Nonproportional Automatic Reinsurance
Definition of "Nonproportional automatic reinsurance"
Obligatory reinsurance contract in which a reinsurer agrees to pay for all or a large portion of losses up to a limit, when these losses exceed the retention level of the cedent. The reinsurance premium paid by the cedent is calculated independently of the premium charged to the insured. It is not expected that every treaty will pay for itself or that every loss will be recouped by the reinsurer. When a cedent reinsures on a nonproportional basis, it retains substantially more of its profits than reinsuring on a proportional basis. Nonproportional differs from proportional reinsurance in that it does not involve the sharing of risks.
Popular Insurance Terms
Expense of soliciting and placing new insurance business on a company's books. It includes agent's commissions, underwriting expenses, medical and credit report fees, and marketing support ...
Table charting relative costs of a group of cash value life insurance policies derived by using the net cost method of comparing costs (traditional net cost method of comparing costs; net ...
Mechanism used by a fidelity and surety insurance company to spread its liability through reinsurance by issuing a surplus treaty as a first layer of coverage, thereby enabling a cedent to ...
process of discovering sources of loss concerning the liability risk faced by individuals and business firms. The first step in risk management is to identify the causes of a loss by ...
Amount of the loss absorbed by an insurance company after deducting any reinsurance applicable to the loss, as well as subrogation and ABANDONMENT AND SALVAGE rights. ...
Formula for a given line of insurance used by property and casualty insurance companies to compare losses and loss adjustment expense with premiums. This shows the amount of each premium ...
Maximum amount of insurance that an insurance company will issue on a particular risk exposure. This limit is used by the insurance company to avoid having to pay for a loss on the exposure ...
Fund that comes into existence because premiums for ordinary life insurance policies in their early years are higher than necessary for the pure cost of protection. These excess premiums, ...
Coverage for an insured firm if its business debtors fail to pay their obligations. The insured firm can be a manufacturer or a service organization but it cannot sell its products or ...
Have a question or comment?
We're here to help.