ARe flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Cedent
- The insurer that transfers risk to a reinsurer under a reinsurance agreement; also called the ceding company.
- Retention
- The portion of risk a ceding company keeps for its own account before reinsurance responds to losses above that level.
- Utmost good faith
- The principle requiring both parties in a reinsurance contract to disclose all material facts affecting the risk.
- Reinsurance broker
- An intermediary who places reinsurance for cedents, negotiates terms, and transmits risk information between cedent and reinsurer.
- Capacity
- The maximum amount of risk a reinsurer is willing and able to accept, constrained by capital and appetite.
- Quota share treaty
- A proportional treaty in which the reinsurer assumes a fixed percentage of all premiums and losses within the covered portfolio.
- Surplus share treaty
- A proportional treaty where the reinsurer takes a share of each risk above the cedent's retention line, varying by policy size.
- Excess of loss treaty
- A non-proportional treaty in which the reinsurer pays losses above an attachment point up to a stated limit.
- Facultative reinsurance
- Reinsurance arranged for a single risk or policy, negotiated individually rather than automatically under a treaty.
- Stop loss treaty
- A non-proportional treaty covering aggregate losses above a stated percentage or amount, protecting the cedent's overall result.
- Reinstatement provision
- A clause allowing the cedent to restore exhausted reinsurance limits, typically by paying an additional pro rata premium.
- Retrocession
- Reinsurance purchased by a reinsurer to transfer part of its assumed risk to another reinsurer.
- Treaty slip
- The document summarizing the agreed terms of a reinsurance treaty, which the full wording must follow.
- Ceding commission
- An allowance paid by the reinsurer to the cedent to cover acquisition and administrative expenses on ceded business.
- Subject premium
- The premium base on which a treaty rate is applied, usually the cedent's gross or net written premium for covered business.
- Deposit premium
- An initial premium paid at treaty inception, later adjusted to the actual premium earned during the period.
- Bordereau
- A detailed schedule of ceded premiums, losses, or risks submitted by the cedent to the reinsurer for accounting.
- Arbitration clause
- A treaty provision specifying that disputes are resolved by arbitrators rather than courts, including seat and rules.
- Governing law
- The legal jurisdiction and body of law that interprets and enforces the reinsurance contract.
- Claims cooperation clause
- A treaty provision requiring the cedent to notify and consult the reinsurer on significant claims and defend losses diligently.
- Catastrophe accumulation
- The total potential loss a reinsurer faces from a single event across multiple treaties and lines of business.
- Credit risk
- The risk that a reinsurer fails to pay claims; cedents mitigate it with collateral, trusts, or letters of credit.
- Solvency regulation
- Rules requiring insurers and reinsurers to hold capital sufficient to meet obligations, often shaped by risk-based capital standards.
- Underwriting cycle
- The recurring pattern of soft markets with abundant capacity and low rates alternating with hard markets of scarce capacity.
- Data reconciliation
- The process of matching reported bordereaux and ceded figures to the cedent's financial records to ensure accuracy.
- Late notice
- A claims situation where the cedent reports a loss to the reinsurer after the period required by the treaty.
- Business continuity plan
- A documented strategy enabling an insurer to maintain critical operations during disruptions such as system failures or disasters.
- Collateral requirement
- A demand that a reinsurer post assets or guarantees to secure its obligations, often imposed by regulators or cedents.
- Aggregate excess of loss
- A non-proportional treaty covering the cedent's cumulative losses over a period once they exceed a stated attachment.
- Per-risk excess of loss
- A non-proportional treaty responding to losses on individual risks above a specified attachment point per risk.
- Reinsurance clause
- The treaty provision defining what business is ceded and the scope of the reinsurer's obligation.
- Exclusion
- A treaty provision specifying perils, classes, or circumstances for which the reinsurer provides no coverage.