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.

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.

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.

The plan to ensure that money will be available to pay out pension benefits as they fall due. It involves setting contributions at a certain level, such as the standard contribution rate.

The funding level expressed as a percentage.

FAL is members’ capital held in trust at Lloyd’s to pay claims when premiums trust funds are insufficient. The amount is calculated at member level using the risk-based capital model. The amount for individuals is equal to a ratio between 20 per cent and 30 per cent of the premiums they are permitted to write (depending on membership type, nature of risk, liquidity and resources). The ratio for corporate members is 50 per cent (except for dedicated corporate motor at 40 per cent). The funds must be maintained in value and be in a Council-approved form, i.e. readily realisable assets such as cash securities, letters of credit and bank and other guarantees. See LLOYD’S CHAIN OF SECURITY.
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Funds of an approved form that are lodged and held in trust at Lloyd’s as security for a member’s underwriting activities. They comprise the members deposit, personal reserve fund and special reserve fund and may be drawn down in the event that the member’s syndicate level premium trust funds are insufficient to cover his liabilities. The amount of the deposit is related to the member’s premium income limit and also the nature of the underwriting account. (See risk based capital).

Pre-paid plans purchased by a lump sum or periodic payments. A plan covers the funeral director’s fees and expenses and disbursements’, i.e. doctor’s fees, church fees, cost of a minister, cremation/burial fees, grave digging and cost of a plot. These plans have superseded the limited amounts available under industrial life and friendly society insurances.

Short for futures contract’ involving an obligation to buy or sell a specific amount of a commodity, currency or financial instrument at a stated price on a stated future date. The price is established on the floor of an exchange, e.g. the London International Financial Futures Exchange (LIFFE). The contracts may be traded with third parties.

Qualification under the advanced financial planning certificate (AFPC). Demonstrates that an adviser has comprehensive knowledge of pensions matters. It also classifies an intermediary, such as an independent financial adviser, as a pension transfer specialist.

These principles, as practised in the UK under the Companies Act, require company accounts to give a true and fair view. There are moves towards a globally accepted GAAP for insurance accounting. GAAP is associated with annual accounting, which by 2005 will supersede the three-year accounting system at Lloyd’s to bring them into line with insurance company accounting. See ANNUAL VENTURE.