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Glossary
International programmes

Fronting

Agreement by which a local insurer issues the policy required in its country and transfers the risk, through reinsurance, to the programme's insurer or the group's captive.

In practice

It resolves the requirement for an admitted policy without fragmenting the underwriting. It has a cost —the fronting commission— and leaves a credit risk: the entity paying the insured is the local one, not the one assuming the risk behind.

Where it is addressed

This term is covered in Gestión del programa and applies when taking out Programas Internacionales.

Related terms

Admitted local policyPolicy issued in the subsidiary's country by an entity authorised there, in accordance with its regulations and taxation.CaptiveInsurer or reinsurer owned by the business group itself, created to orderly retain part of its risk.ReinsuranceContract by which an insurer cedes part of the assumed risk to another entity.Cash before coverRule in force in several countries whereby cover does not commence until the premium has been effectively paid.DIC clauseClause of the master policy that covers the guarantees not included in the local policy, elevating the subsidiary to the group's standard.DIC ClauseClause of the master policy that completes the indemnity when the limit of the local policy is exhausted before the group's standard.
PreviousTime excessNextGuarantee of amounts on account

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