Technical Reserves
-
Money put aside to meet specific items,
usually for events that have already happened. The four main
types of technical reserves are for unearned premiums, unexpired
risks, unreported claims and outstanding claims.
Temporary Insurance
-
See Term Insurance.
Term Insurance
-
Life cover provided for a specified number
of years. The insurer only pays out if the policyholder dies
within this time.
Terminal (or Final) Bonus
-
Extra bonus that may be paid for
with-profits policies at maturity or if a claim is made.
Term Assurance -
Life cover provided for a specified number of
years. The insurer only pays out if the policyholder dies within
this time.
Theft Claim
-
One arising from burglary, robbery and theft
under the Theft Act 1968 in England and Wales, and burglary,
robbery, housebreaking and larceny in Scotland and Northern
Ireland.
Third Party -
Someone involved in a claim who is neither the
policyholder nor the insurer.
Third Party Administrator
- An organisation to which an
insurance company contracts out administration.
Tied agent -
A sales
person who sells the policies of only one insurance company.
Some sales people are tied to several companies - this is known
as a multi-tie.
Total Loss -
See Write-Off.
Trading Result -
An insurer’s overall profit/loss
calculated as the Underwriting Result plus Investment Income.
Transfer Value -
The amount of the transfer payment which the
trustees of a pension scheme allow members to take with them to
another scheme or personal pension.
Travel -
A policy that covers a combination of loss of
baggage, medical expenses, legal fees, and change in travel
arrangements.
Treaty Reinsurance
-
An agreement between offices whereby the
ceding company is bound to cede and the reinsurer bound to
accept a share of all risks defined in the treaty.
Trust
-
An arrangement whereby control over an Asset is
transferred to a person or organisation (known as the
"trustee") for the benefit of someone else (known as
"the beneficiary").
Trustee-
A person appointed to
manage and safeguard the assets of a trust.
Underinsurance -
When the sum insured is not enough to cover
the maximum possible loss or damage.
Underwriter
-
Person who decides whether to accept a risk and
calculates the premium to be charged.
Underwriting Ratio
-
See Operating Ratios.
Underwriting Result
-
The profit or loss achieved by an
insurer on insurance underwriting activity, calculated as
premium income less the cost of claims and the insurer’s
expenses in connection with that business (ie
"outgo"). It has been common for insurers to make
underwriting losses since they also receive investment income
which generally offsets the underwriting loss.
Uninsurable Risk
-
A risk
where loss is either inevitable (eg a house already on fire or a
person suffering from a terminal illness) or gradual (eg rust
and corrosion).
Unit Trust
-
A trust into which a small investor may buy by
acquiring units. The capital collected is invested in various
securities in a wide range of markets.
Unitised With-Profit
- Contracts where premiums are invested in
units, either in the with-profits fund or in linked funds or in
a mix of both.
Unit-Linked
-
See Linked.
Unit trust - Investment
fund that pools the payments of many individual investors. The
fund is split into units of equal value. The unit prices move up
and down in line with the value of the fund's investments.
Utilities / Retailers /
Affinity Groups - Institutions which
sell insurance policies to their customers but it is not their
primary product or service. These policies are underwritten by
established insurers.
Utmost Good Faith
-
The principle of insurance which requires
proposers to give all relevant information to the insurer and
requires insurers to deal openly and honestly with
policyholders.
Waiver of Premium - An optional extra on a life, protection
or pension policy which means that the insurance company
will pay the premiums if the policyholder is unable to because
of illness or injury.
Warranty Insurance
-
This type of insurance provides cover
against the cost of repairs to broken down household appliances.
Wear and Tear
-
This is the amount deducted from claims
payments to allow for any depreciation in the property insured
that is caused by its usage.
Weather Claim
-
One arising from burst pipes, storm and
weather damage.
Whole Life Policy
-
A policy where premiums are paid for the
rest of an individual's life, or up to a specified advanced age,
and benefit is paid on the death of the person insured, whenever
that occurs.
With Profit Insurance
-
Life insurance policies that receive
their investment income in the form of "bonuses", paid
out of the total income earned by the insurance company on its
pooled fund. The value of the saver’s fund thus depends on the
amount he/she has bought and the amount of bonuses added. Once
added, bonuses cannot be taken away, making these policies
generally less volatile than linked policies.
With-Profit Bonds
-
A fund made up of investments like company
shares, fixed interest securities, commercial property and
money. Policies can be single premium (with-profits bonds) or
bought with regular premiums to save for pensions or general
savings. With-profits policies usually have regular bonuses
added and the eventual payout is usually smoothed to reduce the
peaks and troughs of investment performance.
With-Profits -
See Non-Linked.
Write-Off
-
A damaged vehicle which is not repairable, or one
which would cost more to repair than the car was worth before
the damage occurred. Also known as a Total Loss.
Written Premium -
Premium income due to the insurer on the
risks accepted during the year.
