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 Credit

    An accounting entry made by an insurer for premiums ceded to ...
  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. Portfolio Reinsurance

    A type of reinsurance contract in which an insurer has a large ...
Related Articles
  1. Insurance

    The Business Model of Reinsurance Companies

    Learn about the business of reinsurance, a hidden industry that underpins the entire financial and insurance structure around the globe.
  2. Insurance

    When Things Go Awry, Insurers Get Reinsured

    Guru Warren Buffett is making this sector popular. Learn more here.
  3. Insurance

    Facultative vs. Treaty Reinsurance: Differences and Examples

    Reinsurance companies offer insurance to other insurers in case the traditional insurer does not have enough money to pay claims against its written policies.
  4. Tech

    The Reinsurance Industry: An Inside Look (BRK.A)

    Warren Buffett has a major influence on the global reinsurance market, which has seen momentum in 2016 for higher revenue.
  5. Insurance

    Insurance, Excess Insurance and Reinsurance: What's the Difference? (ALL)

    Understanding the differences might help you avoid being overinsured or underinsured.
  6. Insurance

    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.
  7. Insurance

    Third Point Reinsurance Notes Largest Profit in Years

    Third Point Reinsurance saw a tripling of net income in the second quarter of 2016 over last year.
  8. Financial Advisor

    How Utmost Good Faith is Applied in Practice

    The principle of utmost good faith is an articulation of the need for both parties to act in a completely open and honest manner with each other to facilitate access to services at a fair market ...
  9. Taxes

    2 Ways Hedge Funds Avoid Paying Taxes

    Learn about two strategies hedge funds use to minimize their tax liabilities. Read why some hedge funds are in the reinsurance business in Bermuda.
  10. Insurance

    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.
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 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 >>
  3. 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 >>
  4. 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 >>
  5. How can I invest in a mutually owned insurance company?

    Read about the difference between mutual and stock insurance companies, including how to become a de facto investor of a ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment is made with the expectation of earning a return on it. This ...
  3. Treynor Ratio

    A ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a riskless ...
  4. Buyback

    The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies ...
  5. Tax Refund

    A tax refund is a refund on taxes paid to an individual or household when the actual tax liability is less than the amount ...
  6. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced within a country's borders in a specific time period, ...
Trading Center