automatic reinsurance

  • A reinsurance procedure whereby the reinsurance company binds itself unconditionally to accept reinsurance for specified amounts in proportion to the amount retained as its own risk by the direct-writing company. This permits the direct-writing company to issue a policy at once if the amount of insurance is within its own retention plus automatic coverage.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).