Insurance terms

the Insured’s giving up of his rights on the insured property in favor of the Insurer for receiving the full amount of the insured sum from the last one.
an event (incident) that suddenly occurred against the will of a person, as a result of an external mechanical, electrical, chemical or thermal effect on the insured’s body, resulting in harm, injury or death.
Action of recourse
the right of claim against the person responsible for the damage. In case of property loss through no fault of the insured, the insurer who has paid the insurance indemnity may sue in the amount of the sum paid against the person who caused the damage or is liable for it.
professional work of insurance agent and broker to extract new insurance contracts of individuals and legal entities into the insurance portfolio.
Actuarial calculations
the system of mathematical and statistical regularities, on the basis of which the insurer determines the insurance rate (net rate). Actuarial calculations are based on determination of the insured event probability and taking into account other statistical values, variance, risk concentration, etc.
officially authorized person, specialist who calculates insurance rates using mathematical statistics methods. Actuary has the responsibility to ensure that insurance funds are sufficient at the time when the company will have to fulfill its obligations under the issued policies.
a written attachment to the previously concluded insurance or reinsurance contract, which contains amendments between the parties to the previously stipulated contract terms. It may entail a change in the insurance rate and the corresponding mutual settlements under this policy.
Additional insurance premium
part of the insurance premium charged by the insurer in cases when his risk increases due to some circumstances.
average adjustment specialist - making calculations on general average between ship, freight and cargo (in marine insurance). See: average adjuster.
Agency agreement
an agreement with individual or legal entity (agent) on the fulfillment on behalf of him and in the interests of the principal (other person) of the related duties (assignments) arising from the terms of the agency agreement.
Agent’s commission
payment of agent’s services for the fulfillment of his related duties (assignments) in the interests and on behalf of the principal (another person), according to the terms of the agency agreement concluded between them. It is usually handled as a commission (percentage of the insurance premium).
Aggregate limit of liability
the total limit of liability for one policy for the entire insurance period without renewal, assigned in addition to the limits for each insured event.
the sum or sums periodically paid by the insurer, within the period specified in the contract as insurance coverage (regular income) in the amount specified in the contract. Payments are made in connection with the occurrence of the insured event(s) stipulated in the contract - for example, the age occurrence specified in the contract, or in case (s) stipulated by the insurance rules
a person who wants to buy policies and pay premiums applying for insurance.
the person appointed by the insured as the recipient of the insurance indemnity or coverage. He is indicated in the policy. In property insurance under the terms of insurance, he is the recipient of the insurance indemnity’s sum. In personal insurance, if an individual, who is appointed by the insured as the posthumous beneficiary of the insured sum, isn’t indicated in the policy, such persons may be heirs. If the assured is indicated in life insurance policy then in case of death of the insured, the assured receives the insurance or redemption sum regardless of the order of succession. It is possible to indicate several assureds with the determination of the share of payments for each of them (in the sum of 100%).
Average adjuster
Specialist in the compilation of dispatch - calculations on losses distribution in general average between ship, freight and cargo (in marine insurance). See also: ADJUSTER.
person in whose favor the insured has concluded an insurance contract. The third party is the beneficiary of the insurance policy. Also, the beneficiary is a person in whose favor a transferable letter of credit is opened and he has been granted the right on the basis of this letter of credit at another bank in his own favor or in favor of other persons.
Bodily injury
corruption of physical integrity of the body, suffered by the insured during the period of the insurance contract, caused directly, regardless of other causes, as a result of irresistible, accidental obvious external influence. It does not include diseases, except those that are caused, directly and exclusively, by this exposure or its consequences.
list of risks subject to reinsurance.
Captive companies
insurance companies established by large industrial or commercial concerns to insure all or part of their risks.
cargo or property transported by ship in order to obtain freight, insurance of transported goods
Cash loss
the condition of reinsurance agreements, according to which the losses exceeding the sum stipulated in the contracts are payable immediately by reinsurers in the share falling on them (usually within one to two weeks)
Cash surrender value
cash amount to which the insured is entitled in case of early termination of his policy, which is often calculated with an payment installment plan. (This applies only to life insurance policies). Usually calculated as: cash surrender value = amount contributed by the insured + interest income on this amount - the company's expenses on signing and servicing the policy.
the insurer, who for a fee retrocedes the part of the reinsurance risk accepted under the contract with the insured for reinsurance.
Ceding commission
part of the premium held by the ceding company in its favor when retroceding the risk to reinsurance. It can be calculated on gross or net premium.
the process of transferring the insured risk to reinsurance.
insurer accepting risks in reinsurance.
Civil liability
liability to third parties for the harm or damage that it may cause to their health, life and property, as a result of using the insurance object or as a result of owning it. Civil liability may also arise in case of an inadvertent offense or breach of contractual obligations.
In insurance, the claim is made by the insured to the insurer in connection with the occurrence of the insured event. In insurance practice, such a claim is sometimes referred to as a “loss”. Facts and causes finding of the insured event, the amount of damage caused to the insured property as a result of the insured event, documentary payment of insurance indemnity is called satisfaction of the claim or settlement of losses. A claim to the insurer may be made not only by the insured, but also by another legal entity or individual, in whose favor the endorsement on the policy is committed. The statute of limitations for claims submission arising from insurance terms and conditions is stipulated in the policy and is based, as a rule, on the current legislation of the country in which the policy was issued. The concept of a claim may also include claims against the party responsible for the occurrence of the insured event - regress.
Claim settlement
a set of the insurer’s activities to establish the causes, facts and circumstances (confirmed by incontrovertible evidence) of the insured event and the payment of insurance indemnity
Claims adjuster
expert, authorized representative of the Insurer, who establishes the cause, nature and size of insurance claims by agreement with the Insured and handles insurance claims (issuing statement of loss). The postal or telegraphic address of claims adjuster is indicated in the insurance telegraph or policy.
Collective insurance
a set of personal insurance contracts, concluded by the insurer not with individuals, but with the administration of the enterprise or the trade union, which act as the insured. The insureds are people who are employed by this company. Collective policy is issued to an employer or a group representative, and each member receives an insurance certificate.
Compulsory insurance
type of insurance carried out by law, such as insurance towards passengers using the services of air or railway transport, compulsory medical insurance, liability insurance, etc. Compulsory insurance is introduced and implemented on the basis of the relevant legislative acts, which stipulate the procedure and conditions of this type of insurance, which are obligatory for execution by both the insured and the insurer.
Corrective ratios
coefficients used by the insurer (underwriter) in order to increase or decrease the average insurance rates, according to the risk degree when taking on the insurance of a particular object or individual.
a document issued by the broker to the insured confirming that an insurance contract has been concluded on his behalf. Insurance conditions and the premium rate are indicated in the covernote. The insurer shall not be legally responsible for the covernote issued by the broker. But, if the broker is negligent, and it has certain consequences, the covernote can be used by the insured as evidence of the broker’s guilt. Covernote is subject to replacement with the policy, since the covernote has no legal force.
1) concentration of insurance risks in one company to the extent that can lead to multiple losses due to a single insured event; 2) concentration of the insured objects on the same territory, street, house, port, railway station, ship, which in the case of a simultaneous insured event (for example, an earthquake) can lead to a violation of the insurer’s financial stability. Cumulation can be taken into account when determining the portion of the risk remaining on the insurer's retention.
Cumulative insurance programs
insurance program, which in addition to risk coverage also contains an element of savings or accumulation of funds. Cumulative programs include, for example, personal insurance, retirement insurance, etc.
Currency of insurance
currency in which insurance contract is concluded. Premium is payable and the amount of insurance compensation is paid in the currency of insurance. It is sure to be specified in the insurance contract.
the insured’s pecuniary losses in money terms caused by damage or destruction of property (its parts) as a result of an accident, fire, natural disasters, other reasons stipulated by the insurance contract; the insured’s losses in money terms as a result of the realization of the insured risk. Claims made on damage by the insured are accepted by the insurer if they arose as a result of an insured event.
Damage on supplemental equipment
theft, damage, destruction as a result of an accident, fire, explosion, natural disasters, as well as a result of illegal actions of third parties of supplemental equipment of the insured property.
a certain part of the insured’s losses, not subject to reimbursement by the insurer in accordance with the insurance terms and conditions. The deductible can be set in the form of a certain percentage of the value of the insured property or in a certain amount. It is understood that depending on how it is agreed, the deductible can be applied both to the total value of the insured property and to individual points of cargo. The conditional (non-deductible, threshold) and unconditional (deductible) deductibles are distinguished, which are set in percentage or absolute value to the insured sum. In case of conditional deductible, the insurer is released from the liability for loss if its size does not exceed the size of the deductible, and the loss is subject to compensation in full amount if its size exceeds the deductible. In case of unconditional deductible, the insurer’s liability is determined by the loss amount minus the deductible. The deductible is a form of the insurer's own participation in the loss coverage and as a rule, is used for those cases when the insured’s losses are relatively small. The introduction of a deductible into the insurance contract is intended to exempt the insurer from the costs associated with the elimination of minor losses, since in many cases such expenses exceed the amount of the loss. In addition, the deductible requires the insured to treat the insured property more diligently.
Defence costs
legal expenses of the insured, caused by the protection of his rights on set claims against the insurer, and which he evades from satisfying. When proving the insurer's liability, these expenses are subject to reimbursement to the insured
Disability group
MSEC (medical and social expert commission) is set, depending on the degree of disability. There are three groups of disability (by numbers: from the first, the most severe, to the third). See also: DISABILITY.
persistent director (reduction or loss) of general or occupational disability as a result of a disease or injury.
any health deterioration, not caused by injury, in which there are objective manifestations that allow to make a diagnosis.
In insurance, it is the simultaneous development of many unrelated types of insurance, expanding the range of insurance services provided by the insurer. Diversification - a condition of insurance reserves placement by the insurer.
part of the profit of a joint stock insurance company which is subject to be distributed according to the results of the insurer's activities for the year between the shares’ owner in accordance with their amount and value
Double insurance
insurance of the same interest at several insurers against the same risks when the total insured sum exceeds the insured value. In case of double insurance, insurers are liable within the insured value of the insurable interest, and each of them responds in proportion to the sum insured under the insurance contract concluded by it. In developed countries, double insurance can be used for enrichment, and therefore the legislation of these countries pays great attention to this issue. Triple and further insurance is called multiple and falls under the same rules as double.
Emergency medical care
A set of measures to provide qualified medical care to patients with acute diseases or injuries at all stages of treatment (clinic - ambulance - hospital)
Emergency medical treatment
used in less urgent cases than first medical aid. Aid is provided by the primary care physician of the clinic in the patient’s place of residence within 2-4 hours.
the risk amount that is subject to be reinsured in excess of the amount of the reinsurer's own retention.
Excess of loss policy
reinsurance agreement in which the reinsurer participates only in cases where the final loss amount on the insured risk as a result of the insured event exceeds the amount stipulated in the contract.
Excess of loss ratio
disproportionate reinsurance treaty that protects the overall results of a case proceeding in case of the loss ratio for the protected type of insurance exceeds the percentage/specified amount stipulated in the contract
Excess of loss ratio treaty
reinsurance agreement, in which the reinsurer participates only when the loss of the insurance portfolio exceeds the loss limit, which is defined as the percentage ratio of the paid insurance indemnity to the amount of collected insurance premiums.
Extra premium
additional premium paid by the insured to the insurer over and above the usual premium for insuring additional risks of increased danger.
Extra premium/Surcharge
additional insurance premium paid by the insured for including additional risks in the previously agreed terms of insurance.
Facultative obligatory reinsurance
mixed form of reinsurance, according to which the reinsured can transfer not all but only certain risks at his discretion, and the reinsurer is obliged to accept these risks.
Facultative reinsurance
reinsurance on case-by-case basis of one or more particular risks. The reinsured offers the reinsurer each risk separately. This offer is issued in the form of reinsurance slip. Facultative reinsurance provides complete freedom to the reinsured and the reinsurer. The reinsured has the right to offer any risk, and the reinsurer may reject this risk, or accept it in part. Usually, facultative reinsurance is used when reinsuring very large risks.
acceptance of risks for insurance or reinsurance in order to transfer them fully (100%) to other insurance or reinsurance companies, often at the request of the latter for appropriate remuneration.
General policy
policy under the terms of which all cargos received or sent by the insured are considered insured for a certain period, within certain limits of the insurer's liability. Usually, the insured is obliged for each cargo shipment that is subject to the general policy to inform the insurer: the name of the vessel on which cargo is sent, the route of the cargo and the insured sum. The insured is not exempt from this obligation, even if he receives information about the shipment of cargo after their delivery to the destination in intact condition. The insurer is obliged at the request of the insured to issue on individual shipments that fall under the general policy, policies or insurance certificates for each shipment.
Green card
a liability insurance program for traveling abroad. In many countries, the presence of a green card is a prerequisite for using a car entering the country. The green card is valid in all Schengen countries, except for the country that issued the policy.
Gross rate
the full tariff rate without any discounts and deductions, as opposed to net rate, includes all the company's transaction costs and profit margin. More than a net rate and includes it.
Hull insurance
type of insurance used in the insurance of vehicles (ships, aircraft, cars). Hull insurance assumes indemnity for damage from damage or loss of the vehicle itself and does not include the insurer's liability for damage occurred as a result of an insured event due to death and injury to the health of passengers, damage to property being transported, liability to third parties, etc.
Immovable property
objects of possession or use by individuals or legal entities. Immovable property is a property which use for intended purpose and without prejudice to its characteristics and value properties, excludes its movement: buildings, structures, land, etc. Movable property includes all other types of property.
full or partial compensation of the damage by the insurer to the insured, which the latter suffered as a result of the loss or damage of the insured property as a result of natural disasters or other causes covered by the insurance. In property insurance, the loss is reimbursed to the insured or another person by his order. When insuring liability to third parties, insurance indemnity is paid to a person who has suffered damage by the insured.
tissue injury of the human body with the corruption of its integrity and functions, caused by external (mainly mechanical, thermal) influence.
Insurance broker
a legal entity or individual, registered under the established procedure as an entrepreneur carrying out insurance agency business on behalf of himself on the basis of instructions from the insured or insurer. The broker independently places insurance risks in any insurance company, receiving certain remuneration from the insured. Sometimes - an agent giving advice to his clients (insureds) and concluding insurance contracts on their behalf. The broker must be an expert in law and insurance practice. It is believed that as a professional, he should know everything about insurance and his knowledge should help to ensure best insurance conditions and interest rates.
Insurance clause
list of specific events (for example, theft, fire, earthquake, etc.) stipulated by law or an insurance contract, upon occurrence of which the insurer makes payments to the insured at the expense of the insurance fund.
Insurance company’s agent
a trusted individual or legal entity who fulfills assignments or performs certain actions on behalf of and in the interests of another person (principal) at his own expense and on his behalf, without being his employee. It is assumed that the person who empowers the agent, at the same time consents to the commission of legal transactions that are permissible when using these powers. However, the agent’s right to receive payments must be explicitly stated in the agency agreement.
Insurance contract
an agreement between the insured and insurer, under which one party (the insurer) assumes for conditional remuneration (insurance premium) the obligation to pay damages to the other party (insured), which occurred as a result of the adverse events stipulated in the insurance contract to which the insured property was subjected. See also: INSURANCE POLICY
Insurance coverage
insurance payment, which the insurer must make when an insured event occurs under a personal insurance contract or liability insurance, resulting in death, injury or other harm to the health of the insured or a third party. Insurance coverage is an absolute expression of the sum for which seperate objects or all of the property of the insured are insured; valuation of obligations undertaken by the insurer for certain types or the entire set of operations types conducted by it. It may be paid to the assured, beneficiary or heir by law.
Insurance estimate
the process of determining the real value of movable and immovable property acceptable or accepted for insurance. The insured sum and insurance payments are calculated, the amount of incurred losses and the amount of insurance indemnities are determined based on the insurance estimate. The term "risk assessment" in aggregate should be understood as risk is a danger, but the danger is supposed, known. There are other dangers that are not perceived, currently unknown, but which may appear; the probability degree of occurrence of the alleged, but undesirable event - the quantitative side of the risk, and the amount of the alleged damage - an important indicator for making a decision: to insure against this risk or not; what is the most rational and global insurance coverage for this object of insurance, on what conditions should such insurance be carried out and at what rates; the process of liquidation and minimization of losses in case of their occurrence; size and expediency of reinsurance coverage; risk management, implementation of control measures. The need for a global risk assessment in these aspects makes the services of risk managers real and promising.
Insurance interest
measure of material interest in insurance. It is expressed in the insured sum and insurance policy conditions. None of individuals or legal entities can fall back on insurance if it does not have an insurance interest in the insurance object or does not expect it to occur. It is understood that the insured must suffer material damage if the insured property is lost or damaged or if the insured has a material interest to the third parties in connection with the insured property.
Insurance liability coverage
the maximum sum that can be paid by the insurer to the insured for losses resulting from the occurrence of the insured events, accidents. Usually it is used in insurance contracts that do not have the insured sum (liability insurance).
Insurance limit
the insured sum specified in the insurance contract (policy), to the extent of which the insurer has liability to the insured (third parties); the maximum insured sum on which it is possible to insure property or conclude personal insurance contract. Under the certain policy - the maximum insurance payment possible for each insured event, and in general, the amount of payments during the year.
Insurance payment
payment for insurance, which the insured is obliged to pay to the insurer in accordance with the insurance contract or law; paid insurance interest; payment for the insured risk of the insured to the insurer by virtue of the law or an insurance contract. The insurance payment is calculated on the basis of insurance rates, insurance period, the amount of the insured sum and discounts provided to the insured, for example, under accident-free operation of motor vehicles for a number of years, and some other factors. It is submitted by the insured as a lump sum advance when entering into insurance regulations or in parts (for example, monthly, quarterly) during the entire insurance period. The amount of insurance payment is reflected in the insurance policy.
Insurance policy
standard form financial document issued by the insurer to the insured as proof of the concluded insurance contract and containing its terms. There are standard and individual insurance policies. Standard insurance policies are written out by the insurer on a wide range of typical insurance risks that are massive. Individual insurance policies (for example, insurance of movie stars’ looks) reflect personal insurance interests, usually associated with a professional career. In all insurance policies there may be special terms and conditions of the contract that satisfy specific insurance interests and related actions (for example, the insured’s testamentary disposition). The inclusion of special terms and conditions of the contract in insurance policies usually accompanied by the application of additional insurance premium, which is expressed in absolute or relative values. The policy serves as legal proof of the insurance contract existence and can be brought to court if necessary. If the insured does not pay the premium on the policy that is subject to be given to the insured or is indebted, the broker is entitled to withhold the policy until such premium is paid.
Insurance premium deposit
part of the premium retained by the reinsured when concluding reinsurance contract as a guarantee of the reinsurer's fulfillment of its obligations. It is fully paid to the reinsurer upon the termination of the contract.
Insurance supervision
State administration body for regulating insurance activities; control over the insurers’ activities by an authorized state body
Insurance types
insurance division depending on the characteristics taken as the basis for the classification of personal, property and liability insurance. From the insurers’ point of view: insurance of homogeneous objects against their characteristic hazards. It expresses the specific interests of insureds associated with the insurance coverage of these objects.
an individual whose life, health and working ability are subject to insurance coverage. The insured is a person, the insured event with which leads to the payment of insurance indemnity to him or the beneficiary or the heirs. The insured and the policyholder are not necessarily the same person.
Insured's application
Before the insurance contract is concluded, i.e. before the insurer is at risk, the insured is obligated to make a statement to him about all material factors or circumstances that are known to the insured or should be known to him by the nature of his business, and may affect the insurer's decision to accept insurance or reject the risk, establish adequate premium rates, etc. If the insured fails to do so, the insurer has the right to refuse the contract concluded by him. However, if the insurer does not require this, the insurer should not make statements regarding facts that can be assumed to be known to the insurer by virtue of their general knowledge, or he should be aware of them by the nature of his business.
Insured’s fault
In insurance it is customary to distinguish between the gross or wilful insured’s fault and negligence. The gross insured’s fault is sufficient reason for the insurer to refuse to pay insurance indemnity or to pay it on a compromise basis, depending on the nature and amount of the loss. The gross fault may manifest itself, for example, in the failure of the insurer to comply with the obligations regarding the safety of the insurance object. Carelessness or negligence on behalf of the insured, if they do not have sufficiently serious consequences, may be considered by the insurer as excusable reasons in deciding whether to pay insurance indemnity.
Irresistible force
an emergent event that was impossible to foresee and prevent. In practice of insurance it is often referred to as force majeure.
the insurer's obligations to indemnify losses in the value limits stipulated by the insurance contract (see insured sun, liability limit) upon the occurrence of an event (events) listed in the contract as possible insurance claims and/or not included in the list of exclusions from insurance stipulated by the contract.
Limit of the insurer’s liability
the maximum liability of the insurer arising from the insurance contract terms.
damage caused to the insurance object as a result of an insured event that is refundable by the insurer; the established fact of occurrence of the insured event (realization of the insured risk); documents and materials in the insurer’s archive, describing the material circumstances and facts of the insured event, separated into independent record keeping and confirming the reasonableness of the payment
Loss probability
quantitative assessment of the possibility of insured event occurrence for certain types of insurance, for which the insurance indemnity is paid. The loss probability serves as the basis for setting insurance rates, rates, premiums, discounts, additional premiums to them.
Loss ratio
the ratio of the amount paid out in losses for a certain period to the net premium for the same period. It serves as an indicator of the passing the business.
Loss ratio of the insured sum
economic indicator of the insurer’s business, which characterizes the ratio between payments of insurance indemnities and insured sum.
Lump-sum insurance payout
the sum or sums of insurance indemnity paid by the insurer as compensation by a lump sum payment.
Lump-sum system
when insuring the driver and passengers of ground vehicles, the total insured sum for all passengers in ground vehicles with the establishment of the insurer's liability limits for one injured is separately stipulated in the policy
Marine insurance
protection of property interests of the marine company participants from the risks associated with dangers and accidents to which the vessel, cargo and freight are exposed. Marine insurance also includes shipowners’ liability insurance. The insurer’s liability limit, the relationships of the parties before and after the loss occurrence, etc., are determined by the relevant insurance terms.
Maximum possible loss
estimated maximum amount of loss that may be caused to the insurance object as a result of the insured event, i.e. it is determined whether upon the occurrence of such a case, the insurance object can be completely destroyed or under any circumstances the damage will not exceed a certain size (50%, 70%)
Mitigation of damage
the insured is obliged in all cases to act as if his property was not insured, and take all possible measures to reduce the loss or prevent it, despite the fact that the loss may be subject to compensation under the insurance terms and conditions.
Movable property
objects of possession or use by individuals or legal entities. Immovable property is a property which use for intended purpose and without prejudice to its characteristics and value properties, excludes its movement: buildings, structures, land, etc. Movable property includes all other types of property.
Mutual insurance
a form of insurance coverage in which the Insured is simultaneously a member of an insurance company. Mutual insurance is an agreement between a group of individuals and legal entities on compensation in certain shares, according to the accepted terms and conditions, losses to each other.
Mutual insurance association
mutual insurance company whose members and owners are insurance policyholders.
Net deductions
the amount of liability that the reinsured holds at his own risk on accepted insurance or reinsurance after the transfer of the agreed share in reinsurance or retrocession to reinsurers.
Net premium
the bulk of the gross rate, the calculation of which takes into account only contributions to funds intended for the payment of insurance indemnity or coverage. By types of insurance net premium is determined based on its unprofitability on the basis of statistical data or expert estimates.
Net value
in insurance it is the real or sales value of goods at the point of destination, excluding all costs associated with unloading goods at that point. Partial losses in cargo are usually calculated on the basis of gross value, i.e., including unloading costs, if, however, the use of net value is not specified. The net value is applied in the calculations for the contraband capital in case of general accidents and in the calculations for rescue.
Nonproportional reinsurance
reinsurance, in which insured sums, premiums and payments are disproportionately distributed between the reinsured and the reinsurer. The reinsurer participates in indemnity of losses only in case if the loss exceeded the sum stipulated in the contract (excess loss).
Obligatory quote-excess reinsurance treaty
represents a combination of quota and excess types of obligatory reinsurance treaties: the portfolio of this type of insurance is reinsured by quota, and the excess of the insured sums of risks above the set norm, in its turn, is subject to reinsurance on the principles of an excess treaty.
Obligatory reinsurance
mandatory form of reinsurance of all insurer’s risks. The obligatory contract obliges the reinsured to transfer all risks to reinsurance, and the reinsurer is obliged to accept these risks. Usually, in case of obligatory reinsurance, the reinsured regularly sends the bordereau to the reinsurer.
Outstanding loss
claimed loss by the insured to the insurer on the insured risk, which has not yet been paid. If claimed losses are not paid before the end of the reporting year, the insurer for the aggregate amount of such losses makes a reserve.
Park discount
discount given when insuring several cars at once.
Partial loss
any loss in the insured property, the sum of which has not reached the full insured sum, i.e. there is no total loss.
Personal insurance
insurance branch, in which the object of insurance coverage is life, health, working ability of a person.
Personal insurance contract
contract which insurance objects are property interests related to life, health, working ability, and pension coverage of the insured or assured person. In the personal insurance contract, the insured sum is set by agreement with the insurer.
Policy exclusion
its termination by mutual agreement between the insured and insurer. Sometimes it turns out that the insurance contract was concluded erroneously. In such cases, it can be completely excluded (as if it never existed). The policy can also be excluded by mutual agreement between parties, even if there has already been an inception of insurance coverage under the policy. Sometimes the insurance company has right to exclude policy unilaterally upon immediate notification of the insured, provided that the insured fails to comply with the insurance rules or incorrectly describes the risk in the insurance application.
the sum paid by the insured (policyholder) to the insurer for the latter’s obligation to pay the policyholder the appropriate amount when the insured event caused by the policy terms and conditions. It can be paid monthly, quarterly, semi-annually or annually.
Premium reserves
According to generally accepted terms and conditions of reinsurance treaties, the disclosing party has right to withhold part of the reinsurance premium for reserve accumulation for payment of losses and payment of premium returns.
Premium subject to be agreed
There are cases when the cover of insurer’s liability cannot be accurately determined and an advance payment of a premium or part of a premium is paid to him, and the final premium amount is determined after the expiration of the policy.
Preventive measures
measures taken to prevent the occurrence of insured events. It also means that the insured is obliged to take all measures depending on him to prevent the occurrence of insured events, that is, to act as if the corresponding property was not insured.
Property insurance
insurance of movable and immovable property. It provides indemnity of a loss to the insured property in case of damage, destruction, disappearance under the action of causes (risks) stipulated by the insurance contract
Property insurance contract
contract which insurance objects are property interests that are not in conflict with the law and are related to the possession, use and disposal of the insured property. When insuring property, the insured sum cannot exceed its real value at the time of the conclusion of the contract, and the insurance indemnity cannot exceed the amount of direct loss to the insured property.
Property interest of the property’s owner
It manifests itself not only to the property subject to insurance, but also in relation to losses for which liability may arise in connection with the property ownership (loss of profit). The standard policy terms usually provide for the coverage by insurance of only property itself, but by agreement the risk cover of the insurance of other interests related to the property may be included. In any case, the insured's interest should not exceed the insured sum under the policy and this does not give grounds for double insurance.
Proportional reinsurance
reinsurance, according to which insured sums, premiums and payments are proportionally distributed between the insured and the reinsurer, i.e. in accordance with the shares taken on their responsibility.
Proportional system of insurance coverage
provides for the payment of insurance indemnity in the amount of such part of the damage, that is the insured sum in relation to the assessment of the insured object. For example, if the insured sum is 80% of the estimated value of the insurance object, then the insurance indemnity will be equal to 80% of the damage. In this case, part of the damage remains at risk of the insured: the completeness degree of indemnity is the higher, the smaller is the difference between the insured sum and the assessment of the insured object.
Pure premium
In insurance premium is divided into two parts. The main part is intended to create the necessary fund for the payment of insurance indemnity, it is associated with the risk of insurance company and is called pure premium. The additional pure premium is used to make reserves for contingencies and cover legal expenses.
Quota share reinsurance treaty
according to the terms of this agreement, the insurance company transfers to reinsurance all accepted insurance risks on a specific type of insurance or a group of related insurances in a proportion agreed with the reinsurer. In this share, the premium due to him is transferred to the reinsurer, and he reimburses to the reinsured all the losses paid by him in the same share.
Quota share treaty
reinsurance agreement, according to which the reinsured transfers to reinsurance all risks accepted for insurance on a certain type of insurance in the agreed share (quota) with the reinsurer. In the same share, insurance premiums are transferred to the reinsurer, and in the same share he pays the occurred losses.
Quota-excess loss contract
reinsurance agreement, representing a combination of quota and excess loss types of contracts: the portfolio of this type of insurance is reinstated by quota, and the excess of the insured sum of risks above the established norm, in its turn, is subject to reinsurance based on the principles of the excess loss contract.
in insurance it is the premium rate at which the insurer is willing to accept the corresponding risk for insurance. The quote can be obtained from several insurers in order to establish more acceptable insurance conditions.
Rate Manual
a systematic statement of tariffs used by the insurer when concluding insurance contracts.
insurance premium rebate in absolute values, percentage or per thousand, which is provided by the insurer for the conclusion of the contract on conditions that are particularly favorable to him. The rebate value is reflected in the insurance policy.
Reduced insured sum
the insured sum under a life insurance contract, reduced due to the early termination by the insured of the payment of regular insurance premiums. In the reduced insured sum, the contract continues to operate without further payment of contributions until the end of the insurance period.
the right of the insurer to submit a claim to the third party responsible for the occurrence of the insured event in order to obtain compensation for the caused damage. This right arises for the insurer after it has paid a legal loss and within the amount paid by it.
is a system of economic relations, during which the insurer, taking risks for insurance, transfers all or part of the responsibility for them (ahead the insured) on agreed terms to other insurers.
Reinsurance agreement
legal document that defines the relationship between the reinsured and reinsurer, and establishes their rights and obligations.
Reinsurance slip
a document sent by the reinsured to potential reinsurers and containing a proposal to participate in the facultative reinsurance of the relevant risks.
Reinsured (cedent)
the insurer, who for a fee retrocedes the part of the risk accepted under the contract with the insured for reinsurance.
insurance company accepting reinsurance objects.
Reserves for outstanding claims
special funds formed by the insurer for the fulfillment of financial obligations for the claimed but not yet paid losses.
reinsurer, who transfers the insured risk to a third reinsurer (retrocessionary).
the process of transferring the insured risk from the reinsurer to a third reinsurer (retrocessionary).
reinsurer (third party) taking the insured risk from retrocedent.
In insurance, there are several concepts of the term "risk". First of all, this concept means randomness that can happen being out of control, but does not have to happen. Probability event or set of events in case of occurrence of which the insurance is carried out. The insurer’s responsibility can also be understood under the concept of "risk": the insurance object is at risk, i.e. on its responsibility. Further "risk" can mean an insurance object: for example, a ship. Finally, “risk” can be understood as a certain type or even the subject of insurer’s responsibility. It is determined on the basis of statistical data, empirically and on the basis of probability theory. The reliability of risk assessments is verified by constructing various economic and mathematical models (actuarial calculations). It is important to determine the size of the insurance fund.
Risk management
new type of services provided by brokerage firms, insurance and reinsurance companies to their clients. It is widely advertised and discussed in mass media in recent years. It can be translated as "risk assessment".
open theft of property.
an attack in order to steal someone else's property, committed with the use of violence dangerous to life or health, or with the threat of such violence.
this concept is used in reinsurance practice, when the original insurer retains part of the risk on its responsibility and transfers the rest part to reinsurance
Short term insurance
insurance concluded for a period of less than 12 months; types of insurance where claims can be resolved quickly.
Statement of loss
the document, prepared by claim adjuster to confirm claims nature, size and cause in the insured property.
Sue and labour clause
a clause on the insurer's reimbursement of the insurer's expenses related to the prevention of loss of the insured property or the recovery of losses from third parties. It is understood that the insured is obliged to act at any time as if his property was not insured, and to take such measures to preserve the insured property that could be taken by the prudent owner who owns uninsured property.
Surplus treaty
the most common form of proportional reinsurance treaties. According to the terms of this treaty, all risks accepted for insurance, the insured sum of which exceeds the reinsured's own retention, are to be retroceded to reinsurance within a certain limit or excess, i.e. the amount of reinsured's own retention multiplied by specified number of times.
commission (indemnity) in the reinsurer's profit to cedent for providing participation in reinsurance treaties.
Tariff rate
is cost of insured risk. It is a gross rate as in absolute monetary terms, percentage or per thousand of the insured sum for a certain period of time (insurance period). The gross rate is the net rate plus the load calculated by the actuary. The net rate reflects the insurer's expenses on payment from the insurance fund; load - the insurer's legal expenses, the payment of intermediary services (commission) of insurance agents or brokers, the pledged profit from insurance and other expenses.
Temporary disability
Inability to work, accompanied by release from work for the period necessary for treatment and rehabilitation.
The object of insurance
interest, which is the cause and purpose of insurance; in personal insurance: life, health and working ability of citizens; in property insurance: buildings, structures, freight vehicles, collections, household property, transported goods and other material values; in liability insurance: liability for the property interests of third parties that may be violated by the insured (for example, when using means of increased danger).
vehicle theft, vehicle seizure, also without the purpose of misappropriation
covert property embezzlement, theft by unauthorized entry
Third parties
persons who are not in contractual relationships with the insured (for example, with clients) and are not his employees.
Total loss
irrevocable loss of the insured property (vessel, cargo, car) by the insured as a result of risks impact from which insurance was made.
Unconditional franchise deductible
the order in which the insurer reimburses the loss minus the established deductible, for any amount of damage. It may be determined by a fixed amount of money or a percentage of the insured sum. See also: DEDUCTIBLE
insurance of the interest which is lower than its real value. If the insurance policy is issued for the sum that is lower than the real value of the interest that is at risk, the risk is considered underinsured. In this case, the sum of the difference between the insured sum and the sum of the policy in which the interest should be insured, based on its real value, is the responsibility of the insured.
a person authorized by the insurance company to accept risks for insurance and reinsurance. The other meaning - the person who puts the signature on the policy. Usually it is a highly qualified specialist in the field of insurance, carrying out risk assessment when taking specific objects or individuals on insurance (underwriting). Often, the underwriter relies on data received by surveyor. He is also entitled to rate tariffs and specific terms and conditions of the insurance contract, as well as to make a conclusion about the possibility (or impossibility) to conclude an insurance contract under certain conditions.
Voluntary medical insurance
Voluntary insurance
form of insurance carried out on the basis of a voluntary contract between the insured and insurer. The rules of voluntary insurance, which determine the general conditions and procedure of its conduct, are established by the insurer independently in accordance with legislative and other regulatory acts on insurance. Specific insurance conditions are determined at the conclusion of the insurance contract. Unlike compulsory insurance, in which the insured is obliged to insure his property or liability to third parties by law, the insurance contract of this insurance type is voluntary.