» Common Terms and Definitions
|11 Terms found.|
|captive agent  |
An insurance agent working exclusively for a single company, as opposed to an independent agent.
|Captive Insurance Company  |
Formed to insure the risks of its parent company.
|CICA  |
Captive Insurance Companies Association
|Fronting  |
The process whereby an insurance company issues an insurance policy to the insured and then reinsures all or most of the risk with the insured's captive insurance company or elsewhere as directed by the insured. This approach allows the insured to issue certificates of insurance acceptable to regulators and lenders and avoids the burden of licensing the insured's captive in all states or of becoming a qualified self-insurer in all states.
|PORC  |
Producer-Owned Reinsurance Captive
|Producer-Owned Reinsurance Captive  |
This is a type of captive reinsurance company that underwrites risks of an affiliated operating business by means of having those risks first directly underwritten by a fronting insurance company which then cedes those risks on through to the captive as reinsurer. The insurance is "producer-owned" in the sense that the producer of the initial insurance contract owns the captive. In some instances, this type of reinsurance company is owned by an insurance agent and broker, in which case, it is not technically-speaking a captive insurer since it is not owned by the owners of the affiliated operating company.
|Protected Cell Company  |
A type of captive in which each memberís capital and surplus is segregated and protected from other members. Third parties cannot access the assets.
|Rent-a-Captive  |
An arrangement under which an organization rents capital from a rent-a-captive facility, pays a premium, and receives reimbursement for losses, as well as credit for underwriting profit and investment income.
|Risk Retention Group RRG  |
Group Captive formed and regulated under the Liability Risk Retention Act of 1986.
|SRBE  |
A small risk bearing entity (SRBE) such as a captive, pool, trust or small insurance company. An SRBE is subject to less regulation than an admitted insurance company. This attractive feature of a SRBE is also dangerous, as freedom from regulation can lead to a lack of financial and operational guidelines to protect surplus.
|Unbundling  |
The practice of separating risk handling and risk funding services either from a multiline insurer or from themselves. Captives that require a "front" may also be required to purchase all or some of the services from the same insurer. This is a "bundled" program. Unbundling indicates the ability to purchase services from any vendor, not just those associated with the fronting insurer.