Occurs when the early years’ premiums under a contract, less the initial expenses and any early claims, are not sufficient to cover the reserve, plus any explicit required solvency margin, that the company wishes to set up. An expanding life insurer may find that the unexpired premium reserve is increasing faster than it is being released making it difficult to achieve the required margin of solvency. Zillmerization allows for this situation. Reinsurance on a risk premium basis is another possible solution.

The amount estimated as being sufficient to provide pension benefits for future entrants, including any contribution required from the members.

Cover for household contents where an item lost or destroyed would be replaced with a new item, with no deduction for wear and tear. It is ‘replacement as new’ but if the ‘new’ is superior to the ‘old’ the insured pays for ‘betterment’. Business insurance equivalent is the replacement clause. Sums insured must represent full replacement costs.