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Insurance Glossary

Surplus Share

Industry

Definition

A proportional reinsurance arrangement where the reinsurer covers the amount of risk that exceeds the ceding company's retention limit, up to a specified multiple. This allows the ceding company to write larger policies while maintaining consistent retention levels.

Definición en Español

ES

Excedente de Suma

Un arreglo de reaseguro proporcional donde el reasegurador cubre la cantidad de riesgo que excede el límite de retención de la compañía cedente, hasta un múltiplo especificado. Esto permite a la compañía cedente escribir pólizas más grandes mientras mantiene niveles de retención consistentes.

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Related Terms

Proportional Reinsurance
A reinsurance arrangement where the reinsurer shares premiums and losses with the ceding company in a fixed proportion. Includes quota share and surplus share arrangements. The reinsurer participates proportionally in both the income and the risk.
Quota Share
A proportional reinsurance arrangement where the reinsurer accepts a fixed percentage of every policy written by the ceding company, sharing premiums and losses proportionally. For example, in a 40% quota share, the reinsurer receives 40% of premiums and pays 40% of losses.
Retention
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.
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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