Financial ratio and performance criteria designed by the National Association of Insurance Commissioners to identify insurance companies which may need close 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 ceding insurer 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.

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.

In casualty insurance, premiums for limits 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 retention.

[See Aggregate Excess of Loss Reinsurance]

A generic term describing reinsurance which, subject to a specified limit, indemnifies the ceding company against all or a portion of the amount in excess of a specified retention. The term includes various types of reinsurance, such as catastrophe reinsurance, per risk reinsurance, per occurrence reinsurance, and aggregate excess of loss reinsurance. It should never be confused with "surplus share" which always refers to a pro rata form of reinsurance. Also known as Non-Proportional Reinsurance.

A form of excess of loss reinsurance which, subject to a specified limit, indemnifies the ceding 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.

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 but will contain a provision for termination.

This method calculates the premiums which were actually exposed to loss (earned) for the period. The date on which premiums were booked is disregarded. What is significant is the effective date and term to which the premium applies. The portion of the premium written which was exposed to loss (earned) is allocated to the exposure period whether the premiums were booked prior to the period, during the period, or after the period. The exposure earned premium eliminates the deficiency contained in accounting earned premium that results from timing problems in the recording of premium records.

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 extra-contractual 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 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.