the part of the FSA Handbook that contains most of the rules that must be followed by insurers in maintaining adequate financial resources; some material applicable to insurers, especially the Accounts and Statements Rules, is in another part of the FSA Handbook, the ‘Interim Prudential Sourcebook for Insurers’ (‘IPRU(INS)’). Material applicable to non-directive friendly societies is in the ‘Interim Prudential Sourcebook for Friendly Societies’ (‘IPRU(FSOC)’).

The integrating in a single multi-year contract of conventional insurance risks with financial and commodity risks. Where the risk transfer element is minimal they are akin to financial reinsurance with the aim of smoothing losses over time. Multi-covers and blended covers are integrated products.

A test used in the employee/employer relationship. It seeks to establish whether a person works on their own account or as an integral part of the employer’s organisation. The test is likely to succeed if the relationship is a continuing one between the parties. If the individual’s activities are restricted to one employer and the individual carries no financial risk the individual may be deemed to be an employee. Denning L. J. compared a taxi driver with a chauffeur to make this point (Stevenson, Jordan and Harrison Ltd v. McDonald and Evans).

The general term for intangible property rights which are a result of intellectual effort. Patents, trademarks, designs and copyright are the main intellectual property rights. See INTELLECTUAL PROPERTY ASSET PROTECTION; INTELLECTUAL PROPERTY LITIGATION PROTECTION.
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Ownership of the legal rights to possess, use or dispose of products created by human ingenuity including patents, trademarks and copyrights.

Cover that focuses on the revenue streams generated by Intellectual Property (IP) rights and their perceived value. The basis of indemnity is tailored to individual circumstances, and will vary from: (a) reimbursement of research and development costs – for IP still in development; (b) loss of projected future earnings where products are newly launched; (c) loss of profit calculated on historic earnings – for mature products. A legal audit takes place before cover is granted.

Covers businesses against the legal costs and damages that can arise from an IP litigation action. The scope of cover varies but generally embraces: 1. Exploitation agreements in terms of the fees and expenses in enforcing the contractual terms inherent in agreement. Cover may include defence costs when the insured has unintentionally breached an agreement. 2. Defence fees and expenses incurred in defending a claim by a third party that the products or processes used or sold by the insured infringe IP rights. Cover may include the damages that the insured would pay if the defence is unsuccessful. 3. Invalidity/ownership professional fees and expenses in defending challenges to ownership, validity or title to IP where rights have already been granted. 4. Pursuit fees and expenses pursuing those who have infringed the insured’s IP rights.

A rule of construction. Where possible the words of the policy must be construed liberally so as to give effect to the intention of the parties. In insurance the parties intend to make an insurance contract and any inter pretation that is contrary to the real intention of the parties is not to be adopted.

1. Reinsurance clause under which the reinsurer and the reinsured share any interest awarded on damages in proportion to their respective shares of the actual loss in those cases where the reinsured’s net loss exceeds a given level, e.g. £250,000. In long-tail liability business large claims may take years to settle and interest may be awarded. 2. Treaty clause describing the business and limits covered.

The profit attributable to a life insurer earning a higher rate of interest than that assumed at a previous valuation. The profit becomes a part of the surplus.