What Is A Stop Loss Reinsurance Agreement

A generic term used to describe reinsurance agreements written to protect the primary business from certain unusual situations, which are generally related, and not for the reimbursement of normal losses incurred under the primary enterprise policies. Because of this risk, reinsurers generally charge a high fee for this type of coverage and may place the investment point on a multiple of the typical loss experience of an insurance company. Sometimes reinsurers require some kind of reinsurer involvement to be applied to the reinsurer`s limit. In this case, reinsurance can only cover 90-95% of the surplus. The payment of the loss by the insurer in the form of a lump sum to the applicant (or his lawyer) plus an amount in discounted dollars (rewarded) to a pension company (linked or not related to the insurer) which grants the plaintiff (the annuitant) an amount per year for a period of years or for the life of the annuity. Stop loss reinsurance is a kind of excess reinsurance in which the reinsurer is responsible for losses incurred by the insured over a period of time (usually one year) that exceed up to the insurance ceiling a certain amount or percentage of a commercial measure such as. B of the earned premiums issued. A form of proportional reinsurance that compensates the divested company for losses equal to the excess insurance guarantee sold on the basis of shares, as does the share of the quotas. Essentially, this can be considered as a variable quota contract in which the ministat in proportion to the individual risks of the reinsurer increases with an increase in the amount of insurance if the line withheld is retained by the same reinsurer, so that the primary company can limit its net commitment to a single line, regardless of the amount of written insurance.

The first surplus is the surplus for each risk (one or more multiples of the insured`s line) that must first apply to the first surplus contract. Second surplus, third surplus, etc., reinsurance is the remaining portion of the excess debt that must apply to each contract of this type after the amounts have been deducted from the underlying contracts or contracts. An exposure of an insurance company within the categories of its reinsured activities for which the company has self-issued a policy (or certificate), has filed a premium declaration on its books, or has established an internal memorandum detailing the exposure, with the aim of covering this self-insured obligation of its reinsurance contracts. Unlike an uninsured bond for which there would be no coverage. Some dispute the validity of this type of transaction because it violates the principle of contract law that a company cannot enter into contracts with itself. Stop loss reinsurance can also be described as excess reinsurance loss margin. A contractual formula used in proportional contractual reinsurance, in which the end-of-contract fee is different from the loss rate in the parameters indicated. Indeed, a retroactive pricing mechanism for proportional reinsurance. The part designated by law (for example. (b) a liquidator, a curator or a court-appointed beneficiary) receives reinsurance income from an insolvent insurer in relation to the estate of a bankrupt insurer (instead of other plaintiffs, such as security funds or individual policyholders). A clause in a reinsurance contract that provides that the contract or agreement can be terminated immediately in the case of one or more conditions. Certain conditions could be: acquisition, control or merger by or with another company; Loss of a significant portion of the company`s insurance surplus; a sudden and substantial change in the direction of the company; Non-payment of premiums; Bankruptcy or liquidation.

The clause should cover the contracting party, the requirements, the termination requirements and the method of terminating existing transactions (i.e., whether they are cut or being carried out)