Financial Insurance
Definition of "Financial insurance"
Structured product designed to meet specific needs of the insured that may involve any of the following funding arrangements:
- loss portfolio transfers in which the self-insurer transfers the reserves that it had established for its known losses to the insurance company; by concluding such a transfer, the self-insurer can use the capital it had previously set aside for loss reserves;
- retrospective transfers in which a self-insurer has losses for which inadequate insurance coverage exists and now these companies require additional insurance coverages so that the limits can be raised to an adequate amount;
- prospective loss transfers in which a self-insurer has a requirement to fund in advance its future losses, thereby removing its liability for loss reserves from its balance sheet. The premium paid by the self-insurer to the insurance company reflects the self-insurer's expectation of loss.
This specifically designed structured product enables the self-insurer to eliminate its liability for maintaining loss reserves. Also, this product enables the self-insurer to protect itself against adverse future loss experience resulting in earnings per share not being affected by unexpected losses.
Popular Insurance Terms
Presence of other contract (s) covering the same conditions. When more than one policy covers the exposure, each policy will pay an equal share of the loss. ...
Process of forming a large group of homogeneous lives that in order to allow the law of large numbers to operate, thereby projecting a probable rate of mortality or morbidity whose ...
Feature in a life insurance policy allowing a policyowner to freely assign (give, sell) a policy to another or institution. For example, in order to secure a loan, a bank asks to be ...
Employee's full entitlement, with no waiting period, to benefits under a pension or retirement plan. In the case of a contributory plan, there is immediate vesting of the employee's own ...
Assurance by the agent that the recommended insurance plan for the client is suitable for that client's specific needs. This assurance is derived from a careful analysis by the agent of the ...
Average earned monthly income (AEMI) for the tax year in which the insured wage earner has income interrupted or terminated because of illness, sickness, or accident. This AEMI is important ...
Type of term life insurance policy that has a face amount that increases to a predetermined sum and then decreases to zero at the termination point of the policy, while at the same time ...
Insurance coverage for pitfalls associated with travel. The coverage can be classified as follows: Trip Cancellation the travelers) must cancel the trip because of unforeseen circumstances ...
Employee of the insurance company who has the authority to appoint brokers on behalf of the insurance company. This supervisor has the objective and responsibility to sell the insurance ...
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