A reserve fund set aside by an insurer or other entity as a safeguard against heavy and unexpected losses that could not be covered out of other funds.
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Monies put aside by a Company in order to pay for unexpected losses.
Insurance Encyclopedia
Contingency Insurance
(i) Insurance against relatively remote possibilities e.g., loss arising through the reappearance of a missing beneficiary or secondary liability arising because a person primarily liable is not indemnified by an insurer. (ii) Marine insurance under which the insurer undertakes to pay a fixed amount in the event of a contingency occurring.
Contingency insurances
A term describing those policies that do not fall naturally into one of the principal classes of insurance business. The term embraces insurances such as abandonment of events, pluvius insurance and others often of an unusual nature.
Contingency loading
An allowance in the insurer’s premium calculation for possible fluctuations in claims costs. It is added to the risk premium that covers the average claims’ cost for the year. Wide fluctuations in claims experience necessitate a greater contingency cushion than narrow range fluctuations. Other premium computation elements: expenses loading and profit loading.
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The part of the Insurance premium used to cover the possibility of unexpectedly large or frequent losses having to be paid by the Insurer.
Contingency margin
Amount included in the actuarial rates to provide for changes in the contingency level in the trust fund. Positive margins increase the contingency level and negative margins decrease it.
Contingency Reserve
A reserve in an insurer’s annual statement, in addition to the legal requirements to provide for unexpected contingencies or losses.
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A reserve set aside for unforeseen events or damages. Found in the insurance company’s annual statement.
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UK: An amount reserved in the books of a company or other entity in respect of a specific future liability, e.g. payment of taxes.
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MEDICAL,USA: Portion of funds that insurance companies separate from surplus funds to provide for unusual and unexpectedly large claim amounts for catastrophic losses.
Contingent
Conditional; depending on another happening – a contingent beneficiary is one next in line after the first named.
Contingent (or Profit) Commission (Reinsurance)
An allowance payable to the ceding insurer, in addition to the normal ceding commission, based on the net profit derived from a reinsurance treaty.
Contingent (or survivorship) annuity
Also known as a reversionary annuity. The payments to the annuitant start on the death of a named person. One spouse can use this type of annuity to make provision for a surviving spouse.
Contingent (or survivorship) insurance
Life policy under which the sum insured is payable on the death of one person (the life insured), provided it occurs during the lifetime of another (the counter life). The ages of both lives must be proved, but only the life insured is required to prove his state of health.