Glossary

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Quota Share Reinsurance

Insurance Term

Quota Share Reinsurance is a type of reinsurance in which the original insurer (known as the ceding company) agrees to cede a specific percentage of each policy to the reinsurer. The reinsurer then assumes a corresponding percentage of the risk associated with each policy.

For example, if an insurer cedes 30% of a policy to a reinsurer, the reinsurer will assume 30% of the losses associated with that policy. The insurer will continue to manage the policy and will remain responsible for collecting premiums from the policyholder.

Quota Share Reinsurance is commonly used in the insurance industry to help companies manage risk and balance their portfolio. By ceding a portion of each policy to a reinsurer, the insurer can reduce its exposure to large losses and limit its overall risk. This can free up capital and allow the insurer to underwrite more policies.

The reinsurer benefits from this arrangement by receiving a portion of the premiums paid by the policyholder. However, because the reinsurer is assuming a portion of the risk associated with each policy, it also assumes some of the insurer*s responsibilities for managing the policy. This includes underwriting, claims management, and premium collection.

Overall, Quota Share Reinsurance allows insurers to manage their risk while still underwriting policies and collecting premiums. It is a common technique used by insurance companies to optimize their risk exposure and maintain a stable financial position.

More Glossary Terms Beginning with Q

Qualified Person
A technical term used in European Union pharmaceutical regulation (Directive 2001/83/EC for Medicinal products for human use); the regulations specify that no batch of medicinal product can be released for sale or supply prior to certification by a QP that the batch is in accordance with the relevant requirements. The QP is typically a licensed pharmacist, biologist or chemist (or a person with an

Health Care Term Letter: Q
Qualifying SPEs QSPEs
These entities are a specific type of Variable Interest Entity defined in ASC 860, Transfers and Servicing. The activities of QSPEs are significantly limited and entirely specified in the legal documents that established the entity. There also are significant limitations on the types of assets and derivative instruments they may hold and the types and extent of activities and decision-making they

Financial Term Letter: Q
Quarterly Required Amount
means, for the reset rate notes, (1) on any reset date, the Reset Period Target Amount or (2) on a distribution date that is one year or less before the next reset date (x) the Reset Period Target Amount multiplied by (y) 5 minus the number of distribution dates remaining until the next reset date for the reset rate notes (excluding the current distribution date and including the next reset date),

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Quick Ratio
A financial strength ratio that measures proportion of companys cash & shortterm investments to companys current liabilities. Quick Ratio displays the ability to pay current liabilities with the cash & shortterm investments. The higher the number, the stronger the balance sheet of the company. Quick Ratio Formula = (cash & shortterm investments / current liabilities)

Fundamental Analysis Letter: Q
Quota Share Reinsurance
Reinsurance wherein the insurer cedes an agreed-upon fixed percentage of liabilities, premiums and losses for each policy covered on a pro rata basis.

Insurance Term Letter: Q

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Accident Year
The annual calendar accounting period in which loss events occurred, regardless of when the losses are actually reported, booked or paid.

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Admitted Insurer
A company licensed to transact insurance business within a state.

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Annuity
A contract that pays a periodic benefit over the remaining life of a person (the annuitant), the lives of two or more persons or for a specified period of time.

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Assigned Risk Pools
Reinsurance pools which cover risks for those unable to purchase insurance in the voluntary market. Possible reasons for this inability include the risk being too great or the profit being too small under the required insurance rate structure. The costs of the risks associated with these pools are charged back to insurance carriers in proportion to their direct writings.

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Assumed Reinsurance
Insurance risks acquired from a ceding company.

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Average Value Analysis
An actuarial method used to estimate ultimate losses for a given cohort of claims such as an accident year/product line component. If the paid-to-date losses are then subtracted from the estimated ultimate losses, the result is an indication of the unpaid losses. The basic premise of the method is that average claim values are stable and predictable over time for a particular cohort of claims. The

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Bornhuetter-Ferguson Method
An actuarial method to estimate ultimate losses for a given cohort of claims such as an accident year/product line component. If the paid-to-date losses are then subtracted from the estimated ultimate losses, the result is an indication of the outstanding losses. The basic premise of the method is that the historical ratio of additional claim activity to earned premium for a given product line com

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Capacity Insurance
The percentage of surplus, or the dollar amount of exposure, that an insurer or reinsurer is willing or able to place at risk. Capacity may apply to a single risk, a program, a line of business or an entire book of business. Capacity may be constrained by legal restrictions, corporate restrictions or indirect restrictions.

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Captive
A closely-held insurance company whose primary purpose is to provide insurance coverage to the companys owners or their affiliates.

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Case Incurred Development Method
An actuarial method to estimate ultimate losses for a given cohort of claims such as an accident year/product line component. If the paid-to-date losses are then subtracted from the estimated ultimate losses, the result is an indication of the unpaid losses.

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Case Reserves
Claim department estimates of anticipated future payments to be made on each specific individual reported claim.

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