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An expression used in treaties and certificates to mean in the aggregate, without exception.
Financial ratio and performance criteria designed by the National Association of Insurance Commissioners to identify insurance companies which may need closer surveillance by state insurance departments.
That portion of written premium equal to the expired portion of the time for which the insurance or reinsurance was in effect. Technically, the following definitions are appropriate:
A clause in a reinsurance treaty (requiring some affirmative act by the reinsured to activate the reinsurance protection) which stipulates that, in the event of inadvertent error or omission, the reinsured shall not be prejudiced in the fulfillment of the agreement, provided that such error or omission shall be corrected as soon as it is discovered.
An approach designed to deem that all loss from one occurrence had one date of loss, regardless of the type of coverage (i.e., occurrence or claims made), or the number of dates of loss thereunder, or the reinsurance contracts or periods involved. The opposite of an INTERLOCKING loss trigger.
A provision in a Letter of Credit that calls for the LOC to renew each year for an additional year unless written notice of non-renewal is sent by the bank within a required period of time prior to the LOC's anniversary date.
The amount paid by a liability insurer in excess of applicable policy limits occasioned by the failure, on account of negligence or bad faith, to settle a claim for an amount within such policy limits. See Loss in Excess of Policy Limit.
In casualty insurance, premiums for limits or layers of liability added to basic limits, calculated as multiples of basic limits premium. Excess limits premiums were the original (and remain a popular) basis of premium paid for casualty excess of loss reinsurance.
A form of per risk excess agreement under which the indemnity is not a fixed dollar limit but a multiple of the primary company's net loss retention.
A generic term describing reinsurance which, subject to a specified limit, indemnifies the reinsured company against all or a portion of the amount of loss in excess of the reinsured's specified loss retention. The term is generic in deserving various types of excess of loss reinsurance, such as per risk (or per policy), per occurrence (property catastrophe or casualty clash), and annual aggregate. The loss retention in excess of loss reinsurance should not be confused with the policy retention in surplus share re-insurance, which always refers to a pro rata form of reinsurance in which, once a cession of insurance is made, the reinsured and reinsurer share insurance liability, premium and losses, beginning with the first dollar of loss. Also known as Non-proportional Reinsurance.
A form of excess of loss reinsurance which, subject to a specified limit, indemnifies the reinsured company against the amount of loss in excess of a specified retention with respect to each risk involved in each loss.
Those risks, perils, or classes of insurance with respect to which the reinsurer will not pay loss or provide reinsurance, notwithstanding the other terms and conditions of reinsurance.
A claim payment not necessarily required by an insurance policy but made as a commercial accommodation by the insurer to the policyholder.
Expenses (other than loss adjustment expenses) incurred during a specific period of time, divided by premiums written during the same period.
Another name for Prospective Rating and Retrospective Rating.
The cessation of a reinsurance cover when the time period for which it was written has ended. A treaty written on a "continuous until cancelled" basis does not expire automatically but will contain a provision for termination.
Harm from a latent substance within the body, even after active exposure is discontinued. In asbestos or other latent bodily injury context, the period during which the body incurs injury or disease as tissue reacts to the hazardous substance. In Keene Corporation v. INA (667 F2d. 1034, D.C. Cir., 1981), Keene's counsel characterized exposure in residence as the subsequent progress of a disease following exposure.
In reinsurance, monetary awards required by a court of law against an insurer for its negligence to its insured. Such payments required of an insurer to its insured are extracontractual in that they are beyond the insurance contract between insurer and insured. A reinsurance treaty may cover these damages and, if so, will specify covered situations, percentages applicable, and required premium charges.
A fraction or percentage of a reinsured company's subject premium which is deducted from the reinsurance premium to recognize and measure that portion of any policies not covered by reinsurance when the policies are written by the reinsured on an indivisible premium basis. For example, if property excess reinsurance does not cover third-party liability or burglary in a reinsured company's Homeowners Policy, an extraction factor would adjust the reinsurance premium accordingly.
By Robert W. Strain, CLU, CPCU. Presented with the kind permission of Strain Publishing & Seminars, Inc., P.O. Box 1520, Athens, Texas 75751. This glossary appears in both Reinsurance 1997 and Reinsurance Contract Wording 1996. Both books are available from StrainPublishingInc.com. Permission is given to quote from this glossary or to reproduce it in whole or in part if the source of the quotation or reproduction is cited in the use thereof.