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What is the Definition of Fronting?

What is the Definition of Fronting?

A procedure in which a primary insurer acts as the insurer of record by issuing a policy, but then passes the entire risk to a reinsurer in exchange for a commission. Often, the fronting insurer is licensed to do business in a state or country where the risk is located, but the reinsurer is not. The reinsurer in this scenario is often a captive or an  independent insurance company that cannot sell insurance directly in a particular country.

Source: Insurance Handbook A guide to insurance: what it does and how it works |

Label: Insurance
Theme: Dictionary of Insurance Terms

Other Questions: What is the definition of Annuity?

What is the Definition of Fronting?

What is the Definition of Fronting?

You can find random definition and meaning of insurance terms below:

Meaning of Original Equipment Manufacturer Parts in Insurance Terms

Sheet metal auto parts made by the manufacturer of the vehicle. (See Generic auto parts)

Meaning of Over-The-Counter/Otc in Insurance Terms

Security that is not listed or traded on an exchange such as the New York Stock Exchange. Business in over-the-counter securities is conducted through dealers using electronic networks.

Meaning of Package Policy in Insurance Terms

A single insurance policy that combines several coverages previously sold separately. Examples include homeowners insurance and commercial multiple peril  insurance.

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