An index tracking fund aims to follow a particular index as closely as possible, not necessarily aiming to beat it. It invests only in the companies that make up that index. Index tracking removes the need to employ fund managers and so reduces charges.

Option contracts based on an index. The value of a derivative is derived from the underlying index as in the case of weather derivatives. Variations between the actual losses and those derived from the index creates the basis risk.

1. Business transacted with the insurer through an intermediary such as a broker or agent. 2. Business accepted by way of reinsurance.
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Insurance received by insurer through a broker or agent entitled to commission, or through another insurer, as distinct from business transacted directly between the insurer and the insured. Indirect Damage

Same as INCONTESTABLE CLAUSE.

Occupational pension scheme for a named employee. The scheme is insured and is normally established by an exchange of letters between the employer and employee. Where the letter does not incorporate a declaration of trust it is linked with a formal declaration of trust to ensure that the arrangement is legally enforceable. IAs are Inland Revenue approved.

Enable individual investor to pursue own objectives by way of a separate fund.

Mechanism in calculating enhanced capital requirements (ECR) based on an industry-wide assumptions to allow for differences in the risk profiles of individual firms of insurers, both life and non-life. ICAS operates through Individual Capital Guidance that is usually set above ECR and will be affected by whether firms’ risk assessment processes follow all the FSA’s guidance. See RISK-BASED CAPITAL.

Personal pension scheme where the individual holds money in an individual pension account. The money is invested in a selection of investments, including shared funds such as unit trusts This makes it possible to invest in stocks and shares and spread risks. Movement in share prices can be tracked daily in the financial press in order to monitor the value of the pension fund. It is relatively simple to transfer pensions savings from one scheme to another.