Time And Distance Reinsurance
What Does Time And Distance Reinsurance Mean?
Time and distance reinsurance is a type of reinsurance policy that was particularly popular in the United Kingdom, especially in London. Under this arrangement, insurance companies would make a large lump sum payment to a reinsurance company, such as Lloyd’s, which would then provide regular payments that corresponded to the estimated insurance claim payouts to the insurance companies.
Insuranceopedia Explains Time And Distance Reinsurance
Insurance companies used time and distance reinsurance to achieve a better return on their investments. Large reinsurers could leverage their size to make more profitable investments than smaller insurance companies could. Even with the reinsurance fee, time and distance reinsurance proved to be a more advantageous option for some companies.
However, when large reinsurers altered their payout formula, the product became less profitable for smaller insurance companies. As a result, the demand for time and distance reinsurance has largely disappeared, and this product is seldom offered today.
