Automatic Proportional Reinsurance
Form of coverage in which an insurer automatically reinsures individual risks with its reinsurer. The insurer must transfer (cede) the risks to its reinsurer and its reinsurer must accept this transfer (cession). Losses and premiums are shared; the reinsurer shares them in the same proportion as it does that total policy limits of the risks. The insurer receives from the reinsurer a transfer commission reflecting the so-called equity in the unearned premium reserve of the insurer. This provides for acquisition expenses, premium taxes, and the insurer's cost of servicing the business. Automatic proportional reinsurance may be subdivided into two primary types: quota share and surplus.
Popular Insurance Terms
Same as term Floater: coverage for property which moves from location to location either on a scheduled or unscheduled basis. If the floater covers scheduled property, coverage is listed ...
Feature of pension plans whereby an employee whose service has been interrupted can have that period credited toward retirement. ...
Company formed to insure the risks of its parent corporation. Reasons for forming a captive insurance company include: Instances when insurance cannot be purchased from commercial insurance ...
Waiver of an impairment of an applicant for health insurance by attaching an endorsement to the health insurance policy stating that the policy will pay no benefits in connection with the ...
Type of guaranteed insurance contract in which the term is fixed, the rate is fixed, and the contract owner does not participate in the insurance company's earnings. ...
Joint profit sharing and money purchase plan that is appropriate for businesses that desire the funding flexibility of the profit sharing plan and the higher tax-deductible (25% vs. 15%) ...
Decision by a court of law. ...
actual fire losses divided by the total value of the property exposed to the peril of fire; actual losses resulting from fire divided by the total fire amount of in-force business. ...
Period of time of insurance coverage. If a loss occurs during this time, insurance benefits are paid. If a loss occurs after this time period has expired, no insurance benefits are paid. ...
Have a question or comment?
We're here to help.