the TARGET RISK CLAUSE. Also TOTAL INSURED VALUE - TIV.
TOTAL INSURED VALUE - TIV [USA]
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 many contracts this clause replaced the TARGET RISK CLAUSE. Also TOTAL INSURABLE VALUE - TIV.
TOTAL INSURED VALUE EXCLUSION CLAUSE - TIV EXCLUSION CLAUSE [UK]
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.
TOTAL LOSS ONLY REINSURANCE CLAUSE - TLO R/I CLAUSE
Total loss only reinsurance clause in hull reinsurance under which claims are payable only in respect of total, compromised, or constructive total loss.
ULTIMATE NET LOSS
The term applied to the REINSURER's loss under a reinsurance contract, generally the gross loss less any recoveries from other insurance which inure to the benefit of the contract in question.
UMBRELLA COVER TREATY [UK]
Type of EXCESS OF LOSS REINSURANCE treaty protecting a CEDING COMPANY against accumulation of the NET LOSS from a single event or series of events affecting a number of classes of business after the operation of all other reinsurances.
UNAUTHORIZED REINSURANCE
REINSURANCE for which no credit is given in the CEDING COMPANY's ANNUAL STATEMENT because the REINSURER is not licensed or authorized to transact business in the jurisdiction in question. Also NON-ADMITTED REINSURANCE.
UNAUTHORIZED REINSURER
A REINSURER is "non-admitted" when it has not been licensed or recognized by an insurance authority or statutory body of a state or country and, as such, does not have to submit itself to or conform with statutory regulations. Usually no credit is given in the CEDING COMPANY's ANNUAL STATEMENT for reinsurance provided by a non-admitted reinsurer. Also NON-ADMITTED REINSURER.
UNDERLYING
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.
UNDERLYING PREMIUM
The CEDING COMPANY's premiums (written or earned) to which the reinsurance premium rate is applied to produce the REINSURANCE PREMIUM. Sometimes also called GNEPI or GNWPI (Gross net earned, or written, PREMIUM INCOME) or SMPI (Subject Matter Premium Income). Also BASE PREMIUM, SUBJECT PREMIUM, PREMIUM BASE.
UNDERWRITING YEAR EXPERIENCE [USA]
Reinsurance experience calculated with all applicable premiums and losses assigned to the particular period (usually a 12-month period) in which each reinsured policy becomes effective. Also POLICY YEAR EXPERIENCE. Compare ACCIDENT YEAR EXPERIENCE and CALENDAR YEAR EXPERIENCE.
UNEARNED REINSURANCE PREMIUM
That part of the REINSURANCE PREMIUM applicable to the unexpired portion of the policies reinsured.
UNLIMITED COVER [UK]
Reinsurance protection, arranged without a finite monetary limit.
A-C
D-F
G-I
J-L
M-O
P-R
S-U
W-Z
Top
