Chapter 7 Glossary

Question 1

Clash cover

Answer 1

Excess of loss reinsurance cover, limiting an insurers’ exposure to the risk that one claim incidence gives rise to claims on more than one policy

Question 2

Coinsurance

Answer 2

An arrangement whereby two or more insurers enter into a single contract with the insured to cover a risk in agreed proportions at a specified premium. Each insurer is liable only for its own proportion of the total risk. It is frequently applied to individual “slip” business in the London Market where a lead insurer takes a major share of the risk and manages the outturn, while others subscribe on fixed terms.
The term is also used in direct insurance and reinsurance to describe an arrangement in which the insured or cedant retains a proportion of their own risk.