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Fundamental risks

Risks of potentially wide-ranging effect on society as a whole or large segments thereof rather than individuals. They are of a catastrophic nature, e.g. war, famine, earthquake, widespread pollution and unemployment. They are generally outside the scope of private enterprise insurance with responsibility being accepted by governments. Compare with particular risks.

Funded basis

accounting for general insurance business on the basis that premiums, claims and expenses are related to the underwriting year in which the policy incepts and recognition of profits is deferred until a subsequent accounting period, receipts and payments being carried forward in a fund; not permitted with effect for accounting periods beginning on or after 1 January 2004.

Funded Cover

See: Rating
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UK: Prospective excess of loss treaty under which the cedant pays high premiums to the reinsurer for the purpose of paying later losses. The reinsurer deducts charges from the fund and, at the end of the contract, returns the balance to the cedant as profit commission.

Funded life insurance trust

Trust established to distribute life insurance proceeds. Because insurance companies cannot act as trustees or guardians, the policy proceeds are paid to a trust company and distributed under the terms of a trust agreement creating greater flexibility in distribution of the proceeds. The trustee has control over both the policy proceeds and also securities or other property to provide funds out of which to pay the premiums. This type of arrangement is a funded life insurance trust.

Funding

In regard to pension schemes it is the advance provision for future liabilities by the accumulation of assets that are normally external to the employer’s business.
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Setting aside assets to meet an eventual obligation.