Shareholders in small companies agree that on death or retirement of a shareholder the continuing shareholders have an option to purchase the outgoing shareholder’s shares. Life insurance puts money into the hands of the continuing shareholders at the relevant time to fund the purchase.

1. When two blameworthy vessels collide, liability will be apportioned between them according to their degree of fault and, following the running down clause, there will be two payments, i.e. cross liability. Admiralty law prescribes a single liability settlement, a method favourable to the receiving shipowner. 2. Where two or more jointly insured parties, (marine or non-marine) have legal rights against each other, the liability cover will respond as though a separate policy had been issued to each named insured. This is made possible by a cross liabilities or severability of interest clause.

A method used in partnership insurance whereby each partner takes out a policy on his own life for the amount required, pays the premium himself and assigns the policy to his partners in order to put the money into their hands on his death or retirement. Any gain under the policy is subject to capital gains tax.

The total of degree days occurring over the period of a weather derivative. The cumulative figure is multiplied by the amount of the tick to give the payout for the period, subject to the strike being breached but not exceeding any cap.

An accrued benefits valuation method in which the actuarial liability is based on earnings at the valuation date. The standard contribution rate is that necessary to cover the cost of benefits that will accrue in the control period following the valuation date by reference to earnings projected to the end of that period and non-discretionary revaluation thereafter.

a method of claims reserving that uses the deterioration that has already occurred in business written in the year in question to forecast how it will continue, by fitting a standard type of curve to the pattern of deterioration to date, and using the fitted curve to predict the final loss (contrast with chain ladder, which uses the experience of older years to predict what will happen to newer years).

Public liability policy exclusion, of property in the care, custody or control of the insured. The property concerned is ‘bailment’ property insurable by the bailor under a first party insurances or by bailees’ modified liability policies, e.g. hotel proprietors. In any event the general exclusion is overridden in respect of: (a) the effects of directors, employees and visitors, including their vehicles and contents; (b) premises (including contents) temporarily occupied by the insured for work purposes; (c) leased or rented premises; (d) third party property at premises, etc., other than the insured’s premises. See OWN PROPERTY EXCLUSION.