A pre-treatment authorization that must be secured from the insurer. The insured’s physician must submit a cost estimate and plan for treatment. This is done to control costs, and also allows the insurer to inform the insured ahead of time which services will be covered and which will be at his or her own expense.
Insurance Encyclopedia
Precertification Authorization for Health
A cost containment technique which require physicians to submit a treatment plan and an estimated bill prior to providing treatment. This allows the insurer to evaluate the appropriateness of the procedures, and lets the insured and physician known in advance which procedures are covered and at what rate benefit will be paid.
Precertification of benefits provision
See: predetermination of benefits provision.
Precipice bond
A single premium, high income bond, typically for five years, under which the full return of capital depends on a stock market-measure (e.g. FTSE 100) performing to a minimum level over the life of the product. If the index/measure under-performs investors may not receive a full return of capital; the return drops ever lower as the index/measure continues to fall (the ‘precipice effect’). The FSA requires firms to give clear explanations of the risks involved and follow certain other requirements.
Precipitation cover
Weather derivative with a reference point based on an expected rainfall level in a specific location over a defined period. If the point is exceeded, certain entities, e.g. a theme park, will suffer poor sales and receive a payout based on the accumulated deviations above the rainfall index multiplied by the tick. If the actual rainfall level does not exceed the reference point (or strike) there is no payout; the only cost to the firm is the premium paid in return for the protection granted. See PRECIPITATION SWAPS; SNOWFALL COVER.
Precipitation Rainfall and snowfall
See: PRECIPITATION COVER; SNOWFALL COVER.
Precipitation swaps
Two parties exchange payments streams by reference to an underlying index based on rainfall or snowfall. A snow-clearing local authority could enter into a swap with a ski resort. In the event of snow above the reference point, the extra cost of snow clearing is funded out of the income stream of the ski resort. The converse would also apply. The upside risk of one party pays the downside risk of the other.
Predecessor Firm
Typically means a law firm that is named as such in the Declaration that has under dissolution and to whose financial assets and liabilities the Named Insured is the majority successor in interest and from which the Named Insured retained 50% or more of the lawyers.
Predesignated chiropractor
See: predesignated physician.
Predesignated physician
In workers’ compensation cases, doctor whom the employee has selected as his or her physician of choice by formally notifying the employer before the date of an industrial injury.