A state law requiring the policyholder to prove he or she can pay for losses. Depending on the state, this may be required before any accidents or after the first accident. This evidence is usually an insurance policy.
Insurance Encyclopedia
Financial responsible party
Individual who accepts liability for payment of the patient’s bill to the provider of service.
Financial Risk
Possibility that a project may fail for lack of adequate capital. This is a speculative risk, not normally within the scope of risk management unless potential suppliers of capital are reluctant to venture their funds because the project involves excessive pure risk.
Financial Risk Control
Plans and provisions to pay for losses when they occur.
Financial Services and Markets Act 2000 (FISMA or FSMA)
the Act which created a unified regulatory framework in the UK for financial services, including insurance, under which functions and powers are conferred on the Financial Services Authority.
Financial Services and Markets Act Tribunal
Statutory tribunal, within the Court Service, operating as a court of first instance. Persons disciplined by the FSA have the right to go to the Tribunal. The burden of proof attaches to the FSA. Usually there is an oral hearing on the substantive issues. The Tribunal’s decision on fact is final but points of law may be appealed. The Tribunal can award costs against the applicant or the FSA. The Tribunal consists of a legally qualified chairman and two industry members.
Financial Services Authority
an independent body that regulates the financial services industry in the UK; it was set up by the Financial Services and Markets Act 2000 and is accountable to Treasury Ministers; it is financed by the financial services industry; its statutory objectives are to maintain confidence in the financial system, promote public understanding of the financial system, secure appropriate degrees of consumer protection for consumers, and reduce financial crime.
Financial Services Authority (FSA)
The UK’s statutory financial regulator. Almost all kinds of financial services firms must secure FSA authorisation. It regulates and monitors banks, building societies, friendly societies, Lloyd’s, credit unions, insurance and investment firms (stockbrokers and fund managers) and independent financial advisers. The FSA does not cover loans, credit and debt, and does not regulate occupational pension schemes. The FSA has powers to investigate, discipline and prosecute, and can impose unlimited fines on anyone guilty of market abuse. The FSA’s four objectives are: maintaining market confidence; promoting public understanding of the financial system; protecting consumers; fighting financial crime. See FSA HANDBOOK. (Visit www.fsa.gov.uk).
Financial Services Compensation Scheme
a statutory fund of last resort for customers of regulated firms, set up under the Financial Services and Markets Act 2000.
Financial Services Compensation Scheme (FSCS)
Compensation scheme for private customers of financial services firms that have gone out of business. If possible, FCSC transfers UK policyholders to new insurers but otherwise compensates them for their unexpired premiums. Compensation also covers unpaid claims. Compulsory third party motor insurance and employers’ liability is compensated in full; in non-compulsory insurance (e.g. household or general) the first £2,000 is fully compensated with 90 per cent of the remainder. Under long term business, the first £2,000 is fully protected plus 90 per cent of the value of the policy in liquidation. The scheme is funded by an industry levy.