PAID LOSSES – Amount of incurred losses paid out by the insurer.
PARENT – A parent is a corporation, partnership, or individual that directly or indirectly owns, controls or holds with power to vote more than 50% of the outstanding voting securities of a pure captive insurance company.
PARTICIPATING OR PRO RATA REINSURANCE – Includes quota share, first surplus, second surplus, and all other sharing forms of reinsurance where under the reinsurer participates pro rata in all losses and in all premiums.
PER RISK EXCESS REINSURANCE – Retention and amount of reinsurance apply “per risk” rather than on a per accident or event or aggregate basis.
PERIL – This term refers to the causes of possible loss in the property field – for instance: fire, windstorm, collision, hail, etc. In the casualty field the term “hazard” is more frequently used.
POLICY YEAR – The year commencing with the effective date of the policy or with an anniversary of that date.
POOL – An organization of insurers or reinsurers through which particular types of risks are underwritten with premiums, losses, and expenses shared in agreed ratios.
PORTFOLIO REINSURANCE – In transactions of reinsurance, it refers to all the risks of the reinsurance transaction. For example, if one company reinsures all of another’s outstanding automobile business, the reinsuring company is said to assume the “portfolio” of automobile business and it is paid the total of the unearned premium on all the risks so reinsured (less some agreed commission).
PORTFOLIO RUN-OFF – Permitting premiums and losses in respect of in-force business to run to their normal expiration upon termination of a reinsurance treaty.
PREMIUM (WRITTEN/UNEARNED/EARNED) – Written premium is premium registered on the books of an insurer or reinsurer at the time a policy is issued and paid for. Premium for a future exposure period is said to be unearned premium for an individual policy, written premium minus unearned premium equals earned premium. Earned premium is income for the accounting period, while unearned premium will be income in a future accounting period.
PREMIUM, DEPOSIT – When the terms of a policy provide that the final earned premium be determined at some time after the policy itself has been written, companies may require tentative or deposit premiums at the beginning which are readjusted when the actual earned charge has been later determined.
PREMIUM, PURE – The portion of the premium calculated to enable the insurer to pay losses and, allocated claim expenses or the premium arrived at by dividing losses by exposure and in which no loading has been added for commission, taxes, and expenses.
PRIVATE LETTER RULING – An IRS (Internal Revenue Service) regulation ruling how a specific transaction will be taxed.
PROFESSIONAL REINSURER – A term used to designate a company whose business is confined solely to reinsurance and the peripheral services offered by a reinsurer to its customers as opposed to primary insurers who exchange reinsurance or operate reinsurance departments as adjuncts to their basic business of primary insurance. The majority of professional reinsurers provide complete reinsurance and service at one source directly to the ceding company.
PROFIT COMMISSION – A provision found in some reinsurance agreements which provides for profit sharing. Parties agree to a formula for calculating profit, an allowance for the reinsurer’s expenses, and the cedant’s share of such profit after expenses.
PROHIBITED TRANSACTION EXEMPTION (PTE) – A Department of Labor (DOL) ruling in which a transaction is allowable under Employee Retirement Income Security Act (ERISA) regulations. This is required for pure captives insuring shareholders’ employee benefit risks.
PUNITIVE DAMAGES – Excess damage compensation awarded to the plaintiff for a loss. Anticipated to succor the plaintiff for mental anguish or to make a case in point of the defendant. Usually not included in policy limits.
PURE CAPTIVE INSURANCE COMPANY – Any company that insures risks of its parent and affiliated companies.
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After experiencing tremendous losses due to a natural disaster uncovered by my commercial carrier, I knew it was time to form a captive and shopped around for a captive manager...we couldn’t be happier that we chose Elevate.
Communication is quick and effective, documents are always organized and available and my questions are always answered efficiently and professionally.
We chose Elevate because of their reputation in our business community, and their services have exceeded expectations. We trust Elevate.
I have worked with Jerry Messick and the Elevate Captive team since 2012. They have been instrumental in guiding us properly on how to implement and run a captive successfully. The due diligence and proactive service on the part of the Elevate team is unrivaled. Their product knowledge and how to use the instrument to our benefit, while providing sound risk management and compliance principles is another huge differentiating factor for their firm. In addition, the team of experts that Elevate has referred us to in the legal and financial advisory areas has turned out to be top notch. The Captive is only as good as the entire team. Finally, it has to be mentioned that we “just plain like” Jerry and Co.. Friendly, smart and easy to work with. A real pleasure.