A specialist in the mathematics of risk, especially as it relates to insurance calculations such as premiums, reserves, dividends, and insurance and annuity rates.
An amount paid by the reinsurer to the ceding company to help cover the ceding company's acquisition and other costs, especially commissions. Allowances are usually calculated as a large percentage (often 100%) of first-year premiums reinsured and smaller percentages of renewal premiums reinsured.
Contract that provides for income payments to an insured at regular intervals, either for a specific period or for the lifetime of the insured, in exchange for premiums.
Association of Southeast Asian Nations.
A transaction (usually coinsurance or funds withheld, and often involving reinsurance of annuities) where performance of the underlying assets, more so than any mortality risk, is a key element.
Insurance risk that a reinsurer accepts (assumes) from a ceding company.
Reinsurance arrangement whereby the ceding company and reinsurer agree that all business of a certain description will be ceded to the reinsurer. Under this arrangement, the ceding company performs underwriting decision-making within agreed-upon parameters for all business reinsured.
The provision of insurance and banking products and services through a common distribution channel and/or to the same client base.
Reinsurance, including financial reinsurance, whose primary purpose is to enhance the cedant’s capital position.
An insurance or reinsurance entity designed to provide insurance or reinsurance coverage for risks of the entity or entities by which it is owned or to which it is affiliated.
Ceding company (also known as cedant)
An insurer that transfers, or cedes, risk to a reinsurer.
The insurance risk associated with a policy that is reinsured from an insurer to a reinsurer.
Demand on an insurer or reinsurer for payment under the terms of an insurance policy.
Coinsurance (also known as original terms reinsurance)
A form of reinsurance under which the ceding company shares its premiums, death claims, surrender benefits, dividends, and policy loans with the reinsurer and the reinsurer pays expense allowances to reimburse the ceding company for a share of its expenses.
A variant on coinsurance, in which the ceding company withholds assets equal to reserves and shares investment income on those assets with the reinsurer.
A party to a contract requiring or offering the exchange of risk.
The risk that a party to an agreement will be unable to fulfill its contractual obligations.
Critical illness (CI) insurance (also known as dread disease insurance)
Insurance that provides a guaranteed fixed sum upon diagnosis of a specified illness or condition such as cancer, heart disease or permanent total disability. The coverage can be offered on a standalone basis or as an add-on to a life policy.
Enterprise Risk Management (ERM)
An enterprise-wide framework used by a firm to assess all risks facing the organization, manage mitigation strategies, monitor ongoing risks and report to interested audiences.
Number of deaths predicted to occur in a defined group of people.
Amount payable at the death of the insured or at the maturity of the policy.
A type of reinsurance in which the reinsurer underwrites an individual risk submitted by the ceding company for a risk that is unusual, large, highly substandard or not covered by an automatic reinsurance treaty. Such risks are typically submitted to multiple reinsurers for competitive offers.
Financial reinsurance (also known as financially-motivated reinsurance)
A form of capital-motivated reinsurance that satisfies all regulatory requirements for risk transfer and is often designed to produce very predictable reinsurer profits as a percentage of the capital provided.
GAAP (Generally Accepted Accounting Principles)
A set of financial accounting principles that companies follow when preparing financial statements for reporting results to stockholders.
Group life insurance
Insurance policy under which the lives of a group of people, most commonly employees of a single company, are insured in accordance with the terms of one master contract.
Guaranteed issue life insurance
Insurance products that are guaranteed upon application, regardless of past health conditions.
IFRS (International Financial Reporting Standards)
Standards and interpretations adopted by the International Accounting Standards Board (IASB).
In force sum insured
A measure of insurance in effect at a specific date.
Individual life insurance
An insurance policy that insures the life of usually one and sometimes two or more related individuals, rather than a group of people.
Initial Public Offering (IPO)
The first sale to the public of shares of common stock issued by a private company. IPOs are often issued by smaller companies seeking the capital to expand, but can also be used by large mutual or privately owned companies seeking to become publicly traded.
An insurance product that mitigates longevity risk by providing a stream of income for the duration of the policyholder's life.
A variant on coinsurance in which the ceding company retains all the reserves, as well as assets backing reserves, and pays the reinsurer interest on the reinsurer’s share of the reserves.
A measure of the incidence of sickness or disease within a specific population group.
Actual number of deaths occurring in a defined group of people.
Mortality risk reinsurance
Removing some of the major mortality or lapse risk associated with life insurance from the client company.
Usually synonymous with capital-motivated reinsurance, but includes any reinsurance agreement that is other than coinsurance or YRT.
The act of replacing one participating member of a contract with another, with all rights, duties and terms being transferred to the new party upon consent of all parties affected.
Original terms reinsurance
The totality of risks assumed by an insurer or reinsurer.
Preferred risk coverage
Coverage designed for applicants who represent a better-than-average risk to an insurer.
Primary insurance (also known as direct insurance)
Insurance business relating to contracts directly between insurers and policyholders. The insurance company is directly responsible to the policyholder.
Amount paid to insure a risk.
New business produced during a specified period.
Quota share (also known as ‘first dollar’ quota share)
A reinsurance arrangement in which the reinsurer receives a certain percentage of each risk reinsured.
The right of the ceding company to cancel reinsurance under certain conditions.
The transfer of insurance risk from an insurer, referred to as the ceding company, to a reinsurer, in conjunction with the payment of a reinsurance premium. Through reinsurance, a reinsurer ’insures’ an insurer.
The amount required to be carried as a liability in the financial statement of an insurer or reinsurer to provide for future commitments under outstanding policies and contracts.
A form of reinsurance that is acceptable within Islamic law. See Takaful.
The maximum amount of risk a company will insure on one life. Any amount in excess of the retention limit must be reinsured.
A transfer of reinsurance risk from a reinsurer to another reinsurer, referred to as the retrocessionaire, in conjunction with the payment of a retrocession premium. Through retrocession, a retrocessionaire reinsures a reinsurer.
A reinsurer that reinsures another reinsurer; see Retrocession.
The structuring of financial assets as collateral against which securities can be issued to investors.
Simplified issue life insurance
Insurance products with limited face amounts that require no or minimal underwriting.
The excess of statutory assets over statutory reserves, both of which are calculated in accordance with standards established by insurance regulators.
A form of insurance that is acceptable within Islamic law, and that is devised upon the principles of mutual advantage and group security.
A telephone interview process, during which an applicant’s qualifications to be insured are assessed.
Treaty (also known as a contract)
A reinsurance agreement between a reinsurer and a ceding company. The three most common methods of accepting reinsurance are automatic, facultative, and facultative-obligatory. The three most common types of reinsurance treaties are YRT (yearly renewable term), coinsurance, and modified coinsurance.
The process by which a company assesses the risk inherent in an application for insurance prior to acceptance of the policy.
The periodic calculation of reserves, the funds that insurance companies are required to hold in order to make good on all future insurance obligations.
Variable life insurance
A form of whole life insurance under which the death benefit and the cash value of the policy fluctuate according to the performance of an investment fund. Most variable life insurance policies guarantee that the death benefit will not fall below a specified minimum.
Presentation of information broadcast over the Internet.
Yearly Renewable Term (YRT)
1. A type of reinsurance which covers only mortality risk, with each year’s premium based on the current amount of risk.
2. A level term life insurance product with annually increasing premiums, commonly known as annually renewable term (ART).