Modified Coinsurance Law and Legal Definition
In modified coinsurance plan, the ceding company retains the assets in accordance with all the policies reinsured and institutes and retains the total reserves on each policy. Here the reinsurance company (reinsurer) paid the gross investment income on the retained assets of the ceding company. According to this arrangement, periodic settlement is possible between the two companies for the total premiums collected and for death benefits, surrenders, dividends, at the end of each financial year. The reinsurance company is charged by the ceding company for its proportionate part of the increase in reserves on the reinsured policies.