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
Rules stating that every administrator of a qualified pension plan, profit sharing plan, section 401 (K) plan salary reduction plan), section 403(b) plan, and stock bonus plan must provide ...
Act by a person who is terminally ill of cashing in a life insurance policy to pay for the necessary associated illness, medical expenses, and final wishes. This terminally ill person ...
Excess coverage over the first layer of medical insurance to provide for catastrophic medical payments. The first layer may be either group or individual medical insurance, or an individual ...
Found under the "Exceptions and Exclusions Section for All Medical Benefits" in many health insurance policies that exclude: complications arising from elective, nontherapeutic voluntary ...
Determination of: property covered, property excluded; perils covered, perils excluded; location covered, location excluded; time period the policy is in force;persons covered, persons ...
Expectation of illness or injury. The probability of such occurrence is shown by a morbidity table, which is important in determining the premiums for health insurance policies. ...
Form of state rating legislation that allows each property/liability insurer to choose between using rates set by a bureau or its own rates. Individual states regulate insurers and approve ...
Retirement arrangement in which contributions are divided between allocated (insured) and unallocated funding instruments (an uninsured plan). It seeks to combine the advantages of ...
Legislation mandating that factors taken into account in the calculation of premium rates for automobile insurance include the insured's driving record, annual miles driven, and years of ...
Have a question or comment?
We're here to help.