What is fronting mean in insurance?
Essentially, fronting insurance is a term that describes a relationship between two entities: one is an admitted carrier of commercial insurance and the other is an unrelated captive or organization that cannot write insurance coverage.
What are fronting arrangements?
Fronting Arrangement means an arrangement through which an insurer cedes more than ninety-five percent of the risk under an insurance contract that it has entered into, to another insurer or reinsurer, while remaining liable under the insurance contract to the insured; Sample 1.
What is the purpose of fronting?
The primary purpose of fronting is compliance with insurance regulations. However, an important secondary purpose is to access services such as claims handling and risk control, as well as excess risk transfer capacity, from the fronting insurer in a cost-effective manner.