Policy proof of interest (PPI)

Policy whereby the insurer waives proof of insurable interest when settling a claim. The policy is unenforceable as it is a wagering contract but is otherwise valid. PPI policies are significant in maritime trade where cargo changes ownership and it would be difficult to prove an interest at a particular time. A PPI clause is attached to the policy, otherwise known as an ‘honour policy’, peculiar to marine insurance.

Policy provisions

Words, sentences, and paragraphs that describe the benefits and nonbenefits of an insurance contract and its operation.

Policy purchase rider

See: guaranteed insurability (GI) rider.

Policy Register

A record kept by an insurer of policies effected.

Policy reserve

1. Amount of assets added to the future premiums to be received from insurance policies so that funds are sufficient to pay future claims on policies that are in force. 2. Assets that guarantee that the insurance company has funds sufficient to pay future claims.
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See: level annual premium system.

Policy reserve (Life Insurance)

A reserve created by virtue of the concept that all policies merit a portion of the pro rate reserve.

Policy Reserves

The funds that an Insurance Company holds specifically for the fulfillment of its Policy obligation. Reserves are so calculated that. together with the future premiums and interest earnings, they will enable the Company to pay all future claims.

Policy Signing Office

An office conducted jointly by a number of insurers, either Lloyd’s underwriters or companies, where policies are signed on their behalf.

Policy Statement for Risk Management

A statement of (i) the risk management objectives of a business, and (ii) the authority and responsibility of the risk manager. (B) Risk management policy statement in a written Risk Management Policy Statement: Sample of Policy Statement : Risk management is the process of making and carrying out decisions that will minimize the adverse effect of accidental losses upon our company. The risk management process is vital to the personal health and safety of employees and the safety of the public. In financial terms, it is vital to our ability to pursue our goals, commence and operate programs, and to perform duties in an efficient and professional manner.

Policy summary

Document that gives the legally required information of a specific insurance policy that is to be purchased by an applicant.
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UK: A document in durable medium that FSA rules require intermediaries to give retail customers, setting out the main benefits, exclusions and limitations of the policy and other information.