Fire Catastrophe Reinsurance

Definition of "Fire catastrophe reinsurance"

Means used by a direct fire underwriter to protect against accumulation for a fire account, as well as against extremely large fire account liability. For example, heavy liabilities under individual risks can be analyzed by the initial fire underwriter to determine the number of separate fire risks involved. The reinsurance method applied to the risks is a quota share or surplus share treaty with the use of a facultative reinsurance cover if necessary. Under this method, the re-insurer assumes the liability of a proportionate share of the risks in exchange for a proportionate share of the premiums. An extremely large number of losses under individual risks caused by a single event, commonly referred to as a conflagration hazard, arises when different risks may be affected by one fire. An example would be widespread damage to many adjacent private houses. While the loss for each retained individual risk would be small, the aggregate would be so large that it would affect the stability of the fire insurance company. Catastrophe reinsurance would protect any surplus reinsurance and excess of loss reinsurance up to a stated amount.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Same as term Debit Insurance: life insurance on which a premium is collected on a weekly, bi-weekly, or monthly basis, usually at the home of a policyholder. The face value of the policy is ...

Eligible rollover distribution that is paid directly from an employee's employee benefit insurance plan to the employee's individual retirement account (IRA) or to another plan maintained ...

Membership organization, based in Chicago, Illinois, consisting principally of property and casualty insurance companies. Its objectives are to influence the public and the legislators on ...

Amount paid to an insurer. Determination of the actual cost (not the price paid) of a life insurance policy has been widely discussed for many years in life insurance and consumer circles. ...

Proof of death of the insured form filed with the insurance company establishing the rights of the beneficiary to the death benefit. ...

Mortality table whose statistics have been adjusted to show expected mortality experience. ...

Decision by a court of law. ...

Coverage for the contents of a renter's home or apartment and for liability. Tenant policies are similar to homeowners insurance, except that they do not cover the structure. They do, ...

Index that traces the construction of new single-family homes, townhouses, and multifamily apartment buildings. These statistics are published monthly by the United States Department of ...

Popular Insurance Questions