Proportional treaty that allocates risk, losses and premium on a variable-percentage basis between the cedant and reinsurer. The cedant’s retention is a fixed monetary amount for each policy but the percentage reduces as the policy limit increases. Where the retention, called a line, is not exceeded, 100 per cent of the risk is retained by the cedant. The treaty capacity is expressed as a multiple of the cedant’s line; a retention of £3m plus a four line treaty (£12m) means that the cedant is able to accept up £15m without recourse to further reinsurance facultatively or by a second surplus treaty. See Figure 8.

UK: 1. The act of terminating an existing life insurance (whole life or endowment) and receiving the current surrender value in cash. 2. A pensions term to describe allocation (the giving up of part of a pension in return for a pension payable to the member’s spouse or dependants) or commutation.
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The giving up of an insurance policy by the insured to the insurer before the insurance has run its full course.
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To terminate or cancel a life insurance policy before the maturity date. In the case of a cash value policy, the policyholder may exercise one of the non-forfeiture options at the time of surrender.

UK: cash value of a whole of life or endowment assurance policy when discontinued.
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Surrender value is the amount payable to the policy holder on his surrendering his right under a policy and terminating the contract of insurance.
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UK: The cash due when a life insured terminates his policy before maturity. The existence of a reserve makes the payment possible but due allowance is made for expenses and the cover granted. Often there is no surrender value during the first two years.

Opra suspension of a named person from continuing to act as a trustee of any occupational pension covered by the order (PA95, s.4). The trustee will be able to resume if the order is removed.

An alternative risk transfer between two parties having risks in the opposite direction. An insurer might swap a windstorm exposure with a building contractor who gets work if windstorm occurs. If it does not occur, the contractor’s excess capacity is compensated from the insurer’s additional profit following favourable claims experience.

Agreement between parties with diverging interest to exchange payment streams based on an underlying rate, index, instrument or asset and a ‘notional amount’. An ice cream manufacturer wants a warm summer while an overseas tour operator expects a cool summer to boost his sales. If the temperature is above the reference temperature, 18°C, the ice cream company pays the tour operator out of their enhanced revenue. No premium changes hands, the upside risk of one party pays the downside risk of the other.

Damage to cargo caused by water condensing from humid air inside a container or the hold of the ship due to a fall in outside temperature.

policies of insurance or reinsurance where the initial premium is subject to variation depending upon claims experience (see also Burning cost).

Most insurance companies issuing investment bonds and unitised funds offer a variety of investments linked to property, equity, managed and fixed-interest funds, and sometimes cash or gilt funds. In return for a fee most will permit the holder to switch his investment from one fund to another. As the money remains invested in the same life policy liability to tax does not arise as happens when shares are sold.

Where damaged cargo taints other cargo, the resultant loss is known as sympathetic damage. If the original damage was occasioned by an insured peril without any intervening cause then the sympathetic damage is covered by the policy. Goods liable to cause this type of damage include: hides and skins, certain cheeses, guano and carbon disulphide.