Page 330 - Reinsurance Management IC85

Reinsurance Management

reinsurer therefore receives premium as a deposit subject to its
adjustment on completion of treaty or contract period.

Direct Written Premium

This is all the premium income of an insurer, adjusted for
additional or return premiums, prior to any reinsurance ceded or
reinsurance assumed.

Earned Premium

The premium which is proportionate to the period of insurance or
reinsurance which has expired and for which there would be no
further obligation to entertain any claim in future.

Excess of Loss Reinsurance

A type of reinsurance which indemnifies the reinsured against all
or a part of the amount of a loss in excess of specified loss
retention. This type of reinsurance is also known as Non-
Proportional Reinsurance.

Expiration

This is cessation of cover if not renewed following the anniversary
date. A treaty written on a "continuous until cancelled" basis does
not expire automatically. This would need to be looked at for a
cancellation provision.

Facultative Reinsurance

The reinsurance of part or all of the insurance provided by a
single policy for indemnity based upon sharing of risk given the
reinsured's retention. The word "facultative" means that both
parties have an option or faculty to accept or reject the negotiated
submission of an individual risk.

Facultative Treaty

A reinsurance contract under which the ceding insurer has the

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