The Rantings of the barely human.
A system of insurance whereby premiums are not fixed in advance but are calculated each year on the basis of the sum needed to maintain the insurer’s solvency in the light of the claims payable and the insurer’s expenses.
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A policy wherein extra costs can be assessed to the policyholder should the insurer’s loss experience be worse than expected.
An insurance company owned by its policyholders that issues policies under which the policyholders may be assessed for losses and expenses.
Alternative term for ‘pay as you go’, a method of calculating life insurance risk premiums on a year-byyear basis. Each premium reflects the chance that the policyholder will die in the following year plus an allowance for expenses. It is suitable where term (temporary) insurance is purchased on a year-by-year basis, e.g. as group life cover. The influx of new members helps to stabilise the overall annual cost. The level annual premium system is more appropriate for individual lives.
an independent professional who advises and negotiates on behalf of policyholders on the settlement of their claims.
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Person who estimates the value of goods for the purpose of apportioning the sum payable by the underwriters to settle the claims. Also called as Surveyor.
An item of value listed on the balance sheet of an insurance company, for example, “property” or “office furniture.”
The way in which the assets of a pension fund are distributed across a range of alternative investments, such as equities, fixed interest securities or cash. The strategy is based on the fund’s long-term needs but shifts towards particular assets may occur to take advantage of short-term opportunities.
The risk that the assets of a company may lose market value over time.
An insurer has to identify assets belonging to him that he maintains for a particular aspect of his business, e.g. separate funds for longterm business. The UK Treasury is empowered to pass regulations that prevent unauthorised parent undertakings of insurers, or others specified by the Treasury, from doing anything (e.g. payment of dividends or creation of charges) that lessens the effectiveness of the asset identification rules (FMSA s.142 (1)(2)).
Asset liability management basically refers to the process by which an institution manages its balance sheet in order to allow for alternative interest rate and liquidity scenarios. Banks and other financial institutions provide services which expose them to various kinds of risks like credit risk, interest risk, and liquidity risk. Asset liability management is an approach that provides institutions with protection that makes such risks acceptable.
The value of a book of business to an insurer, assuming that the business has been in force long enough to show true mortality rates. This value must be known by the insurer in order to make rates and also in order to sell the business. If assets share values do not grow properly, either the rates have been too low or expenses too high.