• Obligatory Treaty

    A reinsurance contract (usually pro rata) under which the subject matter business must be ceded by the ceding company in accordance with contract terms and must be accepted by the reinsurer. Also known as Automatic Treaty.

  • Occurrence

    1. In a non-insurance sense, an incident, event or happening. In insurance, the term may be defined as continual, gradual, or repeated exposure to an adverse condition which is neither intended nor expected to result in injury or damage, as contrasted with an accident which is a sudden happening. In reinsurance, per occurrence coverage permits all losses arising out of one event to be aggregated instead of being handled on a risk-by-risk basis.
    2. One basis or determinant for calculating the amount of loss or liability in insurance or reinsurance when an aggregation of related losses is to constitute a single subject of recovery. For example, in property catastrophe reinsurance treaties, occurrence is usually defined so that all losses within a specified period of time involving a particular peril are deemed to be an occurrence.
  • Odd Time

    A term used in run-off language for the part of a policy period greater than the twelve months of coverage usually provided in order to accommodate a special policy term need of an insured, such as bringing the policy anniversary date into conformity with other policies issued to the same insured.

  • Offset (verb)

    To reduce the amount owed by one party to a second party under one agreement or transaction by crediting the first party with amounts the second party owes the first party under other agreements or transactions for the purpose of determining the amount, if any, the first party owes to the second. The use of "offset" as a verb and "setoff" as a noun has been consistently used in federal bankruptcy statutes since the first bankruptcy act was enacted in 1800. See also Counterclaim, Recoupment, and Setoff.

  • Operating Income or Profit

    The sum of the net investment income and net underwriting income in any reporting period.

  • Operating Ratio

    The arithmetic sum of two ratios: incurred loss to earned premium, and incurred expense to written premium. Considered the best simple index to current underwriting performance of an insurer.

  • Original Conditions

    A term used in both treaty and facultative reinsurance which incorporates by reference all of the terms (as well as amendments, modifications, alteration, and waivers) of the original policy written by the insurer that are not modified in the reinsurance contract, i.e., the location of the property and the rate, among others. See Follow the Fortunes, which is totally different in concept and is applicable only to treaty reinsurance, but which is often used in tandem with Original Conditions.

  • Original Insurer

    The insurer which writes a policy for a policyholder (which may or may not create the need for reinsurance).

  • Original Policy

    The policy written by the original insurer.

  • Overline

    The amount of insurance or reinsurance written which exceeds the insurer's or reinsurer's normal underwriting capacity, inclusive of automatic reinsurance facilities. See Underwriting Capacity.

  • Overriding Commission

    1. A fee or percentage of money which is paid to a party responsible for placing a retrocession of reinsurance.
    2. In insurance, a fee or percentage of money which is paid by the insurer to an agent or general agent for premium volume produced by other agents in a given geographic territory.