dictionary of insurance zonexs

8/10/2019 Dictionary of Insurance Zonexs

1/47

1

A

ACORD

It is a non-profit insurance industry organization that providesstandard forms, including insurance applications, binders, andcertificates of insurance, that are used by nearly 90% of theProperty and Casualty insurance carriers in the US and theagents, brokers and other producers that represent thesecarriers.

Additional premium (AP)

A further premium payable by the insured, either becausehigher than expected claims have been made on the policy orbecause of alterations to the policy extending the scope of thecover provided.


2/47

2

Admitted

Insurance companies that are admitted are to follow guidelinesthat are set by the department of insurance (DOI) of the statethey conduct business in.

Aggregate deductible

The total losses that must be borne by the reinsured in additionto their normal retention before they are able to make

recoveries on their reinsurance.

Aggregate exposure

The maximum total of claims that can be incurred by an insurer

or reinsured in respect of any event (e.g. a windstorm) or seriesof similar events (e.g. the negligence claims relating to Savings &Loans institutions). This exposure is usually related to aparticular risk type, class of business and/or geographical area.


3/47

3

Aggregation

The process of accumulating claims as specified by an excess ofloss reinsurance agreement for the purpose of establishing theamount recoverable.

Assumed Business

Assumed business is the business a reinsurance companyreceives from an insurance Company due to Reinsurance

Contracts. This may be via a Reinsurance Broker or direct.

Assurance

A term interchangeable with insurance but generally used in

connection with life business as assurance implies the certaintyof an event and insurance the probability.

Assured

The person whose life is assured or in whose favour a policy isissued.


4/47

4

Attachment date

Date on which insurance comes into force.

Attachment point

This refers to the level or layer within a reinsurance programmethat is being underwritten and the point or layer at which apotential loss will hit or attach to it.


5/47


6/47

6

Blanket policy

A policy in which a single sum insured covers a number ofseparate items without being divided up among them (e.g.buildings in a fire policy).

Bonus

In life assurance, an allocation to a with-profits policyholder of aproportion of the profits of a life fund. This normally forms an

addition to the policyholders sum assured.

BOR

In insurance, a broker of record is an agent designated by the

policy holder to represent and manage the policyholder'sinsurance policy.

Bordereau/ Bordereaux

A detailed list of premiums or claims prepared by cedantsor cover-holders for circulation to underwriters to advise


7/47

7

them of risks covered and claims incurred. A bordereau is

normally prepared monthly or quarterly.

Branch

An autonomous overseas office of an insurer, staffed by thatinsure rs employees, with full underwriting authority.

Break-up basis

A basis of actuarial valuation which assumes that no newbusiness will be written. Also called wind-up basis.

Broker

An insurance intermediary , who advises and arranges insurancefor his clients. Although he acts as the agent of his client, he isnormally remunerated by a commission from the insurer.

Brokerage


8/47

8

Commission received by a broker, usually from the insurer, in

consideration for placing insurance business. Normallycalculated as a percentage of the premium paid by the insured.Brokerage is increasingly being replaced by fee-basedremuneration.

Bureau

This refers to business written through Lloyds.


9/47

9

C

Cancellation

Termination of a policy before it is due to expire. In most casesthis will result in a return premium being paid by the insurer to

the insured.

Casualty business

A US term for non-life insurance other than fire, marine orsurety business. Alternative term for liability business .

Catastrophe

A single event, or sequence of events in a short period, such as ahurricane, flood, windstorm or earthquake, which results insubstantial claims being made on an insurer.


10/47

10

Cedant

An insurer which cedes business to another insurer under areinsurance agreement.

Claim

Injury or loss to the insured arising so as to cause liability to theinsurer under a policy it has issued.

Claims ratio

Also known as loss ratio . Claims expressed as a percentage ofpremiums. A loss ratio often calculated in practice is the incurredloss ratio . Contrast expense ratio .

Co-insurance

An insurance policy provision under which the insurer and theinsured share costs incurred after the deductible i s met.
http://www.investorwords.com/2517/insurance_policy.htmlhttp://www.investorwords.com/3916/provision.htmlhttp://www.investorwords.com/2523/insurer.htmlhttp://www.investorwords.com/2519/insured.htmlhttp://www.investorwords.com/4525/share.htmlhttp://www.investorwords.com/1148/cost.htmlhttp://www.investorwords.com/1339/deductible.htmlhttp://www.investorwords.com/1339/deductible.htmlhttp://www.investorwords.com/1148/cost.htmlhttp://www.investorwords.com/4525/share.htmlhttp://www.investorwords.com/2519/insured.htmlhttp://www.investorwords.com/2523/insurer.htmlhttp://www.investorwords.com/3916/provision.htmlhttp://www.investorwords.com/2517/insurance_policy.html


11/47

11

Commission

Money paid to a broker or other intermediary by an insurer forarranging the sale of an insurance policy.

COPE

An acronym that stands for the four property risk characteristicsan underwriter reviews when evaluating a submission forproperty insurance: construction, occupancy, protection and

exposure.

Cover

The benefit granted by the policy of insurance.

Cover holder

A person authorised to grant cover so as to bind theunderwriters.


12/47

12

Cover note

A document issued to the insured confirming details of theinsurance cover placed.

Credit note

Document from broker to a (re)insurer notifying the reinsurerthat a reinsurance recovery due to the reinsurer has beencollected by the broker and will be signed to them in the near

future.

Credit insurance

A single premium insurance policy usually sold with a loan.

Cube

The Cube provides a single access point to large amounts of

information, gathered from many of Torus applications.


13/47

13

D

D & B (Dun & Bradstreet)

is a public company headquartered in Short Hills, New Jersey,USA that provides information on businesses and corporations

for use in credit decisions, B2B marketing and supply chainmanagement.

Debit note

An advice issued by a broker informing an insurer that thebroker has debited the broke rs account with a claim orreinstatement premium etc. payable.

Declaration

A statement by the insured giving details of the risks required tobe covered. This may be incorporated within the proposal formor made later.


14/47

14

Declinature

The refusal of an insurer to accept or renew an insuranceproposal.

Deductible

The first, uninsured, part of a loss or claim which is retained by apolicyholder or cedant.

Deferred premium

That part of a premium which, following agreement withunderwriters is payable by instalments, usually quarterly or half-yearly.

Dependant

A subsidiary undertaking (as defined by the Companies Act) ofan insurance company.


15/47


16/47

16

Discovery period

The time period during which any claims on a policy must bereported.

Duck Creek

It is software used by Renewable Energy for rating and pricingpurposes.


17/47

17

E

Earned premium

The proportion of a premium relating to a period of risk whichhas expired.

Earthquake

It is a form of property insurance that pays the policyholder inthe event of earthquake that causes damage to the property.

Employers liability

A type of insurance, generally compulsory in the UK, which

covers employers against claims by employees who are injuredwhile at work.


18/47

18

Endorsement

Documentary evidence of a change in the wording of or coveroffered by an existing policy or qualification of wording if thepolicy is written on restricted terms.

Errors and Omissions Liability Insurance (E&O)

Insurance of professionals (managing agents, members agents,brokers, auditors etc.) for acts of negligence or omissionsresulting in loss to a client.

Escape Portal (Excess Casualty Portal Entry)

This a system designed for Brokers where they can opt to move

to the application and get a formal quote, binder or even apolicy at a click of a button for small businesses (Every accountquoted gets $1M thru $10M limit options).


19/47


20/47

20

(c) the possibility of loss to insured property caused by its

surroundings.


21/47

21

F

Facultative business

Usually applies to the (re)insurance of individual named risks onterms and conditions negotiated with the (re)insurer specifically

for each risk.

Fleet

A group of vehicles, ships or aircraft which are insured togetherunder a single policy.

FLEXA

This means Fire, Lightning, Explosion, Aircraft (scope of a homeinsurance).

Flood Coverage

It denotes a specific insurance coverage against property lossfrom flooding.


22/47

22

G

General liability

A type of policy which covers the policyholder against legalliability for injury, property damage or financial loss caused to

others.

Genius

GENIUS is the name of the general lines policy administrationsystem that sits behind OPUS.


23/47

23

H

Hazard

is a situation that poses a level of threat to life, health, property,or environment.

Hull policy

Insurance of a vessel or aircraft, as distinct from the goods ormerchandise carried, or liability insurance. In marine insurance,hull risks are sometimes classified as time .


24/47


25/47

25

extent that its death, damage or destruction would cause him

loss.

Insurance

A social device to spread the losses of some over the whole

insuring community.

Insurance broker

A individual or company who arranges insurances for clients,and also may provide advice.

Insurance Premium Tax (IPT)

A tax payable in respect of certain non-life risks located in theUK.

Insured

The person whose property is insured or in whose favour thepolicy is issued.


26/47

26

Insurer

An insurance company or Lloyd s underwriter that, in return fora consideration (a premium), agrees to make good, any loss or damage suffered by the person paying the premium, as a resultof some accident or occurrence.

Inwards business

Risks ceded to a (re)insurer from other (re)insurers or insuredson business written.


27/47

27

L

Lapse

The cancellation of a policy at renewal date as a result of non-payment of the renewal premium.

Layers

A term used in connection with insurance or reinsurance policieson larger risks or class of risks whereby the risk or class is placedin sections (layers).

Leader (Leading Underwriter)

An underwriter who is the first to take a portion of a risk andquote an appropriate rate of premium.


28/47

28

Liability business

Insurance of liabilities due to third parties arising mostcommonly from human or mechanical error or oversightresulting in bodily injury and damage to property.

Line

The proportion of a risk or class of risks accepted by an insurer.Also used to refer to the monetary value that an insurer hasfixed as his maximum exposure for any one risk.

Line slip

An arrangement entered into between underwriters and a

broker whereby, for a given type of risk, the broker only needsto approach the leading and second underwriter who will acceptor reject each risk on behalf of all the underwriters concerned intheir agreed proportions.

LIRMA


29/47


30/47

30

An independent and highly trained claims expert, who acts as a

consultant to insurers in assessing the true extent and value ofany loss which has resulted in a claim being made against them.

Loss ratio

Claims expressed as a percentage of premiums. A loss ratiooften calculated in practice is the incurred loss ratio .


31/47

31

M

Maintenance Period

The Maintenance Period is the period following completion of aconstruction project during which the contractor is responsible

for certain maintenance issues under the many building orengineering contracts.

Managing Agents

An individual or business entity appointed by an insurer to solicitapplications from agents for insurance contracts or to negotiateinsurance contracts on behalf of an insurer.

Marine, aviation and transport (MAT)

Insurance which covers damage to the hull and cargo of shipsand airplanes, and liability for property damage and injury topassengers and third parties.


32/47

32

Maturity

The date when an assurance term comes to an end and the sumassured, plus any applicable bonuses such as a terminal bonus, ispayable.

Members Agents

An individual or business entity appointed by an insurer to solicitapplications from agents for insurance contracts or to negotiateinsurance contracts on behalf of an insurer.


33/47

33

N

Non Admitted

Insurance companies that choose to be a non-admittedbusiness are not required to follow state regulations. They

would have to prove to be financially able to conduct business.They would not have to report their rates to the DOI and cancharge according to their risk exposure.

Non-Bureau

This refers to business which is primarily US or business that isnot written through Lloyds.


34/47

34

O

Open Exposure (OX)

Open Xposure (OX) is a risk assessment program that iscommonly used in the Lloyd's market. OX makes it possible to

run aggregation reports and calculate total risk from a variety ofviewpoints. OX is used by underwriters, actuaries, and CATmodelers.

OPUS

OPUS is Torus' front-office system for policy administration. It isa web-based application available to any user (with theappropriate approval) who is logged in to the Torus network.

Outwards business

Business ceded by a (re)insurer by way of reinsurance to other(re)insurers.


35/47

35

Overriding commission (O/R)

An additional commission (brokerage) payable to intermediaries(brokers) who introduce a large volume of profitable business toan insurer. It can also apply to a special commission received bythe cedant on a quota share reinsurance scheme as a

contribution towards the cedant s expenses.


36/47

36

P

Peril

A harmful event which may be covered under a contract ofinsurance or reinsurance as an insured peril or excluded from it.

Policyholder

The person in whose name the policy is issued.

Policy Issuance

This means issuing a consolidated document containing all terms& conditions agreed along with premium, limit, policy period tothe insured as an evidence of insurance.

Pooling

An arrangement whereby several insurers share business in

agreed proportions.


37/47

37

Premium

The consideration paid for a contract of insurance.

Product liability

An insurance which protects businesses against liability claimsresulting from defects in their products.


38/47

38

Q

Quota share reinsurance (Q/S) A type of proportionalreinsurance in the form of a treaty, normally obligatory,whereby for a particular class of business an insurer cedes and areinsurer accepts an agreed proportion of underlying premiums

received by the insurer.

Quote

This is a document issued by the insurer before the Binderwhere the premium, limit etc. is negotiated between the UWand the broker. The quote might be accepted or declined at thesole discretion of the insured. If the insured accepts it only thenthe case will be bound and the Binder will be issued.


39/47

39

R

Rating

The process of calculating an appropriate premium for a risk.

Reinsurance (RI)

Insurance protection taken out by an insurer to limit theexposure to losses on original business accepted/written.

Reinsurance treaty

Reinsurance of a block of business or whole account inaccordance with the terms of a contract between cedant andreinsurer. May be either proportional or non-proportional.

Renewal

The process of continuing an insurance from one period of risk

to a succeeding one.


40/47

40

Retained Limit/Retention

The amount of liability from any one risk retained by an insurerafter taking into account all reinsurance arrangements.

Retroactive date

The date on which insurance cover commences and to whichsubsequent reinsurance cover is backdated.

Return premium (RP)

A premium refund payable to the insured as a result of thecancellation or endorsement of a policy.

Risk

It is the possibility of some event occurring which causes injuryor loss.


41/47

41

S

SIR (Self Insured retention)

Where a company or individual chooses to retain whole or partof risk itself rather than obtain insurance against that risk.

Signed line

The proportion of a risk to which an insurer is liable followingany signing down of written lines.

Slip

The document used by a broker to set out details of a risk. If anunderwriter agrees to accept the risk, or part of it, the slip isstamped, initialled and marked by the underwriter with theproportion of the risk written.


42/47

42

Syndicate

A grouping of Lloy ds underwriters. Each syndicate has an activeunderwriter who is authorised to accept business on behalf ofeach underwriting member participating therein.


43/47

43

T

TRIA

This stands for Terrorism Risk Insurance Act. It provides financialprotection for insurance companies who cover high-risk

industries from terrorism. TRIA is a short-term measuredesigned to help the insurance market recover from 9/11 anddevelop solutions to insuring terrorism.

Treaty

Reinsurance of a block of business or whole account inaccordance with the terms of a contract between cedant andreinsurer. May be either proportional or non-proportional .


44/47

44

U

Umbrella policy (cover)

Policy providing insurance cover over and above the limitsprovided by the primary policies.

Underwriter

A senior officer of an insurer who accepts business on its behalf.

Underwriting

The process of consideration of an insurance risk by theunderwriter.

Underwriting year

The accounting period in which a contract of general insuranceincepts.


45/47

X


46/47

46

X

XOL Policy

Normally Non Proportional Treaties are simply referred to asExcess of Loss (XoL). The losses are not a direct proportion

(percentage) of the inward loss. E.g. $10m XS $5m. Means $10million of losses will be paid that are in excess of an initial $5million of losses. So a total loss of $6m will result in the XoLpaying the Reinsured $1m.

Y


47/47

47

Y

Year of account

Refer to underwriting year above.

dictionary of insurance zonexs

Documents