Definition:Reinsurance slip
📋 Reinsurance slip is the core market document used to negotiate and confirm the principal terms of a reinsurance contract before a formal policy wording is executed. Originating in the Lloyd's of London market and still central to London-market practice, the slip serves as a concise summary of the risk, the proposed terms, and the reinsurers' agreement to participate — traditionally evidenced by each reinsurer's stamp and written line indicating the percentage of the risk they accept. While the concept has evolved alongside electronic placement platforms, the slip remains the authoritative record of what was agreed at the point of binding.
⚙️ A typical slip sets out the cedent's identity, the class and territory of business, the type of cover ( treaty or facultative), the layer structure including attachment points and limits, the premium or rate on line, reinstatement terms, claims-handling provisions, and any special conditions or exclusions. In the London market, the broker carries the slip from underwriter to underwriter — or, increasingly, processes it through platforms like PPL (Placing Platform Limited) — until the required capacity is subscribed. The lead underwriter, who typically sets the terms and price, signs first, and following markets then decide whether to add their lines at the same conditions.
💡 Although it is not always the final contract wording, the slip carries significant legal weight. Courts in major insurance jurisdictions have upheld slips as binding agreements when the essential terms are sufficiently clear, even in the absence of a later formal policy document. For this reason, precision in drafting is critical; ambiguous language on a slip can lead to costly coverage disputes. Modern market-reform initiatives — including standardized slip templates promoted by the Lloyd's Market Association and the International Underwriting Association — aim to improve consistency, reduce processing delays, and facilitate straight-through electronic processing, supporting the broader digitization of the reinsurance placement workflow.
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