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CPCU 520-11
Chapter 11
| Question | Answer |
|---|---|
| Reinsurance | Ins where one insur txfrs to another insr some or all of potential liab of certain loss exposures |
| Primary insurer | An insurer that txfrs the liab for the loss exposures it cedes to a reinsurer |
| Reinsurer | An insurer that accepts the liab for loss exposures ceded by another insrur |
| Ceding Commision | A fee paid to a primary insurer by a reins. to compensate the primary ins. for acquisition costs |
| Reinsurance limit | the max amnt that the reinsr. will pay for a claim and that is commonly stated in the reins. agreement |
| Retrocession | A contractual agreemnt where one reinsurer txfrs part of the liab for its loss exposures assumed under reinsurance agreements to other reinsurers |
| Cut-through endorsement | An endo providing that in event of insolvency of primary insurer, the reinsurer directly assumes the obligations of the primary insurer |
| Non-Admitted alien reinsurer | A reinsurer that is not licensed in the U.S. but operates there |
| Reinsurance intermediary | The party between a primary insurer and the reinsurer who assist in completing the reinsurance agreement. |
| Large line capacity | A primary insurer's ability to provide a large amount of ins. under a single policy |
| Surplus Relief | A flow of funds into an insurer's policyholder's surplus when policyholders' surplus has been reduced by the insurer's rapid growth in written premiums |
| Portfolio Reinsurance | Reinsurance that transfers to the reinsurer liability for an entire type of ins., territory, or book of business after the primary insurer has issued policies |
| Treaty Reins. | An agreement in wich the primary insurer agrees to cede certain types of loss exposures, and the reinsurer agrees to accept the loss exposures that fall within the treaty. |
| Facultative Reins. | An agreement that is negotiated separately for each loss exposure the primary insurer wants to reinsurer and that gives the reinsurer the right to accept or reject each loss exposure. |
| Pro-Rata Reins. | An agreement where the amt, premium, and losses are divided between primary and reinsurer in the same agreed proportions. (proportional insurance) |
| Excess of loss reinsurance | An agreement that requires a reinsurer to pay that portion of a loss that exceeds the primary insurer's retention up to the reinsurance limit. (non proportional insurance) |
| Quota Share Treaty | A pro rata reins. agreement where the primary insurer cedes a fixed, predetermined percentage of every loss exposure it insures w/in a class or classes. |
| Surplus Share Treaty | A pro rata reins. agreement where the reinsurer assumes pro-rata responsibility for only that portion of a loss exposure's liability that exceeds a stipulated dollar amount. |
| Quota Share and Surplus Share | Name the two types of pro rata reinsurance agreements. |
| Bordereau | a document showing details of all indiv. loss exposures ceded under pro rata treaty ins. agreements |
| Per Risk excess of loss treaty | A Reins. agreement applied to property ins. pol. where a retention and a limit of covg. apply spe. to each loss exposure insured by the primary insr. |
| Working cover | A per risk per policy excess of loss treaty with such low retentions that the reinsurer expects moderate to heavy loss activity. |
| Per Occurrence excess of loss treaty | a reins. agreement that indemnifies the primary insurer. when the losses for an occurrence exceed the primary insr. retention |
| Cat excess of loss treaty | a reins. agreement that helps the primary ins. manage a large accumulation of losses from a single event. |
| Aggregate excess of loss treaty | A reinsurance agreement where the reins. begins to pay when all of the primary insr losses for some stated period of time exceed the retentions stated in the treaty |
| Pro Rata fac reins. | A reins. agreement for indiv. loss exposures where the reinsurer shares a pro rata portion of the losses and premiums of the ceding insurer. |
| Excess of loss fac reins. | A reinsurance agreement for indiv. loss exposures where the primary insr pays all losses up to is agreed retention and the reinsurer pays losses in excess of the retention up to the reins. limit. |
| Finite risk reins. | A non-traditional reins. agreement for a limited amount of risk. Usually txfr investment or timing risk, not UW risk. |
| Insolvency Clause | A clause that is req. in reins. agreements indicating that the primary ins. bankruptcy does not effect the reinsurer;s liability for losses under a reins. agreement. |
| Intermediary Clause | A clause that is req. in reins. agreements indicating that the rein. intermediary is the reinsr's agent for collecting reinsurance premiums and paying reinsurance claims. |
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