DEFINITION of 'Benchmark Surplus'

Benchmark surplus is an insurance term that refers to the amount of surplus from an additional capital source that would be necessary to act as a supplement to the cash flow. The benchmark surplus would be required when unforeseen contingencies occur that could disrupt or impair the cash flow necessary for an insurance company to make future benefit payments for which it has already received the premiums.

BREAKING DOWN 'Benchmark Surplus'

Benchmark surplus refers to any needed additional equity or surplus beyond the equity or surplus currently held by an insurance company or industry. Benchmark surplus is the liquid assets required in addition to those currently held currently held, that an insurance company would need to cover additional benefit claims.

RELATED TERMS
  1. Budget Surplus

    A budget surplus is a situation in which income exceeds expenditures. ...
  2. Adjusted Surplus

    The surplus (assets minus liabilities) of an insurance company ...
  3. Capital Surplus

    Capital surplus is equity which cannot otherwise be classified ...
  4. Premium to Surplus Ratio

    Net premiums written divided by policyholders’ surplus. The premium ...
  5. Current Account Surplus

    A current account surplus is a positive current account balance, ...
  6. Return On Policyholder Surplus

    The ratio of an insurance company’s net income to its policyholder ...
Related Articles
  1. Investing

    Germany Achieves Another Record Trade Surplus

    Germany has posted yet another record trade surplus while the rest of the eurozone struggles from weak demand and deflationary pressures.
  2. Investing

    What's the Balance of Trade?

    The balance of trade is the difference between the value of all the goods and services a country exports and the goods and services it imports.
  3. Financial Advisor

    Mutual Vs. Publically Traded Insurance Companies

    Should you buy your insurance policy from a mutual or publically traded insurance company?
  4. Insights

    Exploring the Current Account in the Balance of Payments

    Learn how a country's current account balance reflects the country's economic health.
  5. Financial Advisor

    5 Companies Benefiting From Germany's Record Surplus

    A weaker euro is boosting German exports, which have led to a record trade surplus. Here are five German companies reaping the benefits.
  6. Investing

    Benchmark To Show Winning Returns

    You can't win if you don't keep score. Read on to learn how to measure your returns.
  7. Financial Advisor

    Permanent Life Policies: Whole vs. Universal

    If you're looking for life-long security, choosing between these two is the key.
  8. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  9. Insurance

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
RELATED FAQS
  1. What's the difference between economic value added (EVA) and producer surplus?

    Understand economic value added and producer surplus. Learn why companies focus on economic value added and producers focus ... Read Answer >>
  2. What's more important, cash flow or profits?

    Learn about the different effects that cash flow and profit have on a business so you can decide which aspect to focus on. Read Answer >>
Hot Definitions
  1. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  2. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  3. Risk Tolerance

    The degree of variability in investment returns that an individual is willing to withstand. Risk tolerance is an important ...
  4. Donchian Channels

    A moving average indicator developed by Richard Donchian. It plots the highest high and lowest low over the last period time ...
  5. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, ...
  6. Moving Average - MA

    A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out ...
Trading Center