Glossary

Aggregate

Insurance or reinsurance which protects a company from a higher than expected accumulation of individual losses over a set period of time excess of a pre-determined amount.

ART

Alternative Risk Transfer being the procurement of insurance using alternative risk transfer methods such as captives and risk retention groups as opposed to the purchase of insurance from traditional insurers.

Association Captive

A captive which is sponsored or owned by an association.

Bond

A surety bond provided by a self-insurer to protect the self-insured retention for the benefit of future claimants in the event that it is unable to meet its financial obligations.

Captive

A corporation formed by a business or a group of affiliated businesses for the purpose of accepting insurance or reinsurance risks in which they have an insurable interest.

Captive Domicile

The state or country jurisdiction in which a captive is registered.

Catastrophe Reinsurance

The protection of an insurance carrier, captive or risk retention group against a single event in which multiple policyholders of the reinsured are involved.

Clash Reinsurance

Liability reinsurance which responds when two or more policies are involved in the same loss occurrence or when a loss arising from a single policy exceeds the policy limit as a result of expenses or legal judgements.

Consumer Directed Healthcare

High-deductible health plans, personal health care spending accounts, such as Health Savings Accounts (HSAs), and tiered benefit plans ,which are designed to reduce healthcare costs through patient participation in costs and choice.

ERISA

The Employee Retirement Income Security Act of 1974 which governs, inter alia, the self-funding of employee benefits.

Excess Insurer

An insurer or reinsurer who provides specific excess of loss protection excess of a self-insured retention.

Group Captive

A captive that is owned by a number of different parent companies, normally from the same industry.

HMO

An independent health care organization which is made up of health care providers and affiliated health care institutions that together provide a comprehensive range of services direct to their members in return for a monthly fee.

Losses Occurring

Reinsurance that covers losses that physically occur during the contract period.

Managed Care

A term commonly used to describe healthcare arrangements where the cost of delivery is agreed in advance of claims, either on discounted fee for service basis or on an annual capitated fee per person regardless of whether that person suffers a claim.

MEWA

Multiple Employer Welfare Organisation. An association of small employers which form for the purpose of purchasing healthcare for their members.

PPO

See "Preferred Provider Organisation"

Preferred Provider Organisation (PPO)

A healthcare delivery network where insurance providers contract with the PPO at various pre-determined reimbursement levels in return for steering patients into their practices and prompt payment.

Protected Cell Captive

A form of Rent-a-Captive where the assets of each user are protected from other users by law. Protected Cell Captives are sometimes referred to as Segregated Cell Captives.

Pure Captive

A captive that is formed for the purpose of only insuring risks of its parent as opposed to others. Pure captives are sometimes referred to as Single Parent Captives.

Quota Share Reinsurance

A reinsurance treaty arrangement that follows the fortunes of the company purchasing the reinsurance with the reinsurer receiving the same percentage of premium as it pays in claims.

Reinsurance

Insurance contracts that protect an insurance or captive insurance company from exposure to excessive financial risks.

Rent-a-Captive

An arrangement whereby the capital base of a captive insurer is leased to enable the user to accept insurance business without the need to separately finance or fund a captive of its own.

Risk Retention Act

The Federal Liability Risk Retention Act of 1986 which allows the formation of Risk Retention groups providing that that all owners are insured with the Risk Retention Group and engaged in similar businesses or activities

Risk Retention Group

An onshore group or association captive that is formed under the provisions of the Federal Liability Risk Retention Act of 1986

Risks Attaching

Reinsurance that covers losses with regard to policies that incept or renew during the contract period.

Segregated Cell Company

A form of Rent-a-Captive where the assets of each user are protected from other users by law.

Self-Insurance

When a company, or group of companies, pays part of its own insurance losses and also assumes the role of an insurer by establishing systems to pay those claims.

Self-Insured Fund

An arrangement whereby a group of companies band together to mutually self-insure their WCA exposures.

Specific

A form of insurance or reinsurance which relates to an individual loss.

Third Party Administrator

An independent organization that provides administrative services including claims processing and underwriting for other entities, such as insurance companies or self-insuring employers.

TPA

See Third Party Administrator

Treaty

A form of reinsurance contract commonly used to formalise proportional agreements whereby reinsurers pay the same pre-determined amount of each claim as they receive in premium (as opposed to non-proportional or excess of loss).

WCA

Workers Compensation.

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