Page 331 - Reinsurance Management IC85

The Insurance Times

option to cede and the reinsurer has the option to accept or decline
individual risks. The contract describes how individual facultative
reinsurances shall be handled.

Flat Rate

A fixed rate not subject to any subsequent adjustment. A
reinsurance premium rate applicable to the entire premium income
derived by the ceding insurer from the business ceded to the
reinsurer (as distinguished from a rate applicable to excess limits).

Follow the Fortunes

A concept inherent in any reinsurance relationship which, when
expressed in an agreement, generally runs to a statement that the
reinsurer "shall follow the fortunes of the ceding insurer in all
matters falling under this Agreement" or shall do so ". . in all
respects as if being a party to the insurance," or similar language.

Fronting

An arrangement whereby one licensed insurer is-sues a policy on
a risk for and at the request of one or more other unlicensed
insurers with the intent of passing the entire risk by way of
reinsurance to the other insurer(s). Such an arrangement may be
illegal if the purpose is to frustrate regulatory requirements

Gross Line

The amount of liability an insurer has written on a risk, including
the amount it has reinsured. Net line plus reinsurance equals gross
line.

Gross Loss

The amount of a ceding insurer's loss irrespective of any
reinsurance recoveries due.

Ground-Up Loss

Website: www.bimabazaar.com Call: 033-22184184 / 40078428 328

ight@ The Insurance Times. 09883398055 / 0988338