Guy Carpenter

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Reinsurance
Terms

  • Uberrimae Fidei

    Literally, of the utmost good faith. A defining characterization or quality of some (contractual) relationships, of which reinsurance is universally recognized to be. Among other differences from ordinary relationships, the nature of reinsurance transactions is dependent upon a mutual trust and a lively regard for the interests of the other party, even if inimical to one's own. A breach of utmost good faith, especially in regard to full and voluntary disclosure of the elements of risk of loss, is accepted as grounds for any necessary reformation or redress, including rescission.

  • Ultimate Net Loss

    1. In reinsurance, the unit of loss to which the reinsurance applies, as determined by the reinsurance agreement. In other words, the gross loss less any recoveries from other reinsurance which reduce the loss to the treaty in question.
    2. In liability insurance, the amount actually paid or payable for the settlement of a claim for which the reinsured is liable (including or excluding defense costs), after deductions are made for recoveries and certain specified reinsurance.

  • Unauthorized Insurer, Reinsurer

    An insurer not licensed, or a reinsurer neither licenses nor approved, in a designated jurisdiction.

  • Unauthorized Reinsurance

    Reinsurance placed with a non-admitted reinsurer which is not licensed or approved in the jurisdiction in question. See: Credit for Authorized Reinsurance and Non-Admitted Reinsurance.

  • Unbundled

    The separation of coverages previously combined into a reinsurance contract.

  • Underlying

    The amount of loss which attaches before the next higher excess layer of insurance or reinsurance attaches.

  • Underlying Premium

    The ceding company's premiums (written or earned) to which the reinsurance premium rate is applied to produce the reinsurance premium. Also known as Premium Base, Base Premium, and Subject Premium.

  • Underwriting Capacity

    The maximum amount of money an insurer or reinsurer is willing to risk in a single loss event on a single risk or in a given period. The limit of capacity for an insurer or reinsurer may also be imposed by law or regulatory authority.

  • Underwriting Income

    The excess of premiums earned by a reinsurer during any reporting period over the combined total of expenses and losses incurred by the reinsurer during the same period.

  • Underwriting Leverage

    The ratio of premium writings to surplus.

  • Underwriting Year

    Also known as policy year, see the definition of Policy Year Experience under Accident Year Experience.

  • Underwriting-Year Basis

    In rating, the use of all premiums written as arising from all policies written or renewed during the year and all losses relating to those same policies, whenever they may occur. See Policy Year Experience under Accident Year Experience.

  • Unearned Premium Reserve

    The sum of all the premiums representing the unexpired portions of the policies or contracts which the insurer or reinsurer has on its books as of a certain date. It is usually based on a formula of averages of issue dates and the length of term.

  • Utmost Good Faith

    Firm adherence to promises made to another, including disclosure of all relevant facts, and complete trust in the fidelity of the other. Black's Law Dictionary states: "The most abundant good faith, absolute and perfect candor, openness and honesty; the absence of any concealment or deception, however slight."