Glossary

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.

Causes of loss forms are Insurance Services Office, Inc. (ISO), commercial property insurance forms that establish and define the causes of loss (or perils) for which coverage is provided. A causes of loss form is combined with one or more coverage forms, the commercial property conditions form, the common policy conditions form, and the declarations to make up an ISO commercial property policy. There are three causes of loss forms: the basic, broad, and special causes of loss forms. The basic and broad causes of loss forms are named perils forms; they provide coverage for loss from only the particular causes that are listed in the policy as covered. The special causes of loss form is an all risks form; it provides coverage for loss from any cause except those that are specifically excluded.

To cede is when a company reinsures its liability with another.

Ceded premiums refer to premiums paid or payable by the captive to another insurer for reinsurance protection.

A cedent is a ceding insurer or a reinsurer.

Ceding commission is the remuneration paid to the ceding insurer/reinsurer by the assuming reinsurer (either entity could be a captive), compensating the cedent for various expenses that it incurs, such as underwriting and business acquisition expenses.