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Bad Faith

The fraudulent deception of another person; the intentional or malicious refusal to perform some duty or contractual obligation. (West's Encyclopedia of American Law, edition 2, 2008)


Bad Faith allegations and judgmments in insurance usually relate to claimants' accusations of negligent claims handling practices by the insurer.  Reinsurance coverage for Bad Faith judgments is specifically addressed within reinsurance agreements, in the Extra Contractual Obligations clause.


A concept in reinsurance dealing with the relationship between ceded premium and the maximum limit of liability to which the reinsurer is exposed.  The precise relationship will vary from treaty to treaty, but if the ratio desired for a specific treaty is achieved, the treaty if referred to as "balanced."  Lower level reinsurances usually need higher premium to limit ratios in order to achieve balance. 

Basis Points
A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of fixed-income security.

A detail report of premium or losses periodically furnished to reinsurers by the reinsured pursuant to the terms of the reinsurance contract.  A premium bordereau contains a detailed list of policies (or bonds) reinsured under a reinsurance treaty during the reporting period, reflecting such information as the name and address of the primary insured, the amount and location of the risk, the effective and termination dates of the primary insurance, the amount reinsured and the reinsurance premium applicable thereto. A loss bordereau contains a detailed list of claims and claims expenses outstanding and paid by the reinsured during the reporting period, reflecting the amount of reinsurance indemnity applicable thereto.  


A reinsurance intermediary who negotiates contracts of reinsurance between a reinsured and reinsurer on behalf of the reinsured, receiving commission for placement and other services rendered from the reinsurer. Under the terms of a standard Intermediary clause pursuant to NY Reg 114, premiums received by the broker from a reinsured are considered paid to the reinsurer, but loss payments and other funds (such as premium adjustments) paid a broker by a reinsurer are not considered paid to the reinsured until actually received by the reinsured.  This places the credit risk of the intermediary onto the reinsurer.

Broker and Reinsurance Markets Association (BRMA)

Founded in 1986, BRMA is a networking forum for treaty property and casualty treaty reinsurance professionals. The membership consists of several of the foremost reinsurance organizations in the United States and Bermuda that continually work to find ways to improve the efficiency and effectiveness of the reinsurance industry.  from their website


Reference to BRMA is often made in the context of reinsurance contract clause wordings.  BRMA has developed a number of "boilerplate" clauses utilized by intermediaries and broker market reinsurers.

Brokerage Commission

An amount paid a broker for insurance or reinsurance placement and other services.  Reinsurance intermediaries are traditionally paid a percentage of ceded premium (1% - 10% depending on structure).  Flat fee, percentage of reinsurer margin, or other arrangements are also used.

Brokerage Market

A collective reference to those reinsurers which accept business mainly through reinsurance intermediaries.  The alternative to broker markets are direct reinsurers, who negotiate and accept business directly with cedents.


Buffer Layer

Used in casualty insurance to describe a stratum of coverage between the maximum policy limit which the primary underwriter will write and the minimum attachment point over which the excess or umbrella insurer will cover.