YOU ASK:

What is the definition of Fronting?

WE ANSWER:

Fronting refers to the process by which a primary insurer acts as the one listed in the policy contract but actually passes all of the risk to a reinsurer. The primary insurer does this for commissions on the premiums paid.

Fronting is often done when a reinsurer who wants the business is not licensed to operate in the state or place where the risk is situated. If an insurance company is licensed to this state, it may agree to be the named insurer. It may be also that the reinsurer is an independent or captive insurance company that is not allowed to get the business.

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