An insurer ‘earns’ a portion of a policy's premium as time elapses during the policy period.
Funds earned by an insurance company (including captives and risk retention groups) after all losses and expenses have been paid. Once earned surplus is recognised, it can be allocated to capital and/or dividends.
A risk management approach that totally integrates both financial (i.e., speculative) and event (i.e., pure) risk into one broad programme of multiple retention and high-excess aggregate insurance limits. To date, however, few firms have implemented such a comprehensive programme. Nevertheless, companies are increasingly buying multiyear, multiline insurance programmes that cover disparate forms of risk (e.g., property and directors and officers liability), which are designed to maximise the benefits of portfolio diversification.
A policy or bond covering the insured against certain hazards, and applies only to loss or damage in excess of a stated amount, a specified primary limit, or a self-insurance limit. It is also that portion of the amount insured that exceeds the amount retained by an entity for its own account.
A form of reinsurance that indemnifies the ceding company against the amount of loss excess of only the specified retention.
Estimated loss frequency multiplied by estimated loss severity, summed for all exposures. This measure of loss generally refers to the total losses of an organisation of a particular type, e.g., workers compensation or general liability.
Describes any plan that uses the past loss experience and exposure levels, e.g., payrolls, of the individual risk as a basis of determining premiums.
The state of being subject to loss because of some hazard or contingency. Also used as a measure of the rating units or the premium base of a risk.
The expenses incurred by the insured during the period of restoration. These would not have been necessary if there had been no physical loss to real or personal property caused by a covered loss. Example: Temporary business equipment rentals.