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Insurance Glossary

Retention

Industry

Definition

The amount of risk that the ceding company keeps for its own account before reinsurance coverage applies. Also called the deductible or attachment point in some contexts. Higher retention means the ceding company bears more risk but pays lower reinsurance premiums.

Definición en Español

ES

Retención

La cantidad de riesgo que la compañía cedente mantiene por su propia cuenta antes de que se aplique la cobertura de reaseguro. También llamado deducible o punto de adhesión en algunos contextos. Una retención más alta significa que la compañía cedente asume más riesgo pero paga primas de reaseguro más bajas.

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Related Terms

Reinsurance
Insurance purchased by an insurance company (the ceding company) from another insurance company (the reinsurer) to transfer risk and protect against large losses. Reinsurance allows insurers to underwrite policies covering higher risks and larger amounts than they could handle independently.
Attachment Point
The dollar amount of loss at which reinsurance coverage begins to apply in an excess of loss arrangement. For example, if the attachment point is $1 million, the reinsurer only pays losses exceeding $1 million.
Ceding Company
The primary insurance company that purchases reinsurance to transfer part of its risk to a reinsurer. The ceding company retains a portion of the risk and cedes the remainder to the reinsurer.
Actuary
A business professional who analyzes probabilities of risk and risk management, including calculation of premiums, dividends, and other applicable insurance industry standards.
Underwriting
The process by which an insurer evaluates the risk of insuring a person or property and determines coverage terms and premium rates.
Loss Ratio
The ratio of losses paid plus loss reserves to premiums earned, used by insurers to measure underwriting profitability and pricing adequacy.
Combined Ratio
The sum of the loss ratio and expense ratio, measuring an insurer's overall underwriting profitability. A ratio below 100% indicates underwriting profit.
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