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Established

Glossary - C

CANCELLATION
Termination of an insurance contract before it is due to expire. The contract may have a cancellation clause which stipulates the conditions for cancellation which is effected by sending a cancellation notice.

CAPACITY
Also known as retention. The total underwriting capacity of an insurance company or reinsurance company.

CASH LOSS
A provision in a reinsurance contract pursuant to which large losses are paid by a reinsurer in advance of the normal account date.

CAPITAL, RESERVES AND TECHNICAL PROVISIONS
an insurer's capital and reserves, also including the provisions committed to technical business and the equalisation reserve. Total maximum funds available to offset liabilities.

CATASTROPHE LOSS
loss which has special significance for the direct insurer or reinsurer due to the amount involved; it is defined as a catastrophe loss in accordance with a fixed loss amount or other criteria.

CEDANT
direct insurer or reinsurer, which passes on (also: cedes) shares of its insured or reinsured risks to a reinsurer in exchange for premium.

CESSION
transfer of a risk from the direct insurer to the reinsurer.
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CLAIMS CONTROL CLAUSE
A provision in a reinsurance contract pursuant to which the ceding company (insurer) may not pay for a loss without the consent of the reinsurer.

CLAIMS COOPERATION CLAUSE
A clause which binds a ceding company to notify the reinsurer of all the claims which can be paid under the contract. Upon the reinsurer�s request, the reinsurer may co-operate in handling the settlement of such claims.

CLAIMS AND CLAIMS EXPENCES
sum total of paid claims and provisions for loss events that occurred in the business year; this item also includes the result of the run-off of the provisions for loss events from previous years, in each case, after the deduction of own reinsurance cessions.

COMBINED RATIO
sum of loss ratio and expense ratio.
Confidence level (also: probability level)
the confidence level defines the probability with which the defined amount of risk will not be exceeded.

CORPORATE GOVERNANCE
serves to ensure responsible management and supervision of enterprises and is intended to foster the trust of investors, clients, employees and the general public in companies.

CO � INSURANCE
An arrangement whereby two or more insurers (co-insurers) underwrite the same risk. Each of the co-insurers has a contractual relationship with the insured.

COVER NOTE
A written statement issued by an intermediary, broker, or direct writer, indicating that coverage has been effected. Also known as The Slip
Credit status (also: creditworthiness)
Liability of a debtor to meet its payment commitments.

CUT THROUGH CLAUSE (STRIKE-THROUGH CLAUSE)
An addition to an insurance policy between an insurance company and a policyholder which requires that, in the event of the company's insolvency, any part of a loss covered by reinsurance be paid directly to the policyholder or mortgagee by the reinsurer. The cut-through endorsement is so named because it provides that the reinsurance claim payment "cuts through" the usual route of payment from reinsured company-to-policyholder, followed by reinsurer-to-reinsured company, substituting instead the payment route of reinsurer-to-policyholder-or-mortgagee. The effect is to revise the route of payment only, and there is no intended increased risk to the reinsurer, although endorsement terms may provide otherwise. Similar to the Guaranty Endorsement, the cut-through endorsement is also known as an Assumption Endorsement.