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Discover Risk management

Risk management Discovered!

Risk management Technical Terms

Risk management: Management of the risks to which a company might be exposed. It involves analysing all exposures to the possibility of loss and determining how to handle these exposures through such practices as avoidance, reducing the risk, retaining the risk, or transferring the risk e.g. see reinsurance.

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Discover Risk

Risk Discovered!

Risk Technical Terms

Risk: General meaning is a thing or person insured.

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Discover Retrocessionaire

Retrocessionaire  Discovered!

Retrocessionaire Technical Terms

Retrocessionaire : A reinsurer that accepts retrocession business.

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Expose Retrocession

Retrocession Exposed!

Retrocession Technical Terms

Retrocession: Reinsurance of reinsurance, either on a risk-by-risk basis, or on a portfolio of business.

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Remember Residual risk

Residual risk Remembered!

Residual risk Technical Terms

Residual risk: This refers to the remaining levels of risk, after risk treatment measures have been taken.

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Explain Reserves

Reserves Explained!

Reserves Technical Terms

Reserves: An insurer will set aside funds from its premiums and/or profits to meet known or anticipated claims in the future.

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Expose Representation

Representation Exposed!

Representation Technical Terms

Representation: A statement made about material facts relating to the insurance being proposed—e.g. previous claims. These representations become the basis of the contract.

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Explain Reinsurers

Reinsurers  Explained!

Reinsurers Technical Terms

Reinsurers : Insurers which take on part of the risks taken on by insurers.

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Remember Reinsured

Reinsured Remembered!

Reinsured Technical Terms

Reinsured: An insurance company or Lloyd’s syndicate who buys reinsurance. This term is the preferred usage to “cedant” in non-proportional reinsurance contracts as risks are not ceded to these contracts—losses exceeding the deductible being payable by the Reinsurer.

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Remember Reinsurance treaty

Reinsurance treaty Remembered!

Reinsurance treaty Technical Terms

Reinsurance treaty: An agreement in writing between an insurer and one or more reinsurers. The insurer agrees to pass on some of the risk, and the reinsurers agree to accept, within pre-arranged limits.

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Expose Reinsurance

Reinsurance Exposed!

Reinsurance Technical Terms

Reinsurance: The practice whereby one party, the reinsurer, in consideration of premium paid, agrees to indemnify another party, the reinsured, for part or all of the liability assumed by the reinsured under a policy (or policies) of insurance. There are two methods of reinsuring risks: Treaty Reinsurance and Facultative Reinsurance.

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Discover Recital clause

Recital clause Discovered!

Recital clause Technical Terms

Recital clause: The clause in a policy document which introduces the parties to the contract and some basic information about the contract.

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Explain Real property

Real property Explained!

Real property Technical Terms

Real property: Real estate—e.g. land and permanent buildings.

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Expose Rating, no claim bonuses and no claim discounts

Rating, no claim bonuses and no claim discounts Exposed!

Rating, no claim bonuses and no claim discounts Technical Terms

Rating, no claim bonuses and no claim discounts: (usually associated with motor vehicle insurance) - A discount off your car insurance premium. The discount increases each year providing no claim that reduces your rating/discount is made on your policy. It keeps on increasing until it reaches the maximum discount level, called 'rating one' or 'maximum no claim bonus'.

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Discover Rate

Rate Discovered!

Rate Technical Terms

Rate: The price per unit—e.g. $3 per $100 of sum insured.

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Discover Quota Share Treaty (Reinsurance)

Quota Share Treaty (Reinsurance) Discovered!

Quota Share Treaty (Reinsurance) Technical Terms

Quota Share Treaty (Reinsurance): A form of proportional reinsurance under which the cedant is obliged to cede, and the reinsurer to accept, a fixed share of every risk up to a maximum dollar amount, in a specified class of business.

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Expose Pure risk premium

Pure risk premium  Exposed!

Pure risk premium Technical Terms

Pure risk premium : The portion of the premium needed to pay losses (claims).

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Remember Proximate cause

Proximate cause Remembered!

Proximate cause Technical Terms

Proximate cause: The first event in a chain of continuous events. Insurance covers the proximate cause of a loss—e.g. a rusty roof may let rainwater in. The proximate cause of any storm damage would probably be the rusting out of the roof which is NOT covered by insurance.

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Expose Proposer

Proposer Exposed!

Proposer Technical Terms

Proposer: A person who proposes for insurance. If the proposal is accepted then the person becomes the insured.

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Remember Proposal

Proposal Remembered!

Proposal Technical Terms

Proposal: Includes a document containing questions to which a person is asked to give answers that will be used in connection with a proposed contract of insurance. A completed proposal form is an offer by the intending insured to enter into an insurance contract. It is NOT an offer by the insurer. An insurer may accept or decline a proposal.

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Explain Professional indemnity

Professional indemnity Explained!

Professional indemnity Technical Terms

Professional indemnity: Insurance covering a professional for his or her legal liability to others due to professional negligence.

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Explain Products liability insurance

Products liability insurance Explained!

Products liability insurance Technical Terms

Products liability insurance: Insurance taken out by manufacturers to cover liability claims arising from their products.

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Expose Product Disclosure Statement

Product Disclosure Statement Exposed!

Product Disclosure Statement Technical Terms

Product Disclosure Statement: A Document prepared by, or on behalf of, the product issuer which contains all the information about the product including the name and address of the issuer (the insurer), significant benefits, cost, terms and conditions, cooling off period and the dispute resolution process.

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Explain Pro rata cancellation

Pro rata cancellation  Explained!

Pro rata cancellation Technical Terms

Pro rata cancellation : This refers to the proportion of premium refunded to an insured in the event of cancellation of the policy. A pro rata refund is calculated according to the period of insurance unearned by the insurer at the date of cancellation.

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Explain Prescribed Contract

Prescribed Contract Explained!

Prescribed Contract Technical Terms

Prescribed Contract: The Insurance Contracts Act has special rules for six classes of personal insurance. These are called the Prescribed Contracts, and the Act prescribes the events an insurer must provide under each of these contracts by way of standard cover. Insurers are free to provide more than standard cover and can even provide less than standard cover, provided the insured was notified of this in writing. Home insurance, private motor insurance and personal accident insurance are examples of Prescribed Contracts.

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Expose Premium funding

Premium funding Exposed!

Premium funding Technical Terms

Premium funding: An arrangement between an insured and a finance provider whereby the insurance premiums are paid directly to the insurer by the financier and repaid to the financier by the insured under agreed credit terms.

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Discover Premium

Premium Discovered!

Premium Technical Terms

Premium: The price of insurance cover for a specified risk for a specified period of time

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Remember Precedent condition

Precedent condition Remembered!

Precedent condition Technical Terms

Precedent condition: A condition which must be met beforehand. It may need to be met before a policy is issued or before a claim will be considered.

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Expose Precedent

Precedent Exposed!

Precedent Technical Terms

Precedent: A judge-made decision considered to be applicable in a later case.

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Discover Policyholder

Policyholder Discovered!

Policyholder Technical Terms

Policyholder: Generally use to describe the policy owner and/or insured.

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Explain Policy schedule

Policy schedule Explained!

Policy schedule Technical Terms

Policy schedule: A notice showing the particular details of a policy.

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Explain Policy

Policy Explained!

Policy Technical Terms

Policy: Means the Product Disclosure Statement and the policy schedule.

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Plaintiff Discovered!

Discover Plaintiff

Plaintiff Discovered!

Plaintiff Technical Terms

Plaintiff: A person or entity bringing civil proceedings against some other party.

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Expose Personal Valuables

Personal Valuables Exposed!

Personal Valuables Technical Terms

Personal Valuables: For most people, their Home contents include personal valuables which they often wear or take with them when they are away from their home. Cover for these items is often limited.

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Discover Personal lines

Personal lines Discovered!

Personal lines Technical Terms

Personal lines: This term is used to refer to insurance for individuals and families, such as private car insurance and home insurance. Contrast with Business Insurance and Commercial Lines.

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Explain Personal liability insurance

Personal liability insurance Explained!

Personal liability insurance Technical Terms

Personal liability insurance: Insurance covering the personal liability an insured may have to others as a result of being negligent.

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Expose Personal Advice

Personal Advice Exposed!

Personal Advice Technical Terms

Personal Advice: A statement which influences or is intended to influence a person to purchase a particular financial service or product and which takes into account one or more of a person’s individual circumstances. This is a Financial Services Reform Act (FSRA) term—the FSRA is now part of the Corporations Act.

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Expose Period of cover

Period of cover Exposed!

Period of cover Technical Terms

Period of cover: Means the current period for which we have agreed to provide you with insurance cover. The current period is shown on the most recent of your insurance schedule and renewal notice and any receipt we may send to you. When we make a write-off payment, the period of cover comes to an end.

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Discover Peril

Peril Discovered!

Peril Technical Terms

Peril: The cause of a possible loss. Not to be confused with hazard.

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Discover Overinsured

Overinsured Discovered!

Overinsured Technical Terms

Overinsured: A term used to describe the condition that exists when an insured has purchased coverage for more than the actual value or replacement cost of a subject of insurance. It is also used to describe a situation where so much insurance has been obtained it constitutes a moral hazard.

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Discover Outstanding claims

Outstanding claims Discovered!

Outstanding claims Technical Terms

Outstanding claims: The aggregate liabilities (total case reserves less amounts paid) faced by an insurer under lodged claims that at any point in time have not been finalised.

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Discover Operative clause

Operative clause Discovered!

Operative clause Technical Terms

Operative clause: The insuring clause of a policy document which sets out the cover provided under the policy.

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Remember Operating statements

Operating statements Remembered!

Operating statements Technical Terms

Operating statements: Details of revenues, expenses and profits for a specific accounting period.

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Expose Open policy

Open policy Exposed!

Open policy Technical Terms

Open policy: Provides cover for all risks of a certain type during a set period of time. The sum insured is then adjusted for the actual total sum insured. Commonly used for marine cargo policies and construction policies.

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Expose Occurrence wording

Occurrence wording Exposed!

Occurrence wording Technical Terms

Occurrence wording: A term used in liability insurance. It refers to a policy under which the circumstances giving rise to a claim must occur during the period of insurance. Claims under such a contract may arise many years after the occurrence of an event and this created problems for insurers both in terms of rating adequacy and claims reserving. These problems gave rise to the development of “claims made” wordings, under which claims must be made against the insured during the period of insurance in order for the insurer to provide an indemnity.

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Discover Non-disclosure

Non-disclosure Discovered!

Non-disclosure Technical Terms

Non-disclosure: This must be distinguished from misrepresentation. Misrepresentation is the provision of information which is subsequently found to be incorrect. Whereas, non-disclosure is the withholding of information from an insurer. If there has been non-disclosure prior to inception then the insurer is able to cancel the contract and may also reduce its liability to the insured. If the non-disclosure was fraudulent then the insurer has the right to avoid the contract from its inception.If the insured's non-disclosure was innocent, then in order to reduce its liability under the policy the insurer must prove that, had it known the true situation at the time, the policy terms and/or premium would have been different. Liability is reduced to an amount that puts the insurer in the same position they would have been in had the non-disclosure not occurred.Where an insured fails to answer a question, or gives an obviously incomplete or irrelevant answer to a question, the insurer is deemed to have waived compliance with the duty of disclosure unless the insurer makes enquiry and follows up the defective information.

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Explain Non-admitted Insurer

Non-admitted Insurer Explained!

Non-admitted Insurer Technical Terms

Non-admitted Insurer: An insurance company that has not been licensed to write insurance in a given jurisdiction. (US)

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Discover No claim bonus

No claim bonus Discovered!

No claim bonus Technical Terms

No claim bonus: The amount by which a renewal premium is reduced as a result of no claims being made during the preceding period of insurance.

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Explain New for Old

New for Old Explained!

New for Old Technical Terms

New for Old: (usually referred to as replacement and reinstatement) - Replacing your existing old damaged items or equipment with new ones.

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Discover Negligence

Negligence Discovered!

Negligence Technical Terms

Negligence: Failure to use a degree of care which an ordinary reasonable person would use under the given or similar circumstances. A person may be negligent by acts of omission or commission or both.

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Expose Morale hazard

Morale hazard Exposed!

Morale hazard Technical Terms

Morale hazard: Morale hazards involve the attitudes of individuals—e.g. are they careless, lacking interest, discouraged?