The proportion of the reinsurance premium payable that has been retained by the cedant to assist in financing the reinsurer’s share of the cost of settling claims.

Name given to the technical life insurance reserve that arises from the level annual premium system.

Process of estimating or calculating amounts to be allocated to cover outstanding claims and unexpired risks. Insurers use an actuarial approach or a computerised program for the purpose. The reserved amount is adjusted whenever new information on a claim is received.

Applies to some ART products enabling them to be varied following the occurrence of loss(es). It also refers to risk modelling techniques whereby the premium payable under a multi-year contract is automatically adjusted by reference to the claims record and changes in the prevailing market and economic conditions.

A financial guarantee insurance that protects a lessor against unexpected declines in the market value of leased equipment (vehicles, aircraft, heavy machinery) upon termination or expiration of the lease agreement. The insurance helps the lessor manage the asset value risk inherent in leasing.

Regulatory test imposed on UK life insurers to ensure that they can withstand a specific fall in equity market values without breaching their required margin of solvency. The result is embedded in the calculation of technical provisions instead of being presented as solvency capital. The appointed actuary is expected to apply his own judgement in considering matters relevant to the test.

Ancient form of loan, similar to bottomry, but secured on the cargo only and repayable only if the cargo is saved.
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(A contract of Insurance by which a ship or its cargo is pledged as collateral for a loan required to support a maritime venture. In the early days of marine insurance, a ship-owner would borrow money on a mortgage on the ship, and the mortgage would provide that if the ship were lost, the borrower would not have to reply the loan. This was Bottomry, which thus combined money lending with insurance. When cargo instead of hull was involved it was called “respondentia.”

PA95, s.40, restricts investment by the pension fund in this type of investment to 5 per cent of the scheme assets. SSAS is an exception.

Condition in a property-related deed that limits the use or development of land/buildings by subsequent purchasers. The encumberance affects the marketability of the title and creates a risk, insurable under a restrictive covenant indemnity, for anyone who infringes it.