Glossary

A catastrophe bond is a derivative debt investment vehicle issued by insurers and reinsurers designed to raise investor capital to cover catastrophic loss events.

Catastrophe equity put refers to a contract that allows an insurer to exercise an opportunity, but not the obligation, to exercise an option at a specific index value in the event that losses (the index value) exceed a predetermined level, thus requiring additional equity capital.

A catastrophe plan is a prepared strategy detailing how a particular organization will respond to a disaster.

A catastrophe policy is the name previously used for major medical insurance.

Catastrophe reinsurance is a form of reinsurance that indemnifies the ceding company for the accumulation of losses in excess of a stipulated sum arising from a single catastrophic event or series of events.

Catastrophe reserves are reserves on a captive's balance sheet that are for paying neither known nor incurred but not reported (IBNR) losses.

Catastrophic loss refers to loss in excess of the working layer, usually of such magnitude as to be difficult to predict and therefore rarely self-insured or retained.

Category 3 water is grossly contaminated with pollutants, including fungi and bacteria.

A cat bond lite is a risk-transfer agreement, such as an industry loss warranty (ILW) or collateralized reinsurance contract, that is transformed into a security.

Causes of loss are the perils that can bring about or trigger loss or damage.