Ab initio

From the beginning.


The cession by the insured to the insurer of the remains of his property, and rights relating to it, when a total loss is claimed.

Abandonment policy

A policy covering the insured against loss resulting from the abandonment of an event as, for example, when a cricket match is washed out by rain.

Abnormal risk

An insurance having some unfavourable feature in comparison with the average.

Abstainers insurance

The insurance of total abstainers from alcoholic liquor on terms, in life, health and motor insurance, more favourable than those available to the public generally.


Notification by a party to a proposed contract that he accepts the offer of the other party of the terms proposed, as where an underwriter initials a slip or the proposer of a life assurance, on receiving an offer to insure from assurers, signifies his acceptance by paying the premium.

Acceptance letter

Life assurers, on receiving a proposal, issue a letter indicating that they are prepared to accept it on payment of the premium. This constitutes an offer which the proposer can accept by paying.

Accepted value

A value on property insured that is accepted by the insurer as its true value and is not therefore disputable in the absence of proof of fraud on the part of the insured.

Accepting office

An insurance company that accepts a reinsurance.


An unlooked-for mishap or an untoward event that is neither expected nor designed.

Accident frequency

A measurement of the number of accidents occurring in a given period.

Accident insurance

Insurances of persons, property or liability against injury, loss or damage other than that covered by life, fire or marine insurances. Personal accident insurance (U.S.).

Accident severity

A measurement of the seriousness of accidents occurring within a given period, judged either by their cost or by the nature of the damage or injury to which they give rise.

Accidental bodily injury

The phrase commonly used in liability policies in relation to claims for injury to the person as distinct from damage to property.

Accidental means

Words used in relation to an event giving rise to a claim under a policy to indicate that an event must arise fortuitously so far as the insured is concerned.

Accommodation business

Business accepted by an insurer not because he thinks it desirable in itself but to oblige an agent or policyholder whose other business he values.

Accord and satisfaction

The ending of a contract by an agreement whereby one party gives consideration to the other to be freed of his obligation under the contract.

Account agent

Same as Credit agent.

Account executive

An employee of an insurance broker who maintains contact with clients and oversees the handling of their insurances.

Account handler

An employee of an insurance broker who makes detailed arrangements for the placing and administration of a client's insurance business.

Account sales

A marine claims document giving details of goods sold, gross proceeds and sales charges, and net proceeds.

Accountants clause

A clause in a business interruption policy entitling the insured to employ his own accountants to prepare a claim.

Accrued interest

Interest earned but not yet paid.

Accrued rights premium

A payment to the State by a private pension scheme which has ceased to be contracted out of the State pension scheme to provide for assumption by the State of liability for the accrued rights of its members to eventual guaranteed minimum pensions.

Accumulating society

A friendly society providing sickness benefits at a rate of contribution according to age at entry calculated to provide enough revenue for the accumulating of a fund to meet the higher cost of claims in the later years of a member's membership.


Concentration of risk, as where an insurer may find that he has many policies on properties or liabilities that could result in losses occurring at one and the same time.

Accumulation (or accumulator) unit

A unit in a linked life assurance where the dividends or interest are not paid out but are added to the capital value.

Accumulation factor

In life assurance the amount payable in the event of survival secured by a single premium of 1, taking into account interest and the probability of survival.

Acquisition expenses

The insurer's expenses in obtaining a new insurance.

Act of God

An event that is the result of natural forces, arising without human intervention, which no human foresight could have provided against and of which human prudence was not bound to recognise the possibility.

Active underwriter

The person who conducts underwriting on behalf of a Lloyd's underwriting syndicate.

Actual deaths

Deaths that have occurred, as opposed to expected deaths.

Actual total loss

There is an actual total loss (a) where the subject matter of insurance is completely destroyed; (b) where it ceases to be a thing of the kind insured; or (c) where the insured is irretrievably deprived of it.


A person concerned with the application of probability and statistical theory to problems of insurance, investment, financial management and demography.

Ad hoc

For this purpose.

Ad valorem

According to the value.

Adaptable funding

A system of costing for pension schemes based on controlled funding (q.v.).

Added years

A number of years added to the service of a member of a pension scheme where each year gives entitlement to a fraction of pension and the member has either been credited with service with a previous employer or has paid additional voluntary contributions.


A document setting out agreed alterations to a reinsurance treaty or other contract.

Addition to age

Where a proposer is an under-average life the assurers in calculating the premium may apply a higher rate applicable to someone x years older.

Additional benefit

A benefit added to a policy beyond its standard cover.

Additional insurance

In some forms of insurance the insurers may require to be notified of additional insurances effected or may require the insured to warrant that he will not effect them.

Additional perils

Perils added to a fire policy, such as damage by storm, tempest or flood.

Additional premium

Extra premium charged either because the insurance is more hazardous than normal or because additional benefits are added to the policy.

Additional voluntary contribution

An additional contribution made voluntarily by a member of a pension scheme to augment the contributor's ultimate pension.

Adhesion contract

See Contract of adhesion.

Adjustable premium

A premium that is variable to correspond with the extent of the subject-matter of insurance, for example, according to variations in the number of persons insured or the value of goods covered.


See Average adjuster, Claims adjuster, Loss adjuster.

Adjusters' note

Explanatory remarks appended to a report by an Average adjuster (q.v.).


The calculation of a variable premium / The calculation of a loss.

Administration bond

A bond given against defaults by a person administering the estate of another.


A person appointed by the court to administer an estate, other than an executor named in a will / A person who deals with the day-to-day running of a pension scheme, who may or may not be a trustee.

Admitted assets

The assets of an insurance company that are recognised by a supervisory authority for the purpose of determining the company's financial condition (U.S.).

Admitted insurer

An insurer authorised to do business in a state (U.S.).

Admitted liability

A form of aviation liability insurance under which insurers agree to pay claims up to a low limit without discussing the question of liability, subject to a complete release of liability from the claimant.

Advance payments bond

A guarantee to one who makes an advance payment under a contract.

Advance premium

U.S. description of Deposit premium (q.v.).

Advance profits insurance

Business interruption insurance of the expected profits of a business newly starting.

Advanced call

See Call.


A business venture. The sending to sea of ship or goods.

Adverse selection

Same as Selection against the insurer.


A written declaration on oath.

Affiliated society

A friendly society with branches.


Assert positively / Ratify the judgement of an inferior court / Declare solemnly, without taking an oath, that one will give true evidence.


Hiring a ship to carry a cargo. The contract is expressed in a bill of lading.


In life assurance the age next birthday is commonly used for calculation of the premium. For annuities the age attained is used.

Age admitted

Phrase marked on a life assurance (or annuity) policy to indicate that the assurers agree the age of the life assured.

Age attained

The age last birthday of a life proposed for assurance.


A legal concept where one party acts for another (the principal) in affecting relations with another party. Used to describe the business of a person acting as an agent, e.g. for obtaining insurances.

Agency agreement

An agreement setting out the terms under which an agent may act for a principal.

Agency inspector

An insurance company employee who acts as liaison officer between the company and its agents.

Agency system

The organisation of an insurer's intermediaries.


Anyone who acts on behalf of another. A person who introduces purchasers of insurance to an insurer.

Agent's authority

The power, express or implied, of an agent to bind his principal.

Aggravated risk

A risk that presents some unfavourable feature from the point of view of insurance.

Aggregate excess of loss reinsurance

A limited form of marine stop loss reinsurance, providing cover on an excess of loss basis for losses arising from any one event (or any one vessel) in excess of the reinsured's retention up to an agreed limit, but only when the aggregate of claims otherwise recoverable under the excess of loss treaty exceeds a stated amount. A supplementary marine reinsurance treaty that permits the insured to reinstate cover when his right to reinstate cover under his original excess of loss treaty has been exhausted.

Aggregate limit of indemnity

The maximum amount that a liability insurer will pay under a liability policy in respect of all claims arising within a specified period of insurance.

Aggregate mortality table

A mortality table combining the experience of selected lives during a select period (q.v.) and thereafter.

Aggregate stop loss reinsurance

A reinsurance that pays any amount in excess of a stipulated sum in respect of claims arising from the insurer's whole portfolio in a given branch of insurance.


A provision in an excess of loss reinsurance contract whereby the cost of successive claims may be added together for the purpose of establishing the sum recoverable.

Agreed returns

Returns of premium payable to the insured in accordance with the express terms of the policy.

Agreed value policy

Same as Valued policy.

Aircraft hull insurance

The insurance of aircraft hulls as distinct from liability.

Aircraft or aerial devices

Damage caused to property on the ground by aircraft or aerial devices or articles dropped therefrom (excluding damage by sonic booms) is an additional peril that can be covered by a fire policy.

Aircraft passenger insurance

Insurance in respect of liability to aircraft passengers; also personal accident insurance to provide specified benefits regardless of such liability.


A passenger aircraft normally engaged in operating regular scheduled services over fixed routes.

Airport owners' and operators' insurance

Liability insurance for the owners and operators of airports.

Aleatory contract

A contract depending on an uncertain event or contingency.

Alien company

An insurance company established outside the U.S.A. (U.S.), Not to be confused with Foreign company (q.v.).

Alien enemy

The term comprises (a) subjects of a hostile state, and (b) persons of any nationality carrying on business in a hostile state. Persons in category (a), when carrying on business in the U.K. or in a country that is not hostile, are not, for the purpose of a contract of insurance, deemed to be alien enemies.


From elsewhere.

All Risks

Term used to describe a policy covering fortuities generally though not inevitabilities such as wear and tear or depreciation. Sometimes loosely used to describe a policy that covers a number of specified risks, though not all.

Allied company

A company linked with another whether one has acquired the other or is a subsidiary or the linkage is by way of amalgamation or merger.

Allocation amount

The proportion of the premium on a linked life assurance which is invested by the insurance company in units of a trust or an internal fund, the units being then notionally allocated to the policy for the purpose of calculating its benefits.

Allocation of surplus

Division of a life company's surplus, e.g., to shareholders and policyholders.

Allotment of bonus

The process of dividing up a life company's surplus among policies.

Alphabet brokers

The leading U.S. insurance brokers, known by their initials, e.g., J. & H. (Johnson & Higgins).

Always Open

Term used in placing open cover (q.v.) to denote that the insurance remains continuous until ended by cancellation.


Writing off part of the value of an asset in a company's books at intervals until the value of the asset is extinguished. Meeting the cost of a potential liability to pay a pension, by periodical payments.


Actuarial term for the total sum produced by the accumulation of a single sum or periodical payments at compound interest over a period.

Amount at risk

Actuarial term for the difference between the sum insured and the mathematical reserve.

Anchor Policy

Any Lloyd's policy form bearing the anchor symbol of Lloyd's.

Animals Act 1971

An Act governing liability for the actions of animals.

Annual Audit

Verification by accountants of the affairs of an insurance company or Lloyd's syndicate.

Annual premium method

A method of calculating premiums under a pension scheme. The insurance company calculates at the outset the cost of providing benefits and expresses it as a level annual premium, subject to additional premium if benefit entitlement increases.

Annual subscriber to Lloyd's

A person, not being a member of Lloyd's, who is admitted to Lloyd's on payment of an annual subscription without being entitled to underwrite.


One to whom an annuity is payable.


A series of regular payments / A contract that provides an income for a specified period, e.g., during life / The sum paid each year under 1 or 2.

Annuity bond

A deed evidencing the grant of an annuity.

Annuity certain

A series of regular payments made for a specified number of years.

Annuity option

The right to buy a pension when a lump sum becomes payable under a pension scheme.


An annuity certain (q.v.) where the first payment is made immediately the annuity is entered upon.


Where a policy is expressed as operating from a date before final agreement was reached on its terms it is said to be antedated.

Anticipated freight

Freight which a ship owner expects to earn but is likely to lose if his ship is lost.

Anticipatory credit cover

Credit insurance to protect a buyer who has made payments in advance of delivery.


Same as Selection against the insurer.

Anton Piller Order

A court order enabling a party to an action to enter the property of another party and to remove documents.

Any one bottom (or Any one policy)

Term applied by a reinsurer to a limit in a marine reinsurance treaty to avoid a potential accumulation of liability.

Apportionable annuity

An annuity under which a proportionate payment is made in respect of the period between the last regular payment and the date of the annuitant's death.


The division of an amount in some recognised proportion, e.g., in cargo insurance where several packages are insured for their global value, or in property insurance where two or more insurers must contribute to a loss.

Apprehensive period

A period during which normal rates for riot and civil commotion insurances are suspended because disturbances are occurring or are thought imminent.

Approved scheme

To qualify for tax relief an occupational pension scheme must be approved by the Superannuation Funds Office of the Inland Revenue. Full tax relief is available only to schemes which are set up under a trust and meet various conditions; these are called exempt approved schemes.

Aquacultural insurance

Insurance of fish farmers against the mortality of their fish.


Settlement of a difference by a person or persons agreed on by the parties in dispute. The arbitrator's decision is called an award.

Arbitration clause

A clause in a policy providing that certain differences which may arise between the parties shall be determined by arbitrators chosen in some specified way.

Architects', surveyors' and consulting engineers' fees

An item for such fees that may be incurred in the event of a loss under a property insurance may be included in the insurance.

Arranged total loss

A compromise settlement where a total loss has not in fact occurred.


Overdue premiums.

Arrests, restraints and detainments

A marine insurance policy refers to the peril of "arrests, restraints and detainments of all kings, princes and people...". This means political or executive acts but not war losses, arrests for local infringements of regulation, or arrests by ordinary judicial process.

Arrived damaged value

The value of cargo which has been damaged in transit, at the time of its arrival at the place where the adventure terminates.

Arrived sound value

What the value of cargo would have been if it had arrived undamaged at the place where the adventure terminates.

Articles of Association

The by-laws of a company, complementing its Memorandum of Association.

As expiry

Expression used where it is proposed that an insurance should be renewed on its previous terms.

As original

Term used in reinsurance to denote that the reinsurance is on the same conditions as the original insurance.

Assault risk

The risk that persons concerned with money will be assaulted in the course of their duties is insurable under a money policy.

Assessment insurance

A system of insurance whereby premiums are not fixed in advance but are calculated each year on the basis of the sum needed to maintain the insurers' solvency in the light of the claims payable and the insurers' expenses.


In life assurance, charging a premium estimated as sufficient to meet claims (and expenses) arising during the year without taking into account the increasing death risk in future years as age advances.


A person appointed to assess and agree on the settlement of a claim under an insurance policy. In modern fire insurance the term refers to such a person appointed by the insured, the insurers' appointee being designated an adjuster.

Assigned risk

Term used to designate an insurance that insurers generally are unwilling to accept of their own free choice but are compelled to accept by law or agreement (U.S.).


One to whom a right of property is transferred.


Transfer of a right/ The document making the transfer of a right. The right transferred may be an interest in the subject-matter of insurance, in the contract of insurance, or in policy moneys due to the insured.


One who transfers a right to another.


An individual elected as an Associate at Lloyd's for the purpose of entering the Room to provide services for under-writers as, e.g., a solicitor, a loss adjuster or an accountant.

Associated company

A company linked with another.

Association scheme

A programme for the insurance on specially designed terms of the members of an association.


Accept all or part of a risk.

Assuming company

A company accepting a reinsurance (U.S.).

Assumption certificate

A statement by a reinsurer that he guarantees that a party other than the ceding company will be paid.


Same as Insurance. Used commonly for the life business and in the traditional form of marine policy. Charles Babbage in 1826 suggested that assurance was a contract on the duration of life which must either happen or fail and insurance a contract relating to any other uncertain event which may partly happen or partly fail, but the distinction has never been universally accepted.


Same as Insured. Used commonly in life and marine insurance, in Lloyd's practice, and in the courts.


Same as Insurer. Used in life assurance and in the traditional form of marine policy

Atomic risks

The British insurance industry has formed pools for insuring the public liability and material damage risks of atomic installations, viz., atomic reactors and atomic power stations and plant (not part of or in any waterborne vessel or aircraft); any other premises or facilities related to the production of atomic energy or its incidental processes.Minor radioactive hazards from isotopes, X-ray machines and particle accelerators are insured by individual insurers.


The coming into force of an insurance / The seizure of property.

Attachment date

The date on which insurance cover comes into force.

Attachment of risk

The coming into force of an insurance.

Attachment slip

A supplementary slip, attached to the original slip, used when it is necessary to obtain an insurer's agreement, by signature, to an amendment or addition.

Attestation clause

A clause in a policy evidencing its signature or sealing,


One appointed to act for another / A lawyer (U.S.).


Examination by accountants of the records of an insurer to check that they are properly prepared and that the financial position is as stated. In the case of Lloyd's underwriters the auditors must also satisfy themselves that Lloyd's regulations have been complied with.


The award of discretionary extra benefits from a pension scheme.


The power granted to someone to act, e.g., to transact insurance in a country.


The power given by a principal to an agent to act on the principal's behalf.

Automatic cover

A provision whereby an insurance applies despite a change of circumstances such as a change of interest or an increase in values, without prior action by the insured being required.

Automatic cover clause

A clause in an engineering policy extending cover to newly acquired plant without prior notification by the insured. (Subsequent notice may be required.)

Automatic personal accident insurance

In aviation insurance a form of personal accident cover arranged by the aircraft operator for named or unnamed passengers. Benefits are payable without the insurers having a right to a release of liability from the passenger. Incorrectly, an "admitted liability" (q.v.) insurance.

Automatic reinstatement

A provision in a policy that in the event of a loss the sum insured shall not be reduced by the amount of the loss.

Automatic reinsurance treaty

A treaty under which direct insurances are automatically reinsured by the treaty.


The arithmetic mean. In marine insurance, loss or damage. In non-marine property insurance, where average is said to apply and there has been under-insurance, the insured's claim is reducible in proportion to the under-insurance.

Average adjuster

One who assesses and apportions losses in marine insurance, notably general average losses.

Average agent

An agent engaged in the assessment of cargo claims and the surveying and treatment of damaged goods.

Average bond

See General average agreement. U.S. description of Average guarantee (q.v.).

Average clause

Same as Average condition.

Average condition

A condition in a non-marine property insurance policy that if the property value has been understated the insured's claim for a loss is reduced proportionately to the undervaluation.

Average disbursements

See General Average disbursements.

Average guarantee

See General Average guarantee.

Average irrespective of percentage

Partial loss is payable without reference to the franchise on the policy (marine).

Average rate

A rate used in fire insurance when several properties are insured for one sum. A weighted average is used, taking into account the rate and the sum insured in respect of each property.

Average salary scheme

A pension scheme in which benefits are based on the average of annual earnings during employment.

Average statement

The statement prepared by an average adjuster to show the contributory values, losses and expenses applicable to a general average (q.v.).

Average unless General

The insurance will pay for particular average but not general average (q.v.).

Average warranty

An express warranty in a marine insurance policy stipulating the franchise or excess applicable to partial losses.

Aviation hull insurance

In aviation insurance practice hull insurance is distinguished from cargo, passenger and liability insurance.


The decision of an arbitrator.