To share in the writing of a risk.

The sharing of risks, as in quota share and surplus share reinsurance, which participate pro rata in all losses from the first dollar up [see Pro Rata Reinsurance].

A term used in the rating of per occurrence excess covers which represents the number of years at a given premium level which would be necessary to accumulate total premiums equal to the indemnity. Synonymous with Amortization Period.

Reinsurance in which the reinsurance limit and the retention apply "per risk" rather than per accident, per event, or in the aggregate.

The anticipated maximum property fire loss that could result given the normal functioning of protective features (firewalls, sprinklers, a responsive fire department, ...), as opposed to MFL (Maximum Foreseeable Loss), which would be a similar valuation, but on a worst case basis with respect to the functioning of the protective features. Underwriting decisions would typically be influenced by PML evaluations, and the amount of reinsurance ceded on a risk would normally be predicated on the PML valuation.

A study which segregates an insurer's policies into various groupings (for example, by policy limit or policy premium).

A method of tracking reinsurance contract experience by segregation of all premiums and losses attributable to policies having an inception or renewal date within a given12-month period. More specifically, the total value (losses plus loss reserves) of all losses arising from policies incepting or renewing during the year (regardless of when reported, incurred or paid) is divided by the fully developed earned premium for those same policies. The finally developed earned premium will always equal the written premium for those policies.

[See Accident Year Experience]

The party in whose name an insurance policy is issued.

1) The net worth of an insurer as reported in its Annual Statement. For a stock insurer, the sum of its surplus and capital. For a mutual insurer, its surplus.

2) The amount by which the assets of an insurer exceed the organization's liabilities. Another name for Surplus to Policyholders.

Any joint underwriting operation of insurance or reinsurance in which the participants assume a predetermined and fixed interest in all business written. Pools are often independently managed by professionals with expertise in the classes of business undertaken, and the members share equally in the premiums, losses, expenses, and profits. An "association" and a "syndicate" (excluding that of Lloyd's of London) are both synonymous with a pool, and the basic principles of operation are much the same.

A defined body of a) insurance (policies) in force (premium portfolio), b) outstanding losses (loss portfolio), or c) company investments (investment portfolio). (The reinsurance of all existing insurance as well as new and renewal business is therefore described as a running account reinsurance with portfolio transfer or assumption.)

The transfer of a portfolio via a cession of reinsurance; the reinsurance of a run-off. Only policies in force (or losses outstanding) are reinsured, and no new or renewal business is included. Premium or loss portfolios, or both, may be reinsured. The term is sometimes applied to the reinsurance by one insurer of all business in force of another insurer retiring from an agency, a territory, or from the insurance business entirely.

If the reinsurer is relieved of liability (under a pro rata reinsurance) for losses happening after termination of the treaty or at a later date, the total unearned premium reserve on business left unreinsured (less ceding commissions thereon) is normally returned to the cedent. Also known as a Return Portfolio or Return of Unearned Premium.

Continuing the reinsurance of a portfolio until all ceded premium is earned, or all losses are settled, or both. While a loss run-off is usually unlimited as to time, a premium run-off can be for a specified duration.

The monetary consideration in contracts of insurance and reinsurance.

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

When used as an accounting term, premiums earned describe the premiums written during a period plus the unearned premiums at the beginning of the period less the unearned premiums at the end of the period.

An adjective applied in reinsurance to these nouns: insurer, insured, policy, and insurance -- meaning respectively: 1) the primary insurer is the insurance company which initially originates the business, i.e., the ceding company; 2) the primary insured is the policyholder insured by the primary insurer; 3) the primary policy is the initial policy issued by the primary insurer to the primary insured; 4) the primary insurance is the insurance covered under the primary policy issued by the primary insurer to the primary insured (sometimes called "underlying insurance").

The term used in some reinsurance markets outside the U.S. to mean the retention of the primary company in a reinsurance agreement.

A generic term describing all forms of reinsurance in which the reinsurer shares a proportional part of the original losses and premiums of the ceding company. Also known as Participating Reinsurance and Proportional Reinsurance.

The same as Brokerage Commission.

A term used to designate an organization whose business is mainly reinsurance and related services, as contrasted with other insurance organizations which may operate reinsurance assuming departments in addition to their basic primary insurance business.

[See Contingent Commission]

Another name for Pro Rata Reinsurance.

The formula in a reinsurance contract for determining the reinsurance premium for a specified period on the basis, in whole or in part, of the loss experience of a prior period (as opposed to retrospective rating, which is based on loss experience for the same period). Also known as Experience Rating [see Spread Loss Reinsurance].

The tentative amount which is subject to subsequent adjustment.

Damages awarded separately and in addition to compensatory damages, usually on account of malicious or wanton misconduct, to serve as a punishment for the wrongdoer and possibly as a deterrent to others. Sometimes referred to as "exemplary damages" when intended to "make an example" of the wrongdoer.

The ratio of reinsured losses incurred under a reinsurance agreement to the ceding company's subject earned premium for that agreement, before loading. Also known as Burning Cost.

1) That part of the premium which is sufficient to pay losses and loss adjustment expenses but not including other expenses.

2) Also the premium developed by dividing losses by units of exposure, disregarding any loading for commission, taxes and expenses.

3) In crop-hail insurance, the ratio of incurred loss to liability, or the dollars of loss per $100 of insurance in force.