10/10 rule

{
  "id": "MLC-T-INS-000273",
  "term": "10/10 rule",
  "field": "Insurance and risk management",
  "definition": "An informal risk-transfer test for reinsurance and insurance contracts, under which a contract is presumed to transfer genuine insurance risk when there is at least a 10 percent chance that the insurer will suffer a loss of at least 10 percent of the premium, measured in present-value terms. Contracts that fail the guideline are accounted for as deposits, not as insurance or reinsurance. The test is a rule of thumb, not a statutory threshold.",
  "url": "https://mlchart.com/terminology/insurance/10-10-rule/"
}