The broker who processes premiums and claims under reinsurance placed by more than one broker for the cedant.

Indication of the state where the vessel is registered and which is responsible for safety standards. A shipowner may choose a particular state because of less rigorous standards. Such a state is a flag of convenience, e.g. Liberia. Underwriters take account of the ‘flag’ when assessing the risk.

Marine insurance whereby the reinsurer receives all of the cedant’s interest up to a predetermined amount. For example, if an underwriter accepts £100,000 on a vessel and reinsures £50,000 on a first interest basis, any amount ‘closed’ up to £50,000 will be ceded to the reinsurer. If only £80,000 is closed to the underwriter it is his share of the risk that goes down as the reinsurer’s line holds good in the sum of £50,000.

A fixed non-adjustable premium. Sometimes used in reinsurance in respect of a portfolio of business that remains relatively unchanged over time or where a minimum premium situation applies.

Policy on a number of vehicles operated by the same insured and rated on an experience basis, i.e. fleet rating. Usually five or more vehicles constitute a fleet. The fleet itself can comprise vehicles of different classes, e.g. private cars, goods-carrying vehicles, etc. Aircraft and ships can also be insured as fleets.
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(i) A Motor Insurance Policy covering a group of similar vehicles with premiums calculated on an experience basis. (ii) A Hull Insurance contract covering a group of vessels in a single Policy. A Reinsurer’s line will be based, usually on the top value Vessel and pro-rata on the other, or may be interested in vessels only above or below a certain category.

The underwriter and shipowner agree an insured value for each vessel in the fleet. The rate is based on ownership, past claims experience and other underwriting considerations. The leading underwriter, and those who follow, write a ‘line’ on the highest valued vessel on the slip and a pro rata line on all other vessels in the fleet. The subsidiary insurances on freight and disbursements are also on a fleet basis.

Insurer compares average gross premium per vehicle with the claims cost per vehicle/year during the previous years. If the loss ratio is materially under a certain percentage, eg 60 per cent, the gross average premium may attract a fleet discount. If the loss ratio exceeds, say, 62.5 per cent, then the gross average premium will be increased. The discount or loading takes account of any trend and is applied to the insurer’s tabular rate for each vehicle in the fleet. For large fleets (premiums £100,000) rating is by burning cost or is restrospective, i.e. premiums will be based on known claims costs over a period after payment of an initial deposit premium. over

This is defined in policy form AVNIC as meaning ‘from the time the Aircraft moves forward in taking off or attempting to take off, whilst in the air, and until the aircraft completes its landing run.

The risks attaching to an aircraft whilst airborne as opposed to those whilst on the ground.

1. Marine. A cargo policy covering individual shipments each of which is declared and eventually exhausts the sum insured. The arrangement has largely given way to open covers. 2. Floating insurance for building contractors. Annual policy insures buildings of normal construction in course of erection and completion (including outbuildings, walls, etc.) up to a specific sum on the site of any of the insured’s contracts.
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(i) When there are a series of export or import transactions, it is used for a single global sum insured, as shipments are made a declaration of their value must be made to the Insurers, the balance of the sum insured applicable to future transactions being thus automatically reduced. (ii) Policies where the sum insured covers a sequence of events, being reduced as each event occurs.