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

Allows a pension scheme member to opt for a lower pension in return for a lifetime pension benefit for the member’s wife, husband or dependants, if surviving at time of member’s death. The member can exercise this option at the time the pension is taken. See OVERLAP.

Allowable maximum

See: Earnings Cap. Alternative accommodation clause (loss of rent). A clause in both household buildings and contents insurances to cover the insured if his home becomes uninhabitable due to insured damage. The buildings insurer will pay the reasonable cost of: any necessary alternative accommodation, loss of rent due to the insured and a maximum of two years ground rent for which the insured is liable, subject to a maximum of 10 per cent of the amount insured. The contents insurer covers the cost of alternative accommodation and rent payable by the insured up to 20 per cent of the sum insured.

Alternative basis clause

A business interruption policy clause to provide the insured with an alternative basis for adjusting a claim when the interruption is short and the turnover method impractical. The practice is for the insurer and the loss adjuster to calculate the loss on a ‘sales value of output’ basis, provided that the lost output cannot be regained within the indemnity period. Insurers are sufficiently flexible in their approach to allow this practice to be adopted even if the clause is not included.

Alternative risk financing An ART (qv)

term describing techniques that provide a funding source other than conventional (re)insurance to meet defined risks. The insured may seek to smooth his earnings over a period of years and seek committed funding to deal with prospective loss and/or secure post-loss funding. The insurer taking the risk combines discounted cashflow techniques with actuarial risk analysis. Techniques include: finite reinsurance, financial reinsurance and contingent capital.

Alternative risk transfer (ART)

Generic phrase to denote various non-traditional forms of (re)insurance and techniques where risk is transferred to the capital markets. More broadly it refers to the convergence of (re)insurance, banking and capital markets. See FINANCIAL REINSURANCE; FINITE REINSURANCE; SECURITISATION; ALTERNATIVE RISK FINANCING; WEATHER DERIVATIVES. (See Figure 1).

Always open

A term used in connection with open covers to signify that the insurance will remain continuously in force until ended by cancellation.

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Term used in placing open covers to denote that the insurance remains continuous until ended by cancellation.