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
Same as term Underwriting Gain Loss): profit ( deficit) that remains after paying claims and expenses. Insurers generate profits from underwriting and from investment income. Their chief ...
Income paid for a specified number of years from an annuity. ...
Intent to defraud. An insured is required to answer truthfully all questions on the application. The insurance company can void a contract if it would not have issued a policy had it known ...
Additional coverage to a property policy. Windstorms are not one of the standard covered perils. If an insured desires coverage for windstorms and hail, an endorsement is required. ...
Financial instrument established irrevocably for a minimum of 10 years, after which the principal reverts to the grantor upon termination of the trust. A key feature is that earnings from ...
Net cost of insurance with no markup to cover an intermediary's profit or expenses. An intermediary, such as a broker, sells an insurance product net; that is, there is no loading for his ...
Automatic right of an insured to renew a policy until a given date or age except under stated conditions. It is extremely important for the purchaser to review the conditions for renewal in ...
Method of terminating a split dollar life insurance policy in which the company transfers its interest in the life insurance policy to the insured employee. Through such a transfer, the ...
Oral or written statement that results in injuring the good name or reputation of another, causing that individual to be held in disrepute. ...
Have a question or comment?
We're here to help.