It represents the practice of transferring the Premium and Claims portfolio of a Reinsurance Agreement from one year to the next. From a certain point of view, it defines the closure of an annuity of a Reinsurance Agreement. Clean cut is not suitable for Lines that have widely variable policy periods. Instead, it is advantageous for Agreements which cover short-tail business in which the periods of all ceded policies are annual, the level of risk does not fluctuate through the Agreement period and claims occur and are settled relatively quickly.
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