Category: Blog

  • Workers Compensation and Employers Liability Policy:

    Workers Compensation and Employers Liability Policy:

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    An insurance policy that provides coverage for an employer’s two key exposures arising out of injuries sustained by employees. Part one of the policy covers the employer’s statutory liabilities under workers compensation laws and part two of the policy cover liability arising out of employees work related injuries that do not fall under the workers…

  • Why have a Captive 2

    Why have a Captive 2

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    Reduced insuranced costs:Lower costs and premiumAccumulation of investment income to help reduce net loss costs. Coverage of risks • Not available in the commercial market • Not available at a realistic premium Capacity • Cannot get all limits required in the commercial market • Captive can be structured to provide desired capacity at necessary levels

  • Why have a captive

    Why have a captive

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    Control • Design of more effective claims handling, loss control and risk management programs Capture insurance related profits • Underwriting profits and investment income accure to owners Access to reinsurance market Capture ceding commission paid by captive to reinsurer. Wholesale pricing versus retail pricing charged by insurance companies

  • Trailer Interchange Insurance:

    Trailer Interchange Insurance:

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    Trailer interchange insurance is a type of trucking auto liability insurance that provides financial coverage for physical damage that may be caused to a trailer while it is being hauled by a party that does not own said trailer. Trailer interchange insurance functions similarly to cargo insurance. Example: • Accidents Theft • Accidental fire

  • Tail:

    Tail:

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    The Period of time which elapses between the writing of an Insurance policy and the payment of the claim or between the loss occurrence (or the insurer’s knowledge of the loss) and the payment of the claim. This is also known as the tail length or tail factor of an insurance policy. EXAMPLE: • If…

  • Short Tail Losses:

    Short Tail Losses:

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    Losses or Claims that pay out very quickly. These are losses that arise from events that have a short latency period or a short settlement period. EXAMPLE: • Life insurance, Property damage and Automobile liability claims.

  • Risk Retention Groups(RRG):

    Risk Retention Groups(RRG):

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    RRGS are state chartered and are exempt from having to obtain a state license in every state in which they operate, and also are exempt from state laws that regulate insurance. They are mutual companies, meaning that they are owned by the members of the group. Members of an RRG must be engaged in similar…

  • Risk Gap:

    Risk Gap:

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    The difference between the premium of all the policies and the aggregate loss of all the policies for a particular captive. Example: • If a captive has $10 million in premiums and $8 million in losses, the risk gap is $2 million.

  • Reinsurance:

    Reinsurance:

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    Reinsurance is the transfer of risk from a ceding insurer to a reinsurer. Reinsurance is the insurance of the risks undertaken by insurance companies. Reinsurance company issues the insurance contract to the primary/ceding insurance company. Need for reinsurance: Stabilizing the insurance company results. Increase of capacity by Risk transfer/sharing. Reduction in claims volatility. EXAMPLE: >…

  • Proportional Treaty:

    Proportional Treaty:

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    Example: > Quota share treaty is a purest form of a proportional treaty where a certain percentage % of each and every risk is transferred/shared with reinsurer.