What does Funds Withheld mean? Read on to discover the definition & meaning of the term Funds Withheld - to help you better understand the language used in insurance policies.
A provision in a reinsurance treaty under which some or all of the premium due the reinsurer, usually an unauthorized reinsurer, is not paid but rather is withheld by the ceding company either to enable the ceding company to reduce the provision for unauthorized reinsurance in its statutory statement or to be on deposit in a loss escrow account for purposes of paying claims. The reinsurer's asset, in lieu of cash, is "funds held by or deposited with reinsured companies."
We hope the you have a better understanding of the meaning of Funds Withheld.