Surplus Reinsurance
Automatic reinsurance that requires an insurer to transfer (cede) and the reinsurer to accept the part of every risk that exceeds the insurer's predetermined retention limit. The reinsurer shares in premiums and losses in the same proportion as it shares in the total policy limits of the risk. The surplus method permits the insurer to keep for its own account small policies, and to transfer the amount of risk on large policies above its retention limit. For example, assume an insurer issues a policy for $20,000. The insurer keeps $5000 ('A) and transfers the remaining $15,000 (%) to its reinsurer. This is called a three line surplus because the amount transferred equals three times the retained line of the insurer. The insurer keeps % and transfers % of the premium to the reinsurer. In the event of total loss, the settlements between the insurer and the reinsurer would be effected on the identical 'A-'A basis. The same principal applies if there is a partial loss, in that the reinsurer must reimburse the insurer in the same proportion as the reinsurance premium received.
Popular Insurance Terms
Section of the insurance policy that lists all of the provisions that are applicable to the insurance coverage provided under that section. This section is attached to the policy jacket ...
Professional designation earned after the successful completion of six national examinations given by the insurance institute of America (IIA). Covers such areas of expertise as premium ...
Section of an insurance company that evaluates claims for their subsequent payment. ...
Coverage for the federal government in the event of loss due to dishonest acts of federal government employees. ...
Financial incentives credited to the policy to encourage the policyowner to keep the policy in force. The incentives may be utilized by: (1) applying them to the policy cash value after a ...
New rule entitled "Accounting for Certain Investments in Debt and Equity Securities," which requires most fixed maturity investments to be listed on the INSURANCE COMPANY'S FINANCIAL ...
Same as term Final insurance: premiums paid out of funds borrowed from the cash value of a life insurance policy. ...
Demand without foundation, such as a claim submitted to an insurance company by an insured who caused a loss, or for a loss that never occurred. ...
Coverage that provides for replacement of damaged or destroyed property on a new replacement cost basis without any deduction for depreciation. This is equivalent to replacement cost ...
Have a question or comment?
We're here to help.