Glossary of Reinsurance Terms

Rate

The percentage or factor applied to the ceding company's subject premium to determine the reinsurance premium, or the percentage applied to the reinsurer's premium to determine the commission payable to the ceding company (or, if applicable, the reinsurance intermediary).

Rate on Line

A percentage derived by dividing reinsurance premium by the reinsurance limit; the inverse is known as the payback or amortisation period.  For example, a $10 million catastrophe cover with a premium of $2 million is said to have a rate on line of 20 percent and a payback period of 5 years.