Automatic Reinsurance

Automatic Reinsurance

An agreement between an insurer and a reinsurer in which the reinsurer takes over the risk for a certain class of policies from the insurer. See also: Reinsurance.
References in periodicals archive ?
A jumbo limit is defined as 'a limit placed on the amount of coverage that may be in force and applied on an individual life for automatic reinsurance purposes.
A reinsurance agreement between companies is often referred to as a reinsurance "treaty." The three main elements involved in reinsurance are retention limits, automatic reinsurance and facultative reinsurance.
Reinsurers increasingly prefer that a client company's underwriters have top-notch educational credentials in order to get the very best automatic reinsurance rates.
For example, an automatic binding limit (i.e., the maximum amount for which the ceding insurer binds the reinsurer under an automatic reinsurance treaty) is usually expressed as a multiple of the retention limit.
Because so many more policies are being reinsured, these first-dollar quota-share arrangements are creating enormous amounts of automatic reinsurance. Automatic reinsurance allows direct writers to pass risk on to reinsurers based on their own underwriting opinion, without seeking approval from the reinsurers.
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