Resources
Reinsurance glossary.
The terms brokers, MGAs, insurers and reinsurers use every day, explained in plain English. Every term has its own link, so you can bookmark or share it.
- AML (anti-money laundering)
- Controls that prevent the financial system being used to launder money, including customer due diligence, screening and reporting of suspicious activity.
- Binder
- A binding authority agreement that lets a coverholder or MGA accept risks on behalf of an insurer or reinsurer within agreed limits.
- Blacklist and prohibited list
- Internal or regulatory lists of parties, countries, vessels or goods a firm must not deal with.
- Bordereau
- A periodic schedule listing the premiums or claims under a treaty or binder. The plural is bordereaux.
- Brokerage
- The commission earned by the reinsurance broker, usually a percentage of the reinsurance premium.
- Capacity provider
- The insurer or reinsurer that carries the risk written by an MGA or coverholder.
- Cash loss (cash call)
- A request by the cedant for immediate payment of a large loss, outside the normal statement cycle.
- Cedant
- An insurer (or reinsurer) that transfers, or cedes, part of its risk to a reinsurer. Also called the ceding company.
- Ceding commission
- Commission paid by the reinsurer to the cedant under proportional business, to cover acquisition and management costs.
- Closing
- The document that confirms the final terms, shares and premium of a placement to each party.
- Cover note
- A document issued by the broker to the cedant confirming that reinsurance cover has been placed.
- Coverholder
- A firm authorised under a binder to accept risks on behalf of an insurer or reinsurer.
- Debit note and credit note
- Documents that charge or credit premium, commission or claims to a party.
- Endorsement
- A change to the terms of a placed risk or treaty after inception.
- Excess of loss (XL)
- Non-proportional cover that pays the part of a loss above the cedant's retention, up to the layer limit.
- Facultative reinsurance
- Reinsurance of a single risk, negotiated and accepted risk by risk. Each reinsurer can accept or decline.
- Fiduciary account (IBA)
- A segregated account in which a broker holds premium and claims money belonging to clients and markets, separate from its own funds.
- KYC (know your customer)
- Identity and background checks a firm carries out on every party it does business with.
- Layer
- A band of excess of loss cover, described as a limit in excess of a retention, for example 5 million xs 1 million.
- Lead underwriter
- The reinsurer that sets the terms of a placement, which following markets accept.
- Loss adjuster
- An independent specialist appointed to investigate a claim and recommend the amount payable.
- MGA (managing general agent)
- An agency that underwrites, and often handles claims, on behalf of one or more capacity providers.
- Non-proportional reinsurance
- Reinsurance where the reinsurer pays losses above an agreed amount, up to a limit. Excess of loss and stop loss are non-proportional.
- Original insured
- The person or company whose risk was first insured by the cedant, and which is ultimately protected by the reinsurance.
- Outstanding loss
- A claim reported but not yet paid, for which a reserve is held.
- PEP (politically exposed person)
- A person with a prominent public role, or their close associates, who needs enhanced due diligence under anti-money-laundering rules.
- Placement
- The process of finding reinsurers to accept a risk or treaty, and the resulting set of lines.
- Profit commission
- Additional commission paid to the cedant when the reinsured business is profitable.
- Proportional reinsurance
- Reinsurance where the reinsurer takes an agreed share of premium and losses. Quota share and surplus treaties are proportional.
- Reinsurer
- A company that accepts risk from a cedant in return for a share of the premium.
- Retention
- The amount of each risk or loss the cedant keeps for its own account before reinsurance responds.
- Retrocedant
- A reinsurer that passes part of the risk it has accepted on to another reinsurer, the retrocessionaire.
- Retrocession
- Reinsurance bought by a reinsurer to protect its own book. The reinsurer ceding the risk is the retrocedant; the one accepting it is the retrocessionaire.
- Sanctions screening
- Checking parties to a transaction against government sanctions lists before business is placed or money is paid. Brokers use tools such as World-Check and LexisNexis.
- Signed line
- The share a reinsurer finally receives after lines are signed down, when the total written exceeds 100 percent.
- Sliding scale commission
- Ceding commission that varies with the loss ratio of the business: lower losses earn higher commission.
- Slip
- The document setting out the terms of a placement, presented to reinsurers for their lines. Variants include the broker slip, quotation slip and placement slip.
- Statement of account
- A periodic statement of premium, commission, claims and reserves due between two parties.
- Subjectivity
- A condition that must be met for cover to be confirmed, such as receipt of a survey or signed proposal.
- Surplus treaty
- A proportional treaty where the reinsurer takes the part of each risk above the cedant's retention, up to a number of lines.
- Surveyor
- A specialist who inspects a risk before or during cover, for example a plant or vessel, and reports on its condition to underwriters.
- Treaty reinsurance
- An agreement under which a reinsurer automatically accepts a defined portfolio of the cedant's risks for a period, usually a year.
- Written line
- The share of a risk a reinsurer agrees to accept when it signs the slip.
A
B
C
D
E
F
K
L
M
N
O
P
Q
R
S
T
W
See SARBOnline on your own business.
Bring a live slip, a treaty statement or last quarter's collections. We will walk it through the system with your team, in your time zone.