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Risk of Trade

Loss caused by Fire is an accidental loss. Hence, the same is a risk of trade. Other examples of risks of trade are riot and strike, explosion, flood, burglary, air-crash, machinery breakdown, shipwreck etc. Risk of trade is synonymous to pure risk.

Risk ownership

Part of the risk management process that allocates responsibility at a senior level for managing key risks. The allocation of risk is supported by a mechanism for reporting issues ultimately to the senior person who has overall responsibility for risk management.

Risk pool

MEDICAL, US: 1. Individuals who comprise an insured group based on health status, age, sex, and future health. Also called risk spread . 2. State program that groups those who cannot obtain insurance coverage. Funds for these programs come from either the state or an assessment on insurers. 3. In managed care plans, a collection of funds established by a managed care plan that uses a risk-sharing system (i.e., capitation) with providers of medical services. Funds are taken from withholding a portion of provider fees or capitation payments to make up the reserve to cover unforeseen use of services. Funds that remain at the end of a year are distributed among the providers. Also called pool . 4. Financial account to which a managed care plan’s specific income and expenses are posted.
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Also known as a pool. A group of insurers (or reinsurers) who share the premiums and losses of a risk they have written together, according to an agreement that exists between them. A pool often writes large commercial risks.
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Multiple subjects of insurance insured or reinsured by a single insurer where, to avoid risk concentration and improve risk distribution, different combinations of exposures, perils, and hazards will be underwritten.

Risk premium

The pure premium needed to cover the expected risks but with no allowance for expenses, commission and contingencies. It is the amount of premium required to cover the risk, taking account of the average claim amount and average claim frequency.

Risk profile

Analysis of (re)insurer’s business that tabulates risks into bands of similar values, showing the number of risks in each category, average values, aggregate values and aggregate premiums, etc.

Risk purchasing group (RPG)

US: A group formed in compliance with the Risk Retention Act of 1986 authorizing a group of insureds engaged in similar businesses or activities to purchase insurance coverage from a commercial insurer. This is in contrast to a risk retention group (RRG), which actually bears the group’s risks rather than obtaining coverage on behalf of group members.
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A group of similarly situated persons or entities that are permitted under federal law to organize across state lines to buy insurance. The carrier that sells insurance to the group must be licensed in at least one state but need not be licensed in every state where a member of the group resides.
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UK Alternative risk transfer term that refers to collective insurance buying.