What is fronting mean in insurance

How does a fronting carrier work?

In a fronting programme, an insurance company (the fronting carrier) issues a policy and transfers some or all of the risk back to the insured. Most fronting programmes utilise a reinsurance cession to the insured's captive to secure the risk participation required by the insured.

What is a fronting fee?

In the context of syndicated credit facilities, the fee payable by the borrower to the fronting bank for the credit risk the fronting bank takes on the syndicate lenders counter-indemnifying it pro-rata to their participation in the relevant facility should it have to pay out under a letter of credit, bond or guarantee ...

What is a fronting company?

Understanding Fronting Policies\n\n The insurance company that underwrites the original policy is known as the fronting company. This entity receives a percentage of the premium despite ceding all of the risks to the reinsurer, which is responsible for all claims made against the policy it now effectively controls.

What is a fronted deductible?

The insurer will typically front the deductible, paying the claimant in full, then bill the insured for reimbursement of the deductible amount. If the insured cannot pay/reimburse the deductible, the claimant is still made whole by the insurer.