Aviation insurance term describing the risk of damage to the aircraft while stationary on the ground.
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The risk of damage to an aircraft while stationary on the ground.

Withdrawal of aircraft from service. The risk is insurable by an aircraft manufacturer under an aviation products liability policy to indemnify a manufacturer against his legal liability for loss of use pending investigation and repair of an alleged defect.

A captive insurance company formed by an association to insure the risks of its members.

Income protection insurance applied to a group, usually effected as an employee benefit. The deferred period is fixed so that the benefit becomes payable when contracted salary payments terminate or are significantly reduced. The benefit, once triggered, continues until the sooner of the end of the disability or normal retirement age.

Personal pension plans arranged by an employer for his employees. Employers may contribute. GPPs are not occupational schemes, simply individual personal pensions grouped for administrative convenience. They are defined contribution schemes with no maximum on the retirement benefits. The employee makes his own contracting out arrangements but this will not affect national insurance contributions.

May occur where a parent company controls other insurance companies within its group. Group underwriting is an alternative to interchange of business within the group. Each acceptance of business is reported to a central control where a group retention is observed in accordance with a scale of group limits reflecting the group’s commitments. Reinsurance may be arranged by the subsidiary or the parent. Centralised underwriting enables the group to maximise its underwriting capacity.
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The centralization of underwriting within a group of insurance companies, thus maximizing the group’s underwriting capacity.

Weather index calculated by subtracting a reference temperature (e.g. 50°F or 10°C) from the average daily temperature. Each degree of ‘warmth’ is a growing degree day (GDD). The deviations from reference temperature benchmark a biological process, such as insect development. ‘Warm’ temperatures necessitate the use of costly pesticides to protect crops against agricultural pests. The payout is the tick multiplied by the difference between the GDD level stated in the contract (i.e. the strike) and the cumulative GDDs for the contract period.

Fixed term investments, typically between three and five years, where a single premium life contract, with only nominal life cover, guarantees a minimum capital growth at maturity. It is a collective investment scheme that produces economies of scale for small investors. Investors pay tax at the basic rate and no additional tax on maturity. Higher tax payers may face a ‘top slice’ on any gain made on the bond.

Insurance policy endorsement covering the policyholder’s interest in mortgaged property providing that, if the insurer becomes insolvent, the reinsurer will pay any claim due directly to the mortgagee and/or policyholder. The endorsement is also called the mortgagee endorsement and conceptually is similar to the cut-through clause.

The right to use the proceeds of a pension plan or insurance policy to purchase an annuity at a minimum rate guaranteed in the contract. Insurers are exposed to the risk of falling interest rates and may use derivative contracts to protect themselves against potential losses. See also OPEN MARKET OPTION.