If several (re-)insurers participate in a contract, one company assumes the role of leader. The policyholder deals exclusively with this lead company. The lead (re-)insurer normally carries a higher percentage of the risk for own account.

Letter of credit (LOC)

Bank guarantee under which at the request of the guaranteed party, the bank undertakes to render payment to the said party up to the amount specified in the LOC. This method of providing collateral in reinsurance business is typically found in the USA.

Life and health (re-)insurance

Collective term for the lines of business concerned with the insurance of persons, i.e. life, pension, health and personal accident insurance.

Longevity risk

In general terms, the actuarial risk that a person receiving regular living benefits – such as annuities or pensions – lives longer than expected.

Loss ratio

Proportion of loss expenditure in the retention relative to the (gross or net) premium earned.

Loss, economic

Total loss incurred by the affected economy as a whole following the occurrence of a loss. The economic loss must be distinguished from the insured loss.

Loss, insured

The insured loss reflects the total amount of losses covered by the insurance industry (insurers and reinsurers).