10 Basic Rinsurance Terminologies.
Basically, Reinsurance terms are those words that are associated with the reinsurance business.
There are some terminologies used in discussing the reinsurance business. And we are going to give a detailed explanation of each. They include.
3. Ceding company.
These are the companies that accept most of the reinsurance risk underwritten by insurance companies. Also, the reinsurer is just a reinsurance company, they act as a third party in the reinsurance business.
This is one of the words used in a reinsurance contract, which resents a person or thing or liability or interest insured or reinsured which are normally expressed in monetary terms.
Ordinarily, risk implies the probability of loss or chance of loss.
These people are the primary insurers that define the reinsurance contracts with the reinsurance company. However, ceding company is known as a direct insurer and the reassured.
Also, it is a reinsurance term, which refers to the maximum amount that a ceding company is prepared to lose on an average risk of particular class insurance say a fire.
Therefore, this term is so important that it cant be valued less in the reinsurance business.
This is the risk proportion of the amount of the liabilities the original insurer refrain from, for its own account and is the maximium net loss that can be sustained on the risk by the direcd insurer the ceding company.
Reserve are portions of funds set aside by reinsurance companies with the aim of fulfilling the objective of reinsurers, insurers or retrocessionire are in case of the large settlement of claims.
This is also another term used in reinsurance business. It entails the number of losses to be incured by the ceding company of the reinsurer which is expressed on a per occurrance basis. e.g Either per accident or event
This is another term used in the reinsurance business. It refers to the reinsurer who reinsured the firest insurer that is the reinsurer of the ceding company
This is also another term used in the reinsurance business. This means the retention amount of the ceding company. A reinsurer may accept one or more lines or a fraction of lines. e.g twenty line treaty means a treaty whose capacity is twenty times the amount of the direct insurer’s retention.
This is the amount given out by the insurer. It is the amount of risk given out by the ceding office to the insurer. Also, it is the amount of risk accepted by the insurer.
Retrocession is another term used in reinsurance contracts. It is a sconds resinsurance and where the reinsurance decides to insure again part of his risk proportion to another reinsurer
We earlier stated that reinsurance terminologies involves those languages or key words used in rinsurance business. They form the basis or road map for effective reinsurance application in real life.
– We also listed the following as the most important terms used in the reinsurance contract. Which includes ceding company, reserve, limit, retention, recession, and many others.