Fronting Agreement Reinsurance

Benchmark`s experts have decades of experience and can guide you through the process. To speak to one of our members, call 800-283-0622 or contact us online today. The insurance world is known for all sorts of complex and confusing terms that are used to describe different relationships – comtification, deductible insurance, retrocession and dozens more. For most people, the concept of fronting insurance is one of those confusing ideas, and for good reason. It`s not something you hear about every day, even though it`s happening in the background at businesses of all sizes, including some of the largest in the world. On this page you will find some of the basics of fronting arrangement to help you understand them better. The fronting company will almost always need guarantees to guarantee the captive`s commitments to the front company under the fronting agreement. Guarantees are one of three forms: captive funds withheld by the shell company, a trust agreement financed by investment securities of the captive or a credit issued by a bank on behalf of the captive (usually secured by investment securities of the captive). The insurance company that takes out the original policy is called a fronting company. This company receives a percentage of the premium, although it has transferred all risks to the reinsurer responsible for all claims against the policy that it now effectively controls. .

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