Glossary of Reinsurance Terms

Deductible

In direct insurance, the first part of an insurance loss paid by the original insured and thus not the insurer. See also Excess.

Deficit Clause

A clause in a reinsurance or other agreement, which specifies that deficits shall be carried forward and offset in arriving at the profit commission.

Deposit Premium

The amount of premium (usually for an excess of loss reinsurance contract) that the ceding company pays to the reinsurer on a periodic basis during the term of the contract. This amount is generally determined as a percentage of the estimated amount of premium that the contract will produce based on the rate and estimated subject premium. It is often the same as the minimum premium but may be higher or lower. The deposit premium will be adjusted to the higher of the actual developed premium or the minimum premium after the actual subject premium has been determined.