Insurance & Reinsurance Glossary

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Other Terms

Net Premium

The premium retained by the insurer after deducting premiums ceded to reinsurers. Net premium is the basis for the insurer's own loss ratio calculation and reflects its actual exposure after reinsurance. Net Retained Premium (NRP) = Gross Written Premium minus Reinsurance Premiums Ceded.

Quota Share Reinsurance

A proportional reinsurance treaty under which the cedant cedes a fixed percentage of premiums and losses on all risks in a defined portfolio to the reinsurer. For example, under a 40% quota share, the cedant cedes 40% of premiums and recovers 40% of all losses. Simple to administer and suitable for high-frequency, lower-severity portfolios.

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Underwriter

A specialist who assesses and prices insurance or reinsurance risks. The underwriter decides whether to accept a risk, on what terms and at what premium. In the Lloyd's market, underwriters sit at the box and subscribe on behalf of their syndicate. In company markets, underwriters operate within authority delegated by management.

Wording

The complete contractual text of an insurance or reinsurance policy, encompassing all terms, conditions, coverage grants, exclusions and warranties. The precision and comprehensiveness of the wording determines the scope of coverage in a claim scenario. Policies may use standard market wordings (e.g. Lloyd's standard forms) or bespoke wordings negotiated between the parties.

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