Insurance that covers the loss of use of a property due to an insured peril.
Insurance Encyclopedia
Loss payable clause
A property policy provision that, at the request of the named insured, stipulates that claims tied to losses of certain property will be paid to both the named insured and the party named in the subject clause.
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Property Insurance provision authorizing the Insurers to pay any loss to the insured or to others identified in the Policy as their interest in future losses may appear at the time of those losses.
Loss payable clause (Property Insurance)
A clause authorizing payment to people with an insurable interest in the property, even if they are not named as the insured. This clause protects the lender in the case of a mortgage.
Loss Payee
The party to whom money or insurance proceeds is to be paid in the event of loss, such as the lienholder on an automobile or the mortgagee on real property.
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The person benefits should be paid to if a loss occurs, for example, the mortgagee of a home or property.
Loss payout pattern
Losses often are paid over a period of years, especially in casualty lines of insurance. The payout pattern illustrates the way that claims are paid out from the time they are filed until they are closed.
Loss portfolio
UK: an amount payable by a reinsurer to a cedant in consideration of the release of the reinsurer from all or part of the liability arising under a reinsurance contract in respect of claims incurred prior to a specified date (see also outstanding claims portfolio and premium portfolio).
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REINSURANCE,REFERENCE: See: Loss Portfolio Transfer.
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UK: The liability of an insurer for the unexpired portion of the in-force policies or outstanding losses or both for a specified segment of the insurer’s business for which reserves have been made. See LOSS PORTFOLIO TRANSFER; LOSS PORTFOLIO ENTRY; LOSS PORTFOLIO WITHDRAWAL.
Loss portfolio entry
A reinsurer may accept, at inception or renewal of a treaty, responsibility for the cedant’s loss portfolio from the previous year(s). The reinsurer thus pays losses for a contractually defined set of earlier losses in return for the unearned premium.
Loss portfolio reinsurance
a type of reinsurance whereby a reinsurer agrees to indemnify the cedant for all claims outstanding in a particular type or class of business, or the totality of the insurer’s business.
Loss Portfolio Transfer
A financial reinsurance transaction in which loss obligations that are already incurred and which are expected to ultimately be paid are ceded to a reinsurer. In determining the premium paid to the reinsurer, the time value of money is considered, and the premium is therefore less than the ultimate amount expected to be paid. The difference between the premium paid for the transaction and the amount reserved by the cedent is the amount by which the cedent’s statutory surplus increases. Other terms used in context with Lloyd’s contracts are loss portfolio-rollover and reinsurance to close. Regulations apply to these transactions to ensure that sufficient underwriting risk is transferred by the ceding insurer to the reinsurer. Loss portfolio transfers may be used when an insurer is exiting a line of business, for certain long tail occurrence claims, or in mergers and acquisitions.
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A form of financial reinsurance involving the transfer of loss obligations already incurred that, when ultimately paid, will exceed the consideration paid to the reinsurer for undertaking such obligations. The amount by which the transferred obligations exceed the consideration paid is the resultant increase to the cedant’s statutory surplus.
Loss portfolio transfer (prospective)
Transfer of loss portfolio in respect of claims on the cedant’s future business. The terms are adjustable according to the volume of business. The reinsurance recoveries follow the loss pattern of the cedant. The effect is to transfer liabilities to the balance sheet of the reinsurer in return for a premium reflecting the time value of money with the timing and investment risks being assumed by the reinsurer. The cedant replaces unknown liabilities with a known cost and this helps clean up the balance sheet especially if a merger or acquisition is involved. It is an alternative risk transfer product.