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Burning cost

UK: a method of calculating the premium in non-proportional reinsurance, in particular excess of loss and stop loss reinsurance, whereby the premium is directly related to the insured’s claims experience; the reinsurer reviews the cedant’s claims experience to ascertain what proportion of premium income would have been “burned up” by the reinsurance claims (see also Swing rated policies).
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REINSURANCE: A term most frequently used in spread loss property reinsurance to express pure loss cost or more specifically the ratio of incurred losses within a specified amount in excess of the ceding company’s retention to its gross premium over a stipulated number of years.
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UK: Premium calculation method used for non-proportional reinsurances mainly or large industrial liability risks. The premium is calculated from the percentage of premiums ‘burnt up’ by losses in the reinsurance layer or primary insurance over a number of previous years. The calculation is adjusted for inflation and other factors subject to change and the final figure is loaded, e.g. by 100/70, for administrative costs and profit. The premium is normally adjustable based on actual experience.

Burning cost ratio

Historical incurred losses (usually excluding IBNR [incurred but not reported]) to an existing or proposed reinsurance agreement, divided by subject premium. The burning cost ratio, adjusted for IBNR, other costs, and a profit factor is a tool used in making rates for excess of loss reinsurance.

Burning of debris condition

A liability insurance condition to ensure that the burning of debris away from the insured’s premises is properly conducted. Fires should (a) be in a cleared area and at a distance (e.g. at least 8 metres) from any property; (b) not be left unattended. A suitable fire extinguisher should be kept available for immediate use. It may also require that fires be extinguished at least one hour before leaving the site at the end of each working day.

Burning Ratio

(i) Ratio of losses suffered to the amount of insurance in effect. (ii) Ratio of actual Fire loss to the total value of the property that could burn. (iii) Ratio of loss by Fire to Fire Insurance in force.
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The amount of losses suffered as compared to the amount of insurance in effect.
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UK: The ratio of actual losses (i.e. excluding IBNR) to the amount of earned premiums.
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The ratio of losses to the amount insured.

Burning warranty/Hot Work/Use of Heat Clause

Public liability clause imposing strict conditions on the insured’s involvement in ‘hot work. Typically where electric oxy-acetylene or similar welding equipment or cutting equipment is used the area of work must be adequately cleared and combustible materials moved at least 6 metres from the work. The warranty also requires, inter alia, that fire extinguishers should be available. Upon completion of each period of work and at regular intervals for at least one hour after the completion of the work there should be thorough fire safety checks. Other conditions govern the use of blowlamps and blowtorches. The use of asphalt, bitumen, tar, pitch or lead heaters is also controlled. See HOT WORK; BURNING OF DEBRIS CONDITION.

Burnout

Occupational illness in which there is mental or physical energy depletion after a period of chronic, unrelieved, job-related stress. It is characterized sometimes by physical illness, perception of being tired, and being disgruntled with one’s work.

Burst pipes

An additional peril added to fire and household policies to cover damage caused by an escape of water from any tank, apparatus or pipe. The repair of the item that burst, overflowed or leaked, is not covered. The insurance is subject to an excess and cover is usually suspended when the building is unoccupied for a defined period, usually 30 days.