Glossary_G-M

GAbbreviationsGeneralGAAP generally accepted accounting principlesGAAS generally accepted auditing standardsGAD (UK) Government Actuary’s DepartmentGATS General Agreement on Trade in Services (WTO [q.v.])GATT General Agreement on Tariffs and Trade (WTO [q.v..)GISC General Insurance Standards CouncilGDV Gesamtverband der Deutschen Versicherungswirtschaft (GermanInsurance Association)GMT Greenwich Mean TimeGNAIE Group of North American Insurance EnterprisesGroupe Consultatif = Groupe Consultatif Actuariel Européen (Association ofEuropean Actuaries)GSP generalised system of preferences (international trade)Re/insuranceGA general averageGAREAT G estion Assurance/Réassurance des Risques, Attentats et Actesde Terrorisme (French terrorism re/insurance pool)GARPOL see ASSURPOLGCO gross claims outstandingGI general (i.e. non-life) insuranceGIT goods in transitGL general liabilityGMC gross market capacityGNEP(I) gross net earned premium (income)GNP(I) gross net premium (income)GOP gross original premiumgr l gross lineGTPL general third party liabilityGP(I) gross premium (income)GUA General Underwriters AgreementGUS global underwriting systemGWPI Gross Written Premium IncomeDefinitionsGENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP):Accounting principles as set forth in opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or statements of the Financial accounting Standards Board and/or their respective successors and which are applicable in the circumstances as of the date in question. Also referred to as GAAP. GENERAL BUSINESS: i nsurance, other than long-term business, sometimes known as short-term or non-life business.GROSS EARNED PREMIUMS: Premiums received by or due to an insurer, without deduction of the cost of any reinsurance, but adjusted to take account of the differences between the unexpired risk reserves at the beginning and end respectively of the period concerned.GROSS LINE: The share of insurance accepted by an underwriter before a deduction is made for any reinsurance by him.GROSS NET PREMIUM: The gross premium for a marine insurance, before deduction of brokerage and discounts but less gross returns of premium.GROSS PREMIUM: The total premium before deduction of brokerage or discounts.GROSS LOSS RATIO: The ratio of claims incurred after subrogation (but before reinsurance recovery) to gross premiums earned or deemed to be earned before reinsurance.GROSS NEGLIGENCE: Intentional failure to perform a duty, reckless disregard of the consequences as affecting the life or property of another.GROSS WRITTEN PREMIUMS: Premiums received by or due to an insurer without deduction of the cost of any reinsurance or any adjustment for the fact that some of the income has to be reserved for the unexpired element of the policy. GUARANTEE FUND: A solvency yardstick, defined as one-third of the required margin of solvency. If a company’s net assets fall below the guarantee fund, it must submit a short-term financial scheme to the Department of Trade and Industry.HAbbreviationsGeneralHMRC Her Majesty’s Revenue & Customs (formed from merger ofHM Customs & Excise and the Inland Revenue in April 2005) HSC Health & Safety CommitteeHSE Health & Safety ExecutiveRe/insuranceHC Hours Clauseh/c hold/held covered (at premium to be agreed)h/c l/u held covered subject agreement of leading underwriterhh hold harmlessHHI Hirschmann-Herfindahl IndexHM hard marketHPR highly protected riskHWD heavy weather damageDefinitionshabeas corpus: (lit.) you have the body (a writ to a jailer to produce the body of one detained in prison and to state the reasons for the detention)HARD MARKET: a market in which it is difficult to obtain insurance. This is demonstrated by high premium rates.HAZARD: a physical or moral feature that introduces or increases the possibility of a loss arising from a peril or influences the extent of loss.HEALTH INSURANCE: insurance providing for the payment of benefits as a resultof sickness or injury. Includes various types of insurance such as accident insurance, disability income insurance, medical expense insurance, accidental death insurance, and dismemberment insurance.HELD COVERED: a marine term whereby the insured’s in terest remains covered in the event of a circumstance arising which would, without prior agreement, cancel coverage.HIDDEN RESERVES: the reserves, undisclosed in amount, deducted from assets or added to liabilities by an insurance company which is exempted from some of the detailed disclosure provisions of the Companies Act.HIRSCHMANN-HERFINDAHL INDEX: specific measurement of market concentration, that is of the extent to which a small number of firms account for a large proportion of output. The HHI is used as one possible indicator of market power or competition among firms. It measures market concentration by adding the squares of the market shares of all firms in the industry. Where, for example, in a market five companies each have a market share of 20%, the HHI is 400 + 400 + 400+ 400 + 400 = 2000. The higher the HHI for a specific market, the more output is concentrated within a small number of firms. In general terms, with an HHI below 1000 the market concentration can be characterised as low, between 1000 and 1800 as moderate and above 1800 as high.HOME-FOREIGN: business underwritten in the UK relating to risks situated outside the UK. N.B This term is normally applied to marine, aviation and transport (MAT) and/or treaty reinsurance.HOURS CLAUSE: the period of time, usually 72 or 168 hours, during which all individual losses arising out of and directly occasioned by one catastrophic event are covered under a catastrophe excess of loss treaty.HULL INSURANCE: (1)a classification of risks referring to a hull of a ship or boat or the fabric of a hovercraft or a plane, including its machinery and equipment. Marine hull insurance commonly includes indemnity for .75 of collision liability; (2) c lass of ocean marine insurance that covers physical damage to the ship or vessel insured. Typically written on an "all-risks" basis; (3) physical damage insurance on aircraft - similar to collision insurance in an automobile policy.HURRICANE: a tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 75 miles an hour or more.IAbbreviationsGeneralIAB Insurance Advisory Board (serves senior executives at lifeinsurance, personal lines and bancassurance [q.v.]providers around the world)IACS International Association of Classification SocietiesIAIS International Association of Insurance SupervisorsIAS International Accounting Standard (forerunner of IFRS[q.v.])IASB International Accounting Standards BoardIASC International Accounting Standards Committee (forerunner of the IASB) IASIU International Association of Special Investigation UnitsIBA (1) International Insurance Brokers’ Association(2) Irish Brokers’ Association(2) International Bar AssociationIBAC Insurance Brokers’ Association o f CanadaIBRA Insurance Brokers (Registration) Act 1977IBRC Insurance Brokers Registration CouncilICA (1) individual capital assessment (for solvency margin purposes)(2) Insurance Council of AustraliaICAO International Civil Aviation OrganisationICE Institution of Civil EngineeringICC (1) International Chamber of Commerce(2) Institute Cargo ClausesICISA International Credit Insurance & Surety AssociationICMIF International Cooperative and Mutual Insurance FederationICN International Competition NetworkICT information and communication technologiesICVC investment company with variable capitalIFRS International Financial Reporting StandardIFSC International Financial Services Centre (Dublin, RoI)IFSL International Financial Services, LondonIFSRA Irish Financial Services Regulatory AuthorityIIC Institute of Insurance ConsultantsIIABA Independent Insurance Agents and Brokers of AmericaIIF Institute of International FinanceIIHS Insurance Institute for Highway Safety (US)III Insurance Information Institute (US)IIL Insurance Institute of LondonILOA Industrial Life Offices Association (superseded in 1985 bythe ABI)ILU Institute of London Underwriters (merged with LIRMA [q.v.]on 31st December 1998 to form the IUA)IMA Investment Management AssociationIMCO Inter-Governmental Maritime Consultative OrganisationIMF International Monetary FundIMO International Maritime OrganisationIMRO Investment Management Regulatory OrganisationInStep Insurance Standards and Electronic PracticesIPE International Petroleum ExchangeIOSCO International Organisation of Securities CommissionsIRM Institute of Risk ManagementIRMA Insurer Receivership Model Act (US)IRS Inland Revenue Service (US)ISM International Safety ManagementIT (1) income tax(2) information technologyISRO International Securities & Regulatory OrganisationISVAP Istituto per la Vigilanza sulle Assicurazioni Private e di Interesse Collettivo(Italian insurance supervisory authority)IUA International Underwriting Association of LondonIUAI International Union of Aviation InsurersIUMI International Union of Marine InsuranceRe/insuranceIBNER incurred but not enough reservedIBNR incurred but not reportedICA internal capital assessmentICAS individual capital adequacy standard(s)ICOB Insurance: Conduct of Business SourcebookIf in fullIFA Independent Financial AdviserIMD Insurance Mediation Directive (concerns intermediaries)incd val increased valueincep inceptionins insuranceinstal instalmentIOB Insurance Ombudsman Bureauiro in respect ofIPT insurance premium taxIR issued and renewedISPV insurance special purpose vehicleI/V increased valueDefinitionsibidem (ibid): in the same placeIBNR CLAIMS: abbreviation for 'incurred, but not reported': Amount set aside forclaims that are anticipated to have occurred but which have not yet been advised tothe Company. The accounting code definition states that as a reserve it alsorepresents any general reserve for inflation. For direct business written within the UKit normally constitutes the average number of claims which are reported late x theaverage claims costs. London Market Business, however, normally represents thedifference between known case reserves and the ultimate loss ratios determined bythe Company.ICAS: the standards laid down by the FSA which make up the framework for theassessment of a company’s internal capital assessment (“ICA”).ICOB: the Insurance: Conduct of Business sourcebook; contains the requirements applying to firms with insurance business customers.ignorantia juris quod quisque scire tenetur non excusat: ignorance of the law which everybody is supposed to know about does not offer excuseIMPLIED CONDITION: a condition which does not appear in the policy, but which is understood to be incorporated therein and is equally binding as though it were expressed in the policy. Breach of an implied condition by the assured entitles the underwriter to avoid the contract from inception.IMPLIED WARRANTY: a warranty that is not expressed in the policy specifically, but which is understood by both parties to be incorporated in the contract. An implied warranty must be strictly complied with and in the event of a breach of warranty the insurer is discharged from liability as from the breach of the date, but the insurer may waive the breach or the breach may be waived by Statute.in camera: not in the open courtin esse: in actual beingin extenso: at full lengthin re: in the matter ofin statu quo: in the former positionin transitu: on the way; in passingINCEPTION DATE: the date when a risk commences.INCIDENTAL NON-MARINE: non-marine insurance written by a marine underwriter as an adjunct to his marine insurance account.INCURRED CLAIMS OR LOSSES: the total, under the normal accruals concept, of paid and outstanding claims arising in a period. The term is also used in the context of claims statistics where for a given accident or policy years the incurred claims (sometimes including IBNR) are compared to earned premiums, for each class of insurance, in order to assess the profitability of the underwriting.INDEMNITY: (1) a principle under which the insurer seeks to place the insured in the same position after a loss as he occupied immediately before the loss (as far as possible). The principle does not apply to life assurance; (2) the cover given by an insurance policy or amount of claim paid to indemnify an insured.INDIRECT BUSINESS: business accepted by way of reinsuranceinfra: belowINLAND MARINE INSURANCE: a broad type of insurance, generally covering articles that may be transported from one place to another as well as bridges, tunnels and other instrumentalities of transportation. It includes goods in transit (generally excepting trans-ocean) as well as numerous "floater" polices such as personal effects, personal property, jewellery, furs, fine art and others.INSURABLE INTEREST: for a contract of insurance to be valid the (prospective) policyholder must have an interest in the insured Item to the extent that its loss, death, damage or destruction would cause him loss. This is called insurable interest and must exist as follows: marine insurance - at the time of the loss; life assurance - at the time the policy is taken out; other insurance - at the time the policy is taken out and also at the time of the loss.INSURABLE VALUE: the value of the insurable interest which the insured has in the insured occurrence or event. It is the amount to be paid out by the insurer (assuming full insurance) in the event of total loss or destruction of the item insured.INSURANCE AGENT: a representative of an insurer, whether an employee or an independent contractor, who negotiates, effects and sometimes services contracts of insurance.INSURANCE BROKER: one who advises persons on their insurance needs and negotiates insurances on their behalf with insurers, exercising professional care and skill in so doing (see "Lloyd’s Broker" and “Insurance Brokers" (Registration) Act 1977). A registered broker sometimes acts as an insurance agent.INSURANCE CONTRACT: a contract under which one party, the insurer, in return for a consideration, the premium, undertakes to indemnify the other party, the insured, against loss upon the happening of a specified event that is contrary to the interest of the insured.INSURANCE SPECIAL PURPOSE VEHICLE: as defined by Article 2(1)(p) of the 2005 EU Reinsurance Directive, “any undertaking, whether incorporated or not, othe r than an existing insurance or reinsurance undertaking which assumes risks from insurance or reinsurance undertakings and which fully funds its exposure to such risks through the proceeds of a debt issuance or some other financing mechanism where the repayment rights of the providers of such debt or other financing mechanism are subordinated to the reinsurance obligations of such a vehicle”. INTEGRATED PRUDENTIAL SOURCEBOOK: prudential requirements for insurers, groups, mortgage firms and insurance intermediaries.inter alia: among other mattersINTERMEDIARY: an agent or broker through whom a transaction is arranged between parties.inter vires: during life; between living personsINTRODUCER: an individual appointed by a firm or an appointed representative to induce business or distribute non-real-time financial promotions.IUA: the International Underwriting Association of London (IUA) is the world's largest representative organisation for international and wholesale insurance and reinsurance companies. It exists to protect and strengthen the business environment for its member companies operating in or through London.INVESTMENT INCOME: interest and dividends arising from the investing of premium monies pending claims being made.IRMA: the NAIC (q.v.) voted unanimously to adopt the Insurer Receivership Model Act at its national meeting in Chicago on 4th December 2005. The Act is seen as an important step in the NAIC’s attempts at modernisation, since it comprehensively addresses the identification and administration of an impaired or insolvent insurer. ISSUED AND RENEWED: the “year of account" basis for treaties, under which all claims for policies issued or renewed in the treaty year are covered, no matter in what year they may occur. Thus the reinsurer is at risk until all policies covered by the treaty for that year have expired and all losses have been settled. As opposed to "losses occurring" (q.v.).JAbbreviationsRe/insuranceJ/A joint accountJHC Joint Hull CommitteeDefinitionsJOINT AND SEVERAL LIABILITY: a legal principle that permits the injured party in a tort action to recover the entire amount of compensation due for injuries from any tortfeasor who is able to pay, regardless of the degree of that party's negligence.AbbreviationsRe/insuranceK used to denote 1000 - CommercialKCR Known Case ReservesDefinitionsKNOWN CASE RESERVES: an amount set aside to cover claims notified to the Company but which are not fully settled (also known as 'outstanding claims').KNOCK-FOR-KNOCK AGREEMENT: an agreement between motor insurers that in the event of an accident involving their respective policy holders neither party shall seek to recover the insured cost of repairing the damage caused to the vehicle it insured from the other insurer, whoever is to blame for the accident.KNOWN OUTSTANDING LOSSES: where claim notifications have been received for potential loss.AbbreviationsGeneralL/A Lloyd’s AgencyLARA Lawsuit Abuse Reduction Act 2004 (US)LAUA Lloyd’s Aviation Underwriting Association.LATF Lloyd’s American Trust FundLAUTRO Life Assurance and Unit Trust Regulatory OrganisationLCA Lloyd’s Central AccountingLCD Lord Chancellor’s Department (predecessor of the DCA [q.v.])LCE Local Currency ExchangeLCH London Clearing HouseLCTF Lloyd’s Canadian Trust FundLIBA London Investment Banking AssociationLIC Life Insurance CouncilLIFFE London International Financial Futures and OptionsExchangeLIRMA London International Insurance and Reinsurance MarketAssociation (merged with ILU in 1998 to become IUA)LMA Lloyd’s Market AssociationLMBC London Market Brokers’ CommitteeLME London Metal ExchangeLMW London Market Control UnitLSE London Stock ExchangeLOA Life Offices’ Association (superseded in 1985 by the ABI)LPC (1) London Processing Centre (now Ins-sure)(2) Loss Prevention Council: see BRE-LPCLPCB Loss Prevention Certification Board, formerly part of the LPC, now partof BRE Certification, an independent approvals andcertification organisation (see BRE-LPC)LPSO Lloyd’s Policy Signing OfficeLTA long-term agreementLUA Lloyd’s Underwriter AssociationLUCO Lloyd’s Underwriters Claims OfficeLUNCO Lloyd’s Underwriters Non-Marine Claims OfficeRe/insuranceLE Loss EventLEI legal expenses insuranceLMXL London Market Excess of LossLOB Line of BusinessLoC letter of creditLR Loss RatioLSC Loss Sustained CoverLTA Long-Term AgreementL used to denote “million”DefinitionsLAPSE: (1) the position when a policy is not renewed (by either party), i.e. it arising on the renewal/due date (not to be confused with a 'cancellation' which arises during the policy term).(2) The termination of a policy either:(a) by failure to pay a premium due (if the policy has no cash value, cover isterminated; if the policy has a cash value, the protection may be continuedin a modified form); or(b) because the insurer does not invite renewal.LARGE LOSS: see Catastrophe.LAYER: term used to denote a stratum of cover, e.g. for claims between £50,000 and £250,000.LAY-UP RETURN: the premium charged on a hull time policy is based on the vessel navigating and being exposed to full maritime hazards during the whole currency of the policy. If the ship is laid up in protected waters for an agreed amount of time the risk is considerably reduced and therefore the insured will receive a return of part of the premium.LETTER OF CREDIT: a document which authorises payment of an agreed sum of money to a person named therein. It is usually irrevocable and authorises the bank named in it to make a payment. The term is also used to indicate a document issued to an assured or a reinsured Company by the underwriter, authorising settlement of the claim amount.lex fori: the law of the forum, i.e. of the courts of the country in which an action is brought (regulates procedure, evidence, execution of judgments etc.)lex loci:the law of the place, i.e. of the country in which some event material to a case took placelex loci contractus: law of a contract, i.e. of the country in which the contract was madelex loci delicti: law of the crime, i.e. of the country in which a tort was committedlex mercatorum: mercantile lawlex scripta: the written law, i.e. statute lawlex non scripta: the unwritten law, i.e. common lawLIABILITY: any legally enforceable act or obligation.LIABILITY INSURANCE: insurance in respect of liability to third parties, most commonly for accidents resulting in bodily injury and damage to property.LIMITATION PERIOD: the period within which a person who has a right to claim against another person must start court proceedings to establish that right. The expiry of the period may be a defence to the claim.LINE: a share of an insurance or of reinsurance business, thus, the proportion of an insurance accepted is termed a line. In reinsurance the original insurer's retention is termed a line. Thus a ten-liner reinsurance treaty is one under which the insurer retains one line and can place ten lines with the various reinsurers.LINES OF BUSINESS:the general classification of insurance written by insurers, i.e., fire, allied lines, homeowners, among others.LINE OF CREDIT: a line of credit issued normally by a bank to an Insured, which can be drawn down to cover a liability eg to cover the reserve for a loss in lieu of cash deposit.LINE SLIP: an arrangement entered into between underwriters and brokers whereby, for a given type of risk, the broker needs to approach only the leading and second underwriter who will accept or reject each risk on behalf of all the underwriters concerned in their agreed proportions. This is an administrative convenience where a broker is placing a large number of similar risks with the same group of underwriters. LINKED LOSS: a method created by the claims department to embrace two or more claim records. A facility used to aggregate individual claims together. Any claim the subject of 'linked loss' may be subject to special reinsurance recoveries.LLOYD’S, CORPORATION OF LLOYD’S OF LONDON: a society incorporated under the Lloyd's Act 1871 which provides services and premises for the transaction of insurance business. It does not carry on insurance business and is not itself liable for insurance business transacted within its premises.LLOYD'S BROKER: a firm or individual that is authorised to place insurance at Lloyd's and who in doing so represents the insured. There are over 250 firms of Lloyd’s brokers, and they must pass solvency tes ts and comply with Lloyd's regulations. With limited exceptions all business in and out of Lloyd's must pass through Lloyds's brokers.LLOYD'S POLICY SIGNING OFFICE: a central service provided by the Corporation of Lloyd's. Its main functions are to: validate and number transactions sign policies on behalf of underwriters take down entries process syndicate reinsurances produce daily tabulations of transactions produce periodic settlement statements provide special schemes (as required) provide statistics, manuals, circulars, advice, etc operate LCA.LLOYD'S SYNDICATE: a group of underwriting members of Lloyd's who are bound by the signature of an active underwriter on their behalf. When an insurance is accepted on behalf of the syndicate each member is liable for his stated fraction only of the insurance, not for the fractions of other members. His personal liability is unlimited.locus in quo: the place in whichLONDON MARKET EXCESS: excess loss reinsurance on business written entirely in the London market.LONG-TAIL CLAIMS: claims notified or settled normally a long time after the expiry of a period of insurance.LOSS: (1) an event giving rise to a claim under an insurance; (2) a claim; (3) t he disappearance of the subject matter of insurance through theft or some other cause as opposed to its survival in a damaged state; (4) the date on which the incident giving rise to a claim occurred.LOSS ADJUSTER: an independent and highly trained claims expert, who acts as a consultant to insurers in assessing the true extent and value of any loss which has resulted in a claim being made against them. Although paid a fee by the insurer, a member of the Chartered Institute of Loss Adjusters is required to act with the claimant's legitimate interests in mind.LOSS EVENT: the total losses to the ceding company or to the reinsurer resulting from a single cause such as a windstorm, flood or bushfire.LOSS SUSTAINED COVER: a type of reinsurance treaty covering only those losses which are sustained during the term of the treaty.LOSSES OCCURRING BASIS: a provision in a reinsurance treaty whereby the reinsurance applies to all losses occurring during the treaty period even if the risk attached before that period. The reinsurance does not apply to claims occurring after the reinsurance period even though the underlying insurance began to run during that period.Professional indemnity insurance is usually underwritten on this basis, although "claims occurring" are usually advised and accepted on a potential claim basis.LOD: abbreviation used in the reinsurance area for 'losses occurring during' - similar to 'accident year'.LOSS OCCURRENCE: (1) an occurrence of a single loss; (2) an occurrence of several losses in the same incident or catastrophe or disaster.LOSS RATIO: the proportion of claims paid or payable to premiums earned.LOSS RESERVE: the setting-up of a reserve for outstanding losses.(1) Where it is agreed that the reassured will retain a proportion of the netpremiums –for a given period to provide a fund to settle gross claimswithout recourse to the reinsurer. Sometimes called cash flow reserve.(2) A fund set aside to pay claims outstanding at the end of a period of account.MAbbreviationsGeneralM&A mergers and acquisitionsMAA Motor Agents’ AssociationMDI Massachusetts Division of InsuranceMercosur free trade area in South America set up by Argentina,Brazil, Paraguay and Uruguay in March 1991; Bolivia andChile have since been granted associate member statusMFN most favoured nationMIA Marine Insurance Act 1906MIAFTR Motor Insurance Anti-Fraud Register (replaced in January 2005 by a newdatabase run by vehicle information experts, HPI)MIB Motor Insurers’ BureauMID Motor Insurers’ DatabaseMIIC Motor Insurers’ Informati on CentreRe/insuranceMAT Marine Aviation and TransportMC Motor CarMIN MinimumMLR Minimum Lending RateMPL maximum possible lossMWPA Married Women’s Property ActsDefinitionsmala fide: in bad faithMARINE INSURANCE: the insurance of ships’ hu lls (including oil rigs at sea) andtheir cargoes.MAT: abbreviation for marine, aviation and transport business, now styled “aircraft,ships and goods in transit” for FSA supervisory purposes.MATERIAL FACT: a fact which would influence the mind of a prudent insurer indeciding whether to accept a proposed insurance and, if it does, the terms on which itwill do so.MEANS TEST: an evaluation of the assets and/or income of a person for thepurpose of determining his eligibility for underwriting member ship of Lloyd’s and thevolume of premium income which he can write.MEMBERS’ SOLVENCY: the requirement for a Name to show that s/he can meetthe financial requirements of Lloyd's based on a summary of his/her open and closedyear results (see also "Syndicate Solvency").。