Glossary of Reinsurance Terms

Captive

An insurance company set up by a (non-insurance)  commercial/industrial company primarily to write the parent company's own insurances and obtain direct access to the reinsurance market.

Case Reserves

Loss reserves established in relation to specific, individual reported claims.

Cash Call

A reinsurance contract provision, common in proportional contracts, which allows a ceding company to make claim and receive immediate payment for a large loss without waiting for the usual periodic payment procedures to occur.

Catastrophe Excess of Loss Reinsurance

A form of excess of loss reinsurance that, subject to a specified limit, indemnifies the ceding company for the amount of loss in excess of a specified retention with respect to an accumulation of losses resulting from a ”catastrophe”.

Cede

In proportional reinsurance, to pass on to another insurer (the reinsurer) all or part of the financial interests of insurance policies written by an insurer (the ceding company) with the object of reducing the company's possible liability by sharing with the reinsurer the insurance liability, premiums, and losses from the reinsured business. See also Cession.

Cession
  1. The unit of insurance passed (or ceded) to a proportional reinsurer by a ceding company or cedant that issued a policy to the original insured. A cession may accordingly be the whole or a portion of single risks, defined policies, or defined divisions of business, all as agreed in the reinsurance contract.
  2. The act of ceding where such act is necessary to invoke the proportional reinsurance protection.
Commutation Agreement

An agreement between the ceding insurer and the reinsurer that provides for the valuation, payment and complete discharge of some or all current and future obligations between the parties under particular reinsurance contract(s). 

Continuous Contract

A reinsurance contract that does not terminate automatically but continues indefinitely unless one of the parties delivers notice of intent to terminate.