Glossary

Assumed premiums are premiums received or receivable for coverage provided under a reinsurance agreement.

Assumed reinsurance refers to insurance accepted from another insurer—for example, an admitted (policy-issuing) company.

In the context of self-insurance, assumed risk is risk retained by an insured. In the context of business written by an insurer, see the definition for assumed reinsurance.

Assumption refers to the amount of risk accepted by a reinsurer.

An assumption of liability agreement is a separate agreement between a company designated as the reinsurer and a policy-issuing company entered into for the benefit of an insured. It makes the reinsurer directly liable to the insured in the event of the insolvency of the issuing company. The reinsurer typically is a licensed company in the states where the insured requires coverage, thus giving insureds access to an insurer that is subject to state regulation. Another important provision specifies that the agreement takes precedence over any other reinsurance contracts or arrangements between the reinsurer and the primary insurer. These agreements are almost always made between affiliated insurers.

An assumption of liability endorsement is added to an insurance policy to provide that, in the event of the insurance company's insolvency, the amount of any loss that would have been recovered from the reinsurer by the insurance company will be paid instead directly to the policyholder by the reinsurer. It is also referred to as a cut through or assumption of risk endorsement.

Assumption of risk is based on the maxim " volenti non fit injuria " ("to a willing person, injury is not done"). If a person knows the consequences of a particular act and voluntarily accepts that risk, they are solely responsible for any resulting injury.

Assumption of the risk doctrine is a common law defense that has been used to pass the responsibility for loss or injury onto the injured party by asserting that the individual had knowledge and understanding of the hazards involved in the undertaking and is therefore not entitled to recovery. Legal decisions have eroded and narrowed the applicability of this defense.

Assurance is a British term meaning "insurance." Policies and endorsements written in London and Bermuda markets, among other places, may use this terminology.

Assured is a British term meaning "insured." Policies and endorsements written in London and Bermuda markets, among other places, may use this terminology.