Accident year :-An accident year grouping of claims means that all the claims relating to events that occurred in a 12 month period are grouped together, irrespective of when they are actually reported or paid and irrespective of the year in which the period of cover commenced.
Accident:- An event or occurrence which is unforeseen and unintended.
Accidental Bodily Injury :- Injury to the body as the result of an accident.
Accident Insurance :- Insurance cover of the loss of any limbs or eyes, etc. in the event of an accident. It is also generally covers compensation to the policyholder’s dependents in the event of death.
Accord and Satisfaction :- When one party has discharged its obligation under a contract, it may elect to release the other party from its obligations. When this is done in return for a new consideration, the release is known as accord and satisfaction.
Act of God :- Event caused by nature that is so unpredictable as to be unavoidable, for example, the timing and location of earthquakes or floods. Acts of God are normally insured against as a matter of course.
Actuary :- A person professionally trained in the technical aspects of pensions, insurance and related fields. The actuary estimates how much money must be contributed to an insurance or pension fund in order to provide future funds.
Actual Total Loss :- Insured item that has been lost or completely destroyed. The full insured value is payable by the insurer.
Additional insured :- An assured party specifically named under an insurance policy that is not automatically included as an insured under the policy of another, but whom the named insured’s policy provides a certain degree of protection. (e.g. bankers or financial institutions)Affreightment :- Carriage of goods by sea.
Agent :- An insurance company representative licensed by the IRDA negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.
All-risks Policy :- Insurance policy that covers personal possessions against loss or damage, usually anywhere in the country. All- risks policies are frequently extended to cover possessions in other parts of the world, and are therefore often used to insure small moveable items. Despite the term “all-risks”, there is usually some important exclusion.
Arbitration :- A form of alternative dispute resolution where an unbiased person or panel renders an opinion as to responsibility for or extent of a loss.
Arson :- The willful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent.
Assignment :- Legal transfer of a property, right or obligation from one party to another.
Assurance :- Insurance that provides for an event that will certainly happen (such as death), as opposed to an event that may happen. There are many types of assurance policies such as endowment assurance, life assurance, and so on.
Assured :- Person who received the proceeds of an assurance policy when the policy matures or the person assured dies.
Average Clause (Condition of average) :- In marine and commercial insurance and some fire insurance and some fire insurance policies, a clause in the policy that stipulates certain items shall be subject to average if there is underinsurance.
Bonus-malus :- A bonus-malus system is a No-claim Bonus (or No-claim Discount) system in which the premium level reached after a policyholder has made claims may be higher than that corresponding to the point of entry. The term is used throughout Continental Europe and elsewhere.
Bancassurance :- Involvement of banks in the traditional insurance market.
Bill of lading :- Document detailing the transfer of goods from a (foreign) supplier to a buyer. It may be used as a document of title.
Blanket insurance :- A policy designed to provide coverage under a single limit for two or more items (e.g. building and/or contents), two or more locations, or a combination of items and/or locations.
Break Bulk :- Carriage of goods other than by container.
Broker :- A marketing specialist who represents buyers of insurance and who deals with companies in arranging for the coverage required by the customer.
Burglary :- Breaking and entering into another person's property with felonious intent.
Business Interruption Insurance :- Protection for a business owner against losses resulting from a temporary shutdown because of fire or other insured peril. The insurance provides reimbursement for lost net profits and necessary continuing expenses.
Catastrophe :- In the context of general insurance a catastrophe is a single event which gives rise to exceptionally large losses. The exact definition often varies and is often dependent on excess of loss wordings e.g. it might mean all losses, in a 72 hour period, arising from a wind storm.
Catastrophe reinsurance :- This is a form of aggregate excess of loss reinsurance providing coverage for very high aggregate losses arising from a single event, which may be spread over a number of hours; 24 or 72 hours is common.
Central fund (Lloyd's) :- A contingency reserve built up from contributions by Lloyd's Names and held by Lloyd's as a layer of protection for policyholders.
Claim :- A request by a policyholder for payment following the occurrence of an insured event. A claim does not necessarily lead to a payment.
Claim amount distribution :- A statistical frequency distribution for the amounts of claims.
Claim frequency :- The number of claims in a period per unit of exposure, such as, the number of claims per vehicle year for a calendar year or per policy over a period.
Claims incurred :- Claims that have occurred, irrespective of whether or not they have been reported to the insurer.
Coinsurance :- A method of sharing a risk among a number of direct insurers, each of which has a separate direct contractual relationship with the insured and is, therefore, liable only for its own contractual share of the total risk. The term is also used in certain excess of loss contracts to refer to the proportion of claims retained by the cedant.
Composite insurer :- A single insurance company writing both life and non-life business.
Consequential loss :- Insurance cover for financial losses arising following damage (e.g. a fire) to business premises.
Cover note :- A note issued by an insurance company to confirm the existence of insurance cover pending the issue of formal policy documentation. An cover note is particularly useful where the policyholder is under a statutory obligation to be covered by insurance and may be required to show evidence of cover, for example third party motor insurance.
Cancellation :- The discontinuance of an insurance policy before its normal expiration date, either by the insured or the company.
Captive Insurance Company :- A company owned solely or in large part by one or more non- insurance entities for the primary purpose of providing insurance coverage to the owner or owners.
Cargo Insurance :- Type of Transit insurance that protects the shipper of the goods against financial loss if the goods are damaged or lost.
Cash against Document (CAD) :- Method of payment for goods for export, whereby the documentation for a shipment is sent to an agent or bank at the destination. These are passed to the consignee, who makes the payment. The consignee is free to take delivery of the shipment when it arrives.
Catastrophe Cover :- Type of re-insurance on an excess of loss basis to protect against an accumulation of losses arising from one event.
Catastrophe Risk :- In insurance, an exceptional loss for example, resulting from a flood or earthquake.
Certificate of Insurance :- A statement of coverage issued to an individual. it is a proof of insurance. Generally, it is issued for Motor and Marine insurances.
Certificate of Motor Insurance :- Document that confirms the existence of a valid motor insurance policy. It must state the name of the policyholder, the registration no. of the vehicle, dates of commencement and expiry of the insurance, the person or persons insured to drive the vehicle, and any limitations on use. The form should be as per Motor Vehicles Act, 1988.
Cession :- Amount of the insurance ceded to a reinsurer by the original insuring company in a reinsurance operation.
Claim :- Request for payment to an insurance company in respect of loss or damage covered by an insurance policy, usually submitted by filling in a claim form.
Claim-made policy :- Insurance Policy in which the insurer must meet only claims made during the time cover is provided (irrespective of when the loss occurred).
Co-insurance :- Method of sharing insurance risk between several insurers. The policyholder will deal as a lead insurer who issues documents and collects premiums. The policy will detail the shares held by each company.
Commercial Lines :- Insurance of businesses, organizations, institutions, governmental agencies, and other commercial establishments.
Commission :- The part of an insurance premium paid by the insurer to an agent or broker for his services in procuring and servicing the insurance.
Concealment :- Deliberate failure of an applicant for insurance to reveal a material fact to the insurer.
Conditions :- Provisions inserted in an insurance contract that qualify or place limitations on the insurer's promise to perform.
Consequential Loss :- Financial loss occurring as the consequence of some other loss. Often called an indirect loss. Consequential loss or damage is indirect loss or damage caused by a covered peril such as fire.
Consideration :- In some forms of contract, the agreement is made binding by the payment of a sum of money from one party to the other. Such a payment is known as a consideration. The term is also used informally to mean any form of payment.
Consignment :- Shipment of goods sent to someone for example, an agent, usually so that he or she may sell them for the consignor.
Contract :- A binding agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is embodied in a written document called the policy.
Contractual Liability :- Legal liability of another party that the business firm agrees to assume by a written or oral contract.
Contractor’s All Risks :- Type of insurance that provides compensation to contractor in the event of damage to construction works from a wide range of perils.
Contribution :- It is a team insurance in which a risk has been insured twice over, and each insurance company shares the costs of a claim payment.
Contributory Negligence :- Lack of care in looking after something that reduces the value of damages or an insurance payment in the event of a claim being made.
Cover Note :- Documents issued by insurance company giving cover for a short time, often one month, while a complete policy (and, possibly, an insurance certificate is drawn up and issued.)
Cross Liability Endorsment :- In the event of claim by one insured for which another insured covere by the same policy may be held liable, this endorsement covers the insured against whom the claim is made in the same manner as if separate policies had been issued.
Co-insurance :- Method of sharing insurance risk between several insurers. The policyholder will deal as a lead insurer who issues documents and collects premiums. The policy will detail the shares held by each company.
Deductible :- The portion of an insured loss borne by the policyholder. The amount or percentage is specified in the policy.
Damaged Arrived Value :- It refers to the market value of the goods in damaged condition.
Debris Removal Clause :- The clause extends insurance coverage to include the cost of debris removal resulting from damage caused by covered loss up to a specified limit of loss.
Deductible :- An amount which a policyholder agrees to pay, per claim or per accident, towards the total amount of an insured loss.-(Excess)
Depreciation :- A decrease in the value of property over a period of time due to wear and tear or adolescence. Depreciation is used to determine the actual cash value of property at time of loss.
Directors’ and Officers’ (D & O) Liability insurance :- Type of insurance that provides a company’s directors and officers with cover against losses incurred through misleading statements or negligence.
Duty of Disclosure :- Positive duty to disclose material facts in an insurance proposal.
Dynamic Risk :- Any insurance risk resulting from a human decision.
Excess :- Amount of any loss that is not included in the cover provided (e.g. a loss falling below the excess is not a claim). A deductible on the other hand eats into the cover. This difference only really matters where there is an upper limit on the amount of cover such as reinstatements or an annual aggregate.
Exclusion :- An event, peril or cause defined within the policy document as being beyond the scope of the cover.
Earned Premium :- For an insurance policy, the part of the premium that relates to an expired period of cover.
Electronic Data Interchange (EDI) :- Method by which companies or people communicate with their banks, clients and suppliers using computers.
Embezzlement :- Fraudulent use or taking of another’s property or money which has been entrusted to one’s care.
Errors and Omissions Insurance (E & O Insurance) :- Insurance that covers liability for errors and omissions, such as incorrect records or accounting.
Estimated Maximum Loss (EML) :- Used in fire, explosion and material damage insurance policies, it is an estimate of the monetary loss that could be sustained on a single risk as a result of a single perils, which is considered by the underwriters to be possible.
Excess :- Sum that a policyholder has (by agreement) to contribute to an insurance claim, for example, on a motor insurance the policyholder may have to pay the first Rs 1000 (the excess) on any claim. It may be compulsory or voluntary.
Excess of loss :- In reinsurance, an agreement that requires the reinsurer to bear any loss over a certain stated amount.
Exchange Gain :- Profit made by an importer if there is an favorable change in the exchange rate.
Exchange Loss :- Loss made by an importer if there is an unfavorable changes in the exchange rate.
Expense Ratio :- The ratio of a company’s operating expenses including acquision costs to premiums written or earned.
Extended Reporting Period Endorsement :- Added to a claims-made policy of liability insurance to provide the original amount of insurance for a limited period of time.
Exgratia Payment :- In insurance, a payment made to settle an issue(such as an insurance claim) but without admitting liability.
Facultative-obligatory reinsurance :- A facultative reinsurance facility with an obligation placed on the reinsurer to accept.
Facultative reinsurance :- A reinsurance arrangement covering a single risk as opposed to a treaty arrangement; commonly used for very large risks or portions of risk written by a single insurer, that are shared among several reinsurers.
Facultative :- Type of reinsurance in which risks is coded on an individual basis. The coding company can choose whether or not to reinsurer can decide to accept or reject the business.
FIA :- Abbreviation of Fellow of the Institute of Actuaries.
Fidelity Guarantee insurance :- Commercial insurance that covers misappropriation of funds or other wrongdoing by an employee. It is also called fidelity insurance.
Fidelity Policy :- A form of protection which reimburses an employer for losses caused by dishonest or fraudulent acts of employees.
Fiduciary :- A person who holds something in trust for another.
Fire :- A combustion accompanied by a flame or glow, which escapes its normal confines to cause damage.
First Loss Insurance :- Type of fire insurance or theft insurance in which the full value of the insured item is declared, but a lower sum insured (at a consequently lower premium).
Fleet Insurance :- Motor insurance policy that covers a group of vehicles from one organization.
Fortuitous Loss :- Unforeseen and unexpected loss that occurs as a result of chance.
Franchise :- In insurance, a franchise is an agreed figure below which an insurance company does not have to meet a claim. A loss above the franchise figure is paid in full.
Fronting :- In insurance, selling certain products with the intension of passing them on to another company.
General Average :- In insurance, a situation in which a loss, resulting from a deliberate act of sacrifice to save other goods, is shared by the insurers concerned (such as the insurer of a vessel and the insurer of its cargo where part of the cargo has been jettisoned-and lost – to save the ship).
Glass Insurance :- Protection for loss of or damage to glass and its appurtenances.
Gross Negligence :- The intentional failure to perform a manifest duty in reckless disregard of the consequences as affecting the file or property of another.
Group Insurance :- Insurance written on a number of people under a single master policy, issued to their employer or to an association with which they are affiliated.
Health Insurance :- A policy that will pay specifies sums for medical expenses or treatments. Health policies can offer many options and vary in their approaches to coverage.
Hazard:- Condition that creates or increases the chance of loss.
Hull Insurance:- Insurance of a vessel and its machinery. A policy is generally taken out during construction which covers the ship for the whole of its useful life.
Insured :- The policyholder - the person(s) protected in case of a loss or claim.
Insurer :- The insurance company.
Implied Warranty:- In marine insurance, warranty that a vessel is seaworthy and its voyage lawful (not explicitly written into the contract).
Incurred Losses:- Expenses account in an insurance company’s income statement reflecting the claims paid during the policy year plus the loss reserves as of the policy year, minus the corresponding reserves as of the beginning of the policy year.
Incurred-But-Not Reported Reserves (IBNR):- Liability account on an insurer’s balance sheet reflecting claims that are expected based upon statistical projections but which have not yet been reported to the insurer.
Indemnification:- Compensation to the victim of a loss, in whole or in part, by payment, repair or replacement.
Indemnity:- Legal principle that specifies an insured should not collect more than the actual cash value of loss but should be restored to approximately the same financial position that existed before the loss.
Insurable Interest:- Financial interest, recognized at law, which the insured has in the subject matter of insurance. In some cases, an unlimited insurable interest exist, for example, in one’s own life and the life of a spouse. However, in most cases, insurable interest is limited to the value of the property or goods, or extent of liability.
Insurable Risk:- Risk against which insurance cover can be obtained by somebody with an insurable interest in it.
Insurance:- Contract under which the insurer agrees to provide compensation to the insured in the event of a specified occurrence, for example, loss or damage to property. In return, the insured pays the insurer a premium, usually at fixed intervals.
Insured:- Person or company that holds an insurance policy (a contract with an insurance company): a policyholder.
Insured Peril:- Peril that is specifically stated in an insurance policy as being covered or included.
Insurer:- Insurance company or other person or company that agrees to indemnify someone against particular risks. Usually as defined in an insurance policy and for an insurance premium.
Insuring agreement:- That part of an insurance contract which sets forth the type of loss being covered by the policy and the parties of the insurance contract.
Insuring Clause:- The clause in an insurance contract which sets forth the type of loss being the policy and the parties of the insurance contract.
Intangible Assets:- They are abstract commodities, which cannot be seen or perceived through the senses, for e.g. goodwill, honesty, integrity, etc.
Jettison:- Hazard covered under a marine cargo policy which is defined as the throwing overboard of cargo to preserve property from loss.
Jeweler’s Block Insurance:- Coverage designed to protect the insured stock property left with insured for repair or other purposes, and the insured’s interest in and legal liability for property on consignment from others in the jewelry trade.
Joint-and-Several Liability:- A legal principle that permits the insured party in a tort action to recover the entire amount of compensation due for injuries from any defendant who is able to pay, regardless of the degree of that party’s negligence, once any liability by that defendant has been established.
Key Person Insurance:- Insurance to cover the health of an essential employee (a key person) in a company. This form of insurance covers the cost of replacing such personnel at short notice by equally qualified temporary staff and any loss of profits incurred in the meantime.
Knock-for-knock Agreement:- In motor insurance, agreement between a group of insurers that no question of responsibility will be discussed and that each company will pay for damage to its own policyholders’ vehicles, so long as the policyholder is covered for such damage.
Liability :- A duty or contract to fulfill an obligation to another person or organization.
Loss ratio :- See Claim ratio Loss reserve/Claims reserve technical reserve :- another name for claims reserve. The expression is also often used in association with the reserve deposited by a reinsurer with the cedant to cover in part outstanding claims.
Lapse:- The termination or discontinuance of an insurance policy due to non-payment of a premium.
Lapsed Policy:- A policy terminated for non-payment of premiums.
Larceny:- The unlawful taking, carrying loading away of another person’s property.
Law of Large Numbers:- Concept that the greater the number of exposures, the more closely will actual results approach the probable results expected from an infinite number of exposures.
Liability:- Any legally enforceable obligation.
Liability Insurance:- Portion of an insurer’s balance sheet which denotes legal obligations of the company, including anticipated future payments of losses covered under policies issued.
Lien:- The right to possession of property until such time that an outstanding liability has been repaid.
Lloyd’s of London:- Incorporated association of insurers that specializes in marine insurance. Formally, established by Act of Parliament in 1871, the Corporation developed from a group of 17th- century underwriters who met at Edward Lloyd’s coffee house in London.
Loading:- The amount that must be added to the pure premium for expenses, profit and a margin for contingencies.
Loss:- The occurrence of an event for which insurance pays.
Loss avoidance:- A risk management technique whereby a situation or activity may result in a loss for a firm is avoided or abandoned.
Loss control:- Any conscious action intended to reduce the frequency, severity, or unpredictability of accident loss.
Loss-of- Profits Insurance:- Type of insurance that provides cover against loss of trade and profits resulting from some disaster such as a fire. In the latter case the policy would typically pay a business the equivalent of the expected net profits lost while repair work and restocking were carried out, plus salaries, rates and rent due in that period.
Loss Payable Clause:- Means of protecting a mortgagee’s interest in property by directing the insurer to make a loss payment to the mortgagee in the event of a loss.
Loss Prevention:- Any measure which reduces the probability or frequency of a particular loss but does not eliminate completely all possibility of that loss.
Loss Ratio:- In insurance , the value of all claims expressed as a percentage of total premium for a period. The figure is used as a guide to the profitability of the business when considering rates.
Loss Reserve:- The amount set up as the estimated cost of a claim.
Moral hazard :- The risk that an insured may attempt to take an unfair advantage of the insurer, for example by suppressing information relevant to the assessment of risk or by submitting a false claim.
Marine Insurance:- Insurance of ships and their cargoes which provides indemnity for property loss, damage and injury to third parties. Marine losses arise in four areas- Hull, Cargo, Freight & Liability.
Minor:- A person under the age of 18, who cannot legally conduct certain transactions purchase certain goods.
Misrepresentation:- A false, incorrect, improper, or incomplete statement of a material fact, made in the application for an insurance policy.
Moral Hazard:- Hazard arising from any nonphysical, personal characteristic of a risk that increases the possibility of loss or may intensify the severity of loss, for instance, bad habits, low integrity, poor financial standing.
Mutual Insurance Company:- An insurance company in which ownership and control is vested in the policyholders and a portion of surplus earnings may return to policyholders in the form of dividends.
Named Peril:- Coverage in property policy that provides protection against loss from only perils specifically listed in the policy.
NATURAL LOSSES : Damages or loss caused due to natural vagaries like hurricane, storm, earthquake, lightning, etc.
NATURAL RESOURCES : Potential and actual forms of wealth provided by nature like oil, coal, arable land, and water power
NEGLIGENCE : Failure of using reasonable care adopted by prudent individuals under similar conditions or situations
NEGOTIABLE INSTRUMENT : Title document for the property that is transferable from one individual to another during the normal course of business
NEGOTIATED SETTLEMENT : Claim settlement reached after compromising in cases where dispute with relation to liability or quantum of the payable loss exists but compromised disposal is more desirable for mutual interest
NEON SIGN INSURANCE : Insurance cover for damages or loss to neon sign installations by any external accidental reasons or theft, fire, explosion, or lightning; insured’s liability to 3rd parties due to accidental damage to insured neon sign is also covered with this plan
NET LOSS : Residual loss to the insured after considering realization from salvage and/or recoveries from 3rd parties but this salvage and recoveries are not considered net of expenditures incurred for their realization
NET PREMIUM : Portion of the premium that is designed to provide coverage for benefits or losses payable under the insurance policy; but not various expenses; part of this premium is retained by the office after deducting the expenses for management and includes commission paid to agents
NET PREMIUM WRITTEN : Total premium written by any ceding firm after reducing premium ceded to the reinsurance company
NET PROFIT : Net trading profit after excluding capital receipts and accretions and outlays that are chargeable towards capital; is determined after providing for standing charges but before deductions of taxes; loss of profit plan provides coverage for loss of net profit and insured standing fees during the time of interruption to the production resulting from damage in insured premises due to insured peril/s
NET RETAINED LINE CLAUSE : Clause that is applicable to excess of loss reinsurance coverage that refers to protection offered by the cover only for retained net line account of the reinsured; net account may be inclusive of normal any single risk retention according to reinsurance program or unplaced share of proportional treaty post retention; according to this clause excess of loss coverage excludes second term
NET RETAINED LINES : Related to excess of loss reinsurance treaties is provision that the contract is only protecting some portion of the insurance that is retained by the reinsured to the net account; treaty does not offer protection if one of the proportional reinsurance provider/s under the treaty is not willing to settle its related share of loss under the contract and because of this reflects back as liability that is to be borne by the reinsured
NET RETENTION : Capacity that insurance companies put forth for retaining risks to its own account without any need for reinsurance
NET TONNAGE : Cargo and/or passenger accommodation expressed in terms of cubic measurements depending on 100 cubic feet equaling one net registered ton
NOMINEE : Institution, firm, or individual mentioned in accident insurance plans to be the beneficiary of the benefits in case of demise of the insured due to an accident
NON - PERFORMING ASSETS : Refers to investments classified as non-performing assets (NPA) according to company accounting policies; RBI provides detailed guidelines on how to and when an investment is considered as NPA in relation to non-payment of debenture or loan when due or interest non-payment on these on due date; amount provided for such cases as per RBI guidelines are applicable to financial institutions and banks; insurance companies may opt to follow these guidelines and provide these in their accounting books
NONPROFIT INSURERS : Individuals under special state regulations for providing hospital, dental, and other medical insurance on non-profit basis; laws offer tax exemption for some taxes
NOTICE OF LOSS : Written notice of losses incurred by insurance companies as stipulated in the conditions of the insurance plan
Occupational Hazard:- Occupations which expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged and the varying periods of absence from occupation, due to the disability, that can be expected.
Occurrence:- An accident, including continuous or repeated exposure to substantially the same general, harmful conditions, that results in bodily injury or property damage during the period of an insurance policy.
Overriding:- In reinsurance, commission paid to the ceding company which is more than the acquisition cost to allow for additional expenses.
P & I CLUBS:- Protection and Indemnity Associations. These are associations of ship-owners organized to provide mutual aid for members for liabilities not covered by marine hull policies.
PACKAGE POLICY:- A combination of two or more individual policies or coverages in a single policy e.g. Householders Package Policy, Shopkeepers Policy, Office Package Policy etc.
PERIL:- In insurance, any event that causes a loss and which may be included or excluded on an insurance policy, for example, an insured peril in a fire policy is fire; an excluded peril is war.
PERIL OF NATURE:- In insurance, a class of peril that includes earthquake, flood, hailstones, storm, thunderbolt and subsidence; such perils are usually covered by property insurance.
PERIL OF THE SEA:- All perils which are unique of transportation and which could not be prevented by reasonable efforts, including sinking of the vessel, standing, heavy weather, lightning, collision with other vessels or submerged objects and damage by sea water when caused by an insured peril.
PERSONAL LINES:- Those types of insurance such as auto or home insurance, for individuals or families rather than for business or organizations.
PHYSICAL DAMAGE:- Damage to or loss of the auto resulting from collision, fire, theft or other perils.
POLICY:- The legal document issued by an insurance company to a policyholder, which outlines the conditions and terms of the insurance, also called the policy contract or the contract.
POLICYHOLDER:- A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.
POLLUTION LIABILITY:- Exposure to lawsuits for injury or cleanup costs that result from pollution damage.
POOL:- An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums. Losses and expenses are shared in agreed upon amounts.
PORTABILITY:- The right to transfer pension right and credits when a worker changes jobs.
PREMIUM:- The sum paid by a policyholder to keep an insurance policy in force.
PROBATE:- The court supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations.
PRODUCT LIABILITY:- Legal liability incurred by a manufacturer, merchant or distribution because of injury or damage resulting from the use of its product.
PRODUCT LIABILITY INSURANCE:- Coverage designed to provide protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of covered product.
PROOF OF LOSS:- Documentary evidence required by an insurer to prove a valid claim exists. It usually consists of a claim for completed by the insured and for health insurance claims by the insured’s attending physician. For medical expense insurance itemized bills must also be included.
PROPOSAL:- Form filled in by a person wanting to take out insurance. Inaccuracies or omissions (accidental or deliberate) in a proposal may invalidate any insurance policy issued.
PROPOSER:- Individual or company offering or seeking insurance.
PROXIMATE CAUSE:- In insurance, the immediate effective cause of an insured loss.
PRUDENT INSURER:- Hypothetical insurer who is in possession of all relevant information (material facts) before issuing an insurance policy.
PURE RISK:- In insurance, a risk that can result in either a break-even situation, or a loss.
QUALIFICATION PERIOD :- Period during when the insured should totally be disabled prior to being eligible for residual disability benefits
QUALIFIED IMPAIRMENT INSURANCE :- Kind of substandard or special class insurance that restricts benefits for insured individual’s particular condition
QUALIFIED PLAN :- Plan that the IRS approves as meeting the requirements of Section 401 (a) of the 1954 Internal Revenue Code; these plans have certain tax advantages
QUID PRO QUO :- Insurance company selling policy to some person for consideration of premium paid by the insured
Risk Avoidance:- Any action that removes the chance of an adverse outcomes happenings.
Risk Control:- In insurance , measure adopted to minimize the effect of an insurable risk, either before or after a loss occurs.
Risk Reduction:- Measure that could reduce the chance of losses occurring of the size of such losses. Risk retention insurance:- Policy of bearing of risk because it would cost more to insure against it than the loss itself.
Reimbursement:- The payment of the expenses actually incurred as result of an accident or sickness, but not to exceed any amounts specified in the policy.
Reinstatement:- The resumption of coverage under a policy which has lapsed.
Reinsurance:- Transfer of an insurance (or part of the risk covered) from one insurance company to another for a premium, not necessarily with the knowledge of the policyholder.
Renewal:- Continuance of coverage under a policy beyond its original term by the insurer’s acceptance of the premium for a new policy term.
Replacement:- The substitution of health insurance coverage from one policy contract to another.
Retention:- The net amount of risk retained by an insurance company for its account or that of specified others, and not reinsured.
Risk:- The chance of loss.
Risk Control:- Any conscious action intended to reduce the frequency, severity, or predictability of accidental losses.
Robbery:- The taking of property from a person by force or threat of violence.
Surcharge :- An extra charge applied by the insurer. For automobile insurance, a surcharge is usually for accidents or moving violations.
Salvage:- Rescuing people or property from a flood, fire, shipwreck or other disaster. A person who salvages goods may be paid compensation by their owners or insurers. The ownership of some salvaged goods can be contentious issue.
Sight Bill:- Bill of exchange payable on presentation i.e. on sight.
Sound Arrived Value:- It refers to the market value of the goods in sound condition.
Stop-Loss:- Type of insurance or reinsurance that covers a whole account over a period of time. No payment is made until the accumulated losses in the year exceed the stop-loss level.
Subrogation:- Right of an insurer, having indemnified the insured, to avail himself or herself of any rights and remedies of the insured, for example, salvage.
Sum-Insured:- Limit of an insurance company’s liability under a particular insurance policy.
Surplus:- In reinsurance, it is the amount by which the sum insured exceeds the ceding office’s retention.
Surplus Treaty:- Reinsurance agreement whereby all risks that exceed a pre-determined amount are reinsured.
Surveyor:- Person whose job is to examine buildings, etc. And report on their condition, often employed by an insurance company (for buildings insurance) or a mortgage provider.
Tariff:- In insurance, it is a collective agreement by members to calculate and charge the same premium for a given risk or type of insurance.
Third-Party:- Person mentioned in a contract but not a party to the contract. Third-Party insurance, for example, gives the insured cover against claims made by a third party (who is not named in the policy and not a party to it).
Third-Party liability:- Liability arising to a party, who is not party to the contract i.e. other than the insured or the insurer. This party/person is called the third party and the liability to him/her arising under law or contract is called third party liability.
Total-Loss:- In marine insurance, the loss of ship at sea or the total destruction of ship and/ or its cargo.
Through Bill of Lading:- A bill of lading providing for the carriage of goods by water, from their point of origin to their final destination, either by successive ocean carriers or by more than one mode of transportation.
Theory of Probability:- This theory enables the insurance company to predict potential losses based on a study of the insured’s previous loss experiences.
Underwriting :- The process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be charged. The process includes rejection of unacceptable risks.
Undischarged Insolvent:- The person who has declared insolvency but not paid off his creditors not has entered into any scheme of settlement with them. He is incapable of entering into any contract.
Unexpired Risk Reserves :- Fund that an insurance company sets up to cover a shortfall in an insurance company’s unearned premium reserve.
Unvalued Policy:- Insurance policy that has a sum insured against each item of property, but not acknowledge by the insurer as true values. In the event of a claim, the insured must prove the actual value of the item.
Utmost good Faith:- Phrase referring to contracts of insurance in which both parties must disclose all the facts that may influence the other’s decision to enter into the contract, whether they are asked to do so or not. If either party has not acted in the utmost good faith, then the contract may become void.
VALUED POLICY:- Insurance policy that has values assigned to insured items, the values being agreed by the insurer. In the event of claim for total loss, that is the sum paid without the need for further negotiation.
VEHICLES SUBJECT TO HYPOTHECATION AGREEMENT :- It is not permissible for insurance companies to issue policies in joint names of pledge and registered owner of vehicles; coverage should be issued in registered owner’s name only and pledges’ interest is protected by using the appropriate endorsement
VEHICLES SUBJECT TO LEASE AGREEMENT : Insurance cover cannot be issued in the joint names of lessor and leasee; policies should be issued in leasee name and lessor interest is protected through appropriate endorsement
VETERINARY HEALTH CERTIFICATE :- Certificate issued by qualified vet on the health and value of an animal; is obtained when insurance is being applied for to determine only healthy animals are insured for their accurate value
VOID CONTRACT:- Contract that was drawn up on the basis of what turns out to be misunderstandings on both sides. Such a contract is deemed in law never to have existed.
Waiting Period :- A period of time set forth in a policy which must pass before some or all coverages begin.
Warranty:- In insurance, it is an undertaking by an insured person that something will, or will not, be done, for example, that an alarm system will be maintained and switched on, Breach of warranty allows an insurer to repudiate claim.
Wear and Tear:- Popular and legal term for depreciation, wear and tear is the decrease in value of an items due to deterioration through normal use rather than through accident or negligence.
Work in progress:- In accounting, the value of goods currently under manufacture or services being supplied, but not completed at the end of the accounting period.
YEAR OF ACCOUNT BASIS : Accounting technique practiced related to reinsurance transactions; within this category accounts dealing with premiums and losses during the year being considered irrespective of the origination year of the cession or loss
YIELD : Ratio of the income earned on an investment to the face value of the investment; also known as current yield on the investment
ZONE A : Relating to application of the premium rates prescribed within the All India Motor Tariff relates to one of the two zones of operations of motor vehicles that comprise the Madras Region and Mumbai Region but excludes Mumbai
ZONE B : Relating to application of the premium rates prescribed within the All India Motor Tariff relates to one of the two zones of operations of motor vehicles comprising regions other than those covered under Zone A; viz Delhi, Mumbai, Kolkata