Amount set aside on the balance sheet in addition to unearned premiums with respect to risks to be borne by the insurance undertaking after the end of the financial year, in order to provide for all claims and expanses in connection with insurance contracts in force in excess of the related unearned premiums and any premiums receivable on those contracts.
Insurance Encyclopedia
Provisional Advice
An early advice to a Reinsurer which is to be followed by a definite advice when accurate details are available.
Provisional damages
Where there is a chance that, in the future, an injured person will suffer serious deterioration in his condition, the court is empowered to issue a declaratory judgment, which, in the event of such deterioration, enables the plaintiff to apply for a review of the original award. Where the declaration is made, the damages awarded are provisional.
Provisional premium
Premium requested by an insurance company for a type of policy that needs a premium adjustment. For example, a commercial property or liability insurance policy’s final premium is determined at the end of the policy period based on an insured’s loss experience and other factors.
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UK: The premium charged under an adjustable policy at the inception.
Provisional privileges
Temporary or conditional rights that a physician is given at a medical facility for a specific length of time during which supervisors assess and validate his or her clinical performance.
Provisional Rate
Tentative rates, premiums or commissions that are subject to subsequent adjustment.
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A temporary rate that can be adjusted at a later time.
Provisional Rate, Premium, or Commission
Tentative amounts applicable to either rate, premium or commission set at the start of the contract and subject to subsequent adjustment.
Provisioning risk
The risk that insurance company accounting provisions may be set at a lower level than is actually required. It misleadingly enhances the company’s financial situation upon which inappropriate underwriting decisions could be made. The capital available may not be sufficient to support the type or level of business that is accepted.
Provisions
(01) The terms or conditions of an insurance policy. (02) The practice among accountants is to apply the term provisions to the amounts set aside to provide for liabilities assumed to exist at the accounting date, and to apply the term reserves to amount available to meet liabilities that may arise after that date. Among actuaries and among practitioners of general insurance it has been widespread practice to apply the term reserve to both categories.
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Also known as a stipulation. A portion of the contract in which benefits and conditions of the policy are explained.
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The terms or conditions of an insurance policy.
Proviso
A condition inserted in a contract on the observance of which the validity of the contract depends.