A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
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Basic Rate

Manual rate for a particular Insurance coverage which is adjusted by discounts or surcharge to reflect the individual circumstances of each insured Refer “Rate, Manual Rate.”
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UK: A fundamental rate applied to a whole class of policies of a given description and often published in rating guides. This rate is subject to modification depending on the characteristics of the particular risk under consideration.

Basic state pension (BSP)

Flat rate state pension unrelated to earnings. It is unfunded; current taxpayers pay for the retirement income of an earlier generation. Membership is compulsory for all employed and self-employed with earnings above the lower earnings limit. Pension entitlement is built up through national insurance contributions. The state pension age for women is 60 (progressively increasing to 65 between 2010 and 2020) and 65 for men. BSP is increased annually for married couples and single persons in line with prices.

Basis

The price differential between a financial position held and the benchmark instrument used to hedge or price that position. The basis may reflect different time periods, product forms, qualities or locations. See BASIS RISK.

Basis (of insurance) clause

A clause that makes the declarations contained in an insurance proposal form the “basis” of any contract of insurance that is made in consequence of the completion of that form. Such declarations are thereby converted into warranties with the result that if one of them is found to be untrue then the insurer may disclaim all liability under the relevant contract from the date of the breach, regardless as to whether the false declaration was material to the underwriting of the contract or causative of any loss. Basis of insurance clauses are not normally found in personal lines insurance contracts sold in the United Kingdom and, where they appear in other contracts, they may be qualified by the inclusion of a term in the proposal form that the declarations made in that document are true to the best of the knowledge and belief of the person making the declarations.

Basis clause

A clause at the foot of a proposal form making the proposal form and declaration the whole basis of the contract. It converts representations into warranties so that any inaccuracy in the form will entitle the insurer to avoid the contract regardless of materiality. The insured’s answers may be subject to his ‘best knowledge and belief.

Basis of Attachment/Treaty Experience

A methodology that determines which original policy losses will be covered under a given reinsurance agreement. There are two types of methodologies: policies attaching and losses occurring. The determination may be based on 1) the effective or renewal date of the original policy; or 2) on the date of the loss; or 3) on the date when the reinsured company recorded premium or loss transaction.-Underwriting Year (See also Policies Attaching)The effective date of the original policy, rather than the date of loss, determines the basis of attachment. Any losses occurring on policies written or renewed with inception or renewal dates during the term of the given reinsurance agreement will be covered by that reinsurance agreement irrespective of when the loss actually occurred. This mechanism is often used with “the policies attaching” methodology.
-Accident Year (See also Losses Occurring During)
The date of the loss under the original policy, rather than the effective date of the original policy, that determines the basis of attachment. Any losses occurring during the reinsurance agreement period on policies in force (if any), written or renewed will be covered by that reinsurance agreement irrespective of the inception or the renewal date of the original policy. This mechanism is often used with “the losses occurring during” the contract period methodology.

-Calendar Year Experience
The evaluation of loss experience whereby the total value of all losses incurred during a given twelve-month period (regardless of the dates of loss or the inception date of the policy) is matched with the premiums earned for the same period. As the name implies, Calendar Year Experience is usually calculated for a twelve-month period beginning January 1st. See also Accident Year Experience and Policy Year Experience.