• Declaratory Judgment

    A decision by a court in a proceeding, which can be brought by either the insurer or the insured, to determine the rights of the parties. In insurance, for example, a court decision may be sought to determine whether an insurance company has an obligation to defend, indemnify or pay on behalf of its insured policyholder under a policy with regard to a particular loss or losses.

  • Deemed (Or So Deemed)

    A condition which is said to exist by agreement between the parties even though it may not exist in fact (e.g., "all policy limits greater than $1,000,000 are to be reinsured on a pro rata facultative basis, or be so deemed.") To deem means to treat as if.

  • Deficit

    As used in reinsurance, any excess of charges over credits at the end of any accounting period (which excess shall be a charge in the computation of the contingent commission for the succeeding period, or in computing various experience-rated reinsurance arrangements).

  • Deposit Premium

    When the terms of a treaty provide that the ultimate premium is to be determined at some time after the treaty has been written, the reinsurer may require a tentative or a deposit premium at the beginning. The tentative premium is readjusted when the actual earned charge has been determined. See Advance Premium.

  • Direct Action Statute

    A provision in a state's law allowing a third party to cut through the insured or insurer to the insurer or reinsurer.

  • Direct Writer

    1. In reinsurance, a reinsurer which negotiates with a ceding company without benefit of an intermediary or broker.
    2. In insurance, a primary insurer that sells insurance through licensed agents who produce business essentially for no other organizations.
  • Direct Written Premium

    The gross premium income (written instead of earned) of a primary company, adjusted for additional or return premiums but before deducting any premiums for reinsurance ceded, and not including any premiums for reinsurance assumed.

  • Domestic Company

    An insurer conducting business in its domiciliary state from which it received its charter to write insurance, as opposed to a foreign company (which is an insurer conducting business in a state other than its domiciliary state), or an alien company (which is an insurer domiciled outside the U.S. while conducting business within the U.S.).

  • Drop-Down Coverage

    In reinsurance, a method of structuring the retention and limit of a particular layer of a property catastrophe excess reinsurance program so that, in the event that a loss (or losses) exhausts the reinsurance limit in a stated lower layer, the unexhausted limit of the highest upper layer would drop down to respond to subsequent loss(es) during the same contract period as a replacement for the lower layer. Such a method is often referred to as "top-and-drop" coverage. For example, if the first layer of $10 million xs (excess) $10 million in a program of $140 million xs $10 million were exhausted, the top layer (for this example, $10 million xs $140 million) will drop down and provide $10 million xs $10 million for a negotiated number of additional occurrences. Another use of drop-down coverage may occur within the first catastrophe layer, wherein the loss retention in a contract drops after the first loss and the layer limit then expands. For a different example, if the first layer coverage were $1 million xs $1 million and a loss in excess of $1 million occurred, provision would be made for the retention to drop to a lesser amount, such as $750,000, and for the limit to expand to $1,250,000 for the second and subsequent losses in the same period, but subject to the annual aggregate limit as negotiated.