An underwriter who underwrites risks on a reasonable basis and who is neither unduly apprehensive nor duly incautious. The concept of the prudent underwriter is at the heart of the fundamental principle of utmost good faith as a fact will be judged to be material (see material fact) if it is one that would have influenced the judgement of a prudent and experienced underwriter in his assessment of the risk. The assertion that the particular underwriter would have been influenced by it does not make it a material fact and the fact that another would have ignored it does not prevent it from being material. The test is objective.

Deals with the financial management and viability of a firm. It is aimed at ensuring that company failures do not endanger the stability of the financial markets or cause financial loss for the customers of that firm. The FSA sets the standards for the maintenance of capital resources proportionate to a firm’s risks. The provisions will shortly be incorporated into a single Prudential Sourcebook.

An abbreviation or set of letters used at Lloyd’s for the purpose of identifying syndicates or brokers.
***
An abbreviation or combination of letters used in Lloyd’s practice to identify a broker or underwriting syndicate.

It is a situation where the public may come in large numbers to the premises, e.g. sports grounds, theatres, department stores, etc. See PREMISES RISK.

Material damage clause covering the extra cost of reinstatement that arises solely in consequence of a public authority or European Community requirement. The cover applies to property damaged by an insured peril including undamaged portions of the affected building but not undamaged buildings. The sum insured should take account of the potential extra costs.

Lossesoccurring policy, subject to a limit for any one occurrence, indemnifying the insured in respect of legal liability for third party injury and property damage arising from the business. Insured’s own costs are covered. The policy has a number of extensions (e.g. moto tingent liability, data protection) and excludes risks (e.g. employers’ liabilconity, covered under other policies) normally covered under other policies. See POLLUTION CLAUSE.

The law will not enforce an insurance which is against public policy, i.e. a policy with a mischievous tendency and therefore injurious to the state or the community. Insurance contracts without insurable interest are in effect wagering contracts and are therefore contrary to public policy and void.

The occupational scheme for employees of central government; local government; nationalised industries; other state organisations. Scheme rules are defined by statute. The accrual rate is oneeightieth for each year of service with a maximum pension of 40/80ths.

System used by a transfer club made up mainly of public sector pension schemes. A transfer club is where several schemes deal with transfer payments in the same way.

Extends a business interruption insurance to provide an indemnity in respect of interruptions due to damage by an insured peril at the premises of a specified supply authority.