Assumption Endorsement

DEFINITION of 'Assumption Endorsement'

A supplemental insurance policy stipulating that, should the original insurer become insolvent, any claim covered by the reinsurance will be paid directly to the policyholder by the reinsurer, rather than through the traditional channels. This is not intended to increase the risk to the reinsurer but, rather, to expedite the claims process. Also called a "cut-through endorsement."

BREAKING DOWN 'Assumption Endorsement'

The assumption, or cut-through, endorsement derives its name from the fact that it "cuts through" the proverbial "red tape" so often associated with insurance claims, providing prompt, hassle-free payments of claims.

RELATED TERMS
  1. Cut-Through Clause

    A reinsurance contract provision that allows a party other than ...
  2. Reinsurance Recoverables to Policyholder ...

    The amount of incurred losses covered by reinsurers compared ...
  3. Reinsurer

    A company that provides financial protection to insurance companies. ...
  4. Reinsurance Ticket

    A notification made by an insurer which discloses the different ...
  5. Reinsurance Recoverables

    The portion of an insurance company’s losses from claims that ...
  6. Aggregate Stop-Loss Reinsurance

    A type of reinsurance agreement in which losses over a specific ...
Related Articles
  1. Markets

    5 Reinsurance Stocks To Watch

    Due to the decline in the reinsurance sector, many stocks within the sector are now trading at historic lows relative to book value. For investors, the time may be right to pounce on the values.
  2. Managing Wealth

    How Does Reinsurance Work?

    Reinsurance is a practice in which insurers transfer portions of portfolios to other parties in order to reduce their exposure to claims.
  3. Personal Finance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  4. Investing

    The Industry Handbook: The Insurance Industry

    As a result of globalization, deregulation and terrorist attacks, the insurance industry has gone through a tremendous transformation over the past decade. In the simplest terms, insurance of ...
  5. Personal Finance

    How Big Data Has Changed Insurance

    No longer confined to technology, big data has become integral to providing solutions to the insurance industry's long standing challenges.
  6. Personal Finance

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  7. Personal Finance

    Understanding Endorsements

    In financial terminology, endorsement has a couple of different meanings.
  8. Markets

    Aspen Doesn't Really Stand Out

    Aspen looks like a middling option for investors considering insurance stocks.
  9. Personal Finance

    How Life Insurance Payouts Work

    Life insurance provides peace of mind to policyholders and their loved ones.
  10. Personal Finance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
RELATED FAQS
  1. Why do some companies in the insurance sector engage in reinsurance?

    Discover how some companies in the insurance sector engage in reinsurance. Reinsurance allows insurance companies to transfer ... Read Answer >>
  2. What is reinsurance?

    Reinsurance occurs when multiple insurance companies share risk by purchasing insurance policies from other insurers to limit ... Read Answer >>
  3. What is Warren Buffett's relation to "Supercat" insurance?

    Understand the concept of catastrophe reinsurance and learn how Berkshire Hathaway makes billions providing such insurance ... Read Answer >>
  4. Can my insurance company refuse me coverage?

    Insurance isn't always as straightforward as other products. Insurers can deny coverage in many different instances:Non-Renewal ... Read Answer >>
  5. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  6. What risks do I face when investing in the insurance sector?

    Read about the unique challenges faced by insurers, and learn how those challenges manifest themselves as risks for equity ... Read Answer >>
Trading Center