'O' group

An informal meeting at Lloyd's of the Chairman, Deputy Chairmen and senior officials, to discuss current problems and events.

Obiter dictum

Any statement in a judgment that is not essential to the principle of law on which the court's judgment is based.

Object/time procedure

A rating method for construction insurance whereby the premium rate is split into a time-related part and a non-time-related part.

Objective risk

The measure of the degree of variation in the proportion of actual to expected events.


In Scots law, one who binds himself to another, as by giving a bond.

Obligatory reinsurance

Reinsurance that the insurer is bound to offer to a reinsurer by the terms of a reinsurance treaty or by law.

Oblige line

Same as Accommodation line.


One to whom a surety such as an insurance company gives a bond in respect of a principal.


One who binds himself to another, as by giving a bond.

Occasional business use policy

A motor insurance policy indemnifying an employer and any employee who uses a vehicle on the employer's business when the specific insurance covering the vehicle is deficient, for example, because it does not cover business use.


The use to which a building is put by its occupiers.

Occupational accident

An accident arising out of and in the course of an occupation.

Occupational classification

A grouping of occupations for the purpose of rating, e.g., personal accident insurances.

Occupational disease

Impairment of health attributable to one's occupation.

Occupational extra

Additional premium imposed on an insured because his occupation is thought to render his insurance more hazardous.

Occupational hazard

A danger inherent in an occupation.

Occupational Pensions Board

A governmental body which supervises pension schemes in relation to contracting out of the state scheme and their satisfaction of statutory requirements as to preservation of pension rights and equal access to pensions.

Occupier's Liability Act 1957

An Act that amended the law relating to the liability of occupiers of property for accidents at their premises.


When insurers insert in their policies a limit for "any one occurrence" they seek to avoid the ambiguity of a limit "for any one accident". Thus, if two passengers in a vehicle are injured in a crash it can be claimed that there were two accidents, one to each passenger, but that there was only one "occurrence".

Occurrence basis

A policy is said to be on an occurrence basis if it covers the consequences of events occurring during a period of insurance even though claims may not arise until later.

Ocean marine insurance

Insurance of seagoing ships, cargoes and freights, as distinct from inland marine insurance (q.v.) (U.S.).

Odd time

A period added to a calendar year for the purpose of making the renewal date of an insurance the date required by the insured.

Off risk

An insurer is said to be off risk when an insurance has been terminated.

Off slip

A Signing slip (q.v.) copied from an original slip, used to sign risks off open covers, open slips and treaty reinsurance contracts.

Offer and acceptance

One of the essentials of a valid contract is that there must be full acceptance by one party of an offer made by the other. In matters of insurance the offer sometimes emanates from the insured and sometimes from the insurer.

Offer and acceptance note

A note requesting reinsurance with a space for reinsurers to signify their acceptance. They return it to the ceding insurer by way of confirmation.

Offer basis

The basis of a long-term agreement in fire insurance whereby the insured undertakes to offer his insurance to the insurer for a number of years at each renewal in consideration of a discount off the premium, but the insurer does not bind himself to accept the offer.

Offer note

Same as Request note.

Office premium

The premium on a life policy as charged to the assured.


An impartial person appointed to investigate and, if required, to adjudicate on complaints by consumers of services such as insurance, banking, building societies, and pensions.

Omnibus clause

A clause in a liability insurance policy extending the indemnity to persons other than the insured, such as his servants.

Omnibus insurance

Insurance of the principal risks involved in a construction contract that is effected by the owner on behalf of himself and the various other parties concerned, thus avoiding subsequent disputes as to whose liability any given occurrence gives rise to.

On gross

Term used to describe the marine insurance premium to which a discount is to be applied the gross premium before any deductions.

On net

Term used to describe the marine insurance premium to which a discount is to be applied the gross premium less any previous deductions.

On risk

The insurer is said to be on risk once an insurance attaches.


Overhead expenses.

One disaster or casualty clause

A clause in a reinsurance treaty to provide that all losses during a short period, usually 12 hours, shall be considered as caused by one disaster or casualty, e.g., a riot, a cyclone, or an earthquake, for the purpose of applying the limit of liability under the reinsurance.

One outlet rule

A rule at Lloyd's that a broker must not be unduly dependent on one insurer in placing his business.

One source rule

A rule at Lloyd's that a broker must not be unduly dependent on one predominant source of business.

One-man pension arrangement

A pension arrangement for an individual employee.

Open cover

Reinsurance where the reinsurer agrees to accept obligatorily a share of any business of a specified kind that is offered. A contract for cargo insurance to cover all shipments from time to time as declared, a policy being issued in respect of each. The arrangement is subject to cancellation on notice by either party.

Open driving policy

A motor insurance policy with no restriction on who may drive provided the driver is not disqualified from holding a licence.

Open market option

An option open to the purchaser of a deferred annuity to use the proceeds of the contract, when the annuity becomes payable, to purchase an annuity from another insurer.

Open policy

A marine insurance policy which covers such risks as may be declared during the currency of the policy with no aggregate limit of cover / A policy on which the sum insured has no yet been exhausted by declarations / Formerly, an unvalued policy (q.v.).

Open slip

A form of slip used to cover a merchant contractor with a large contract to fulfil by several shipments, the total value of which is known in advance. Each shipment is declared and policies issued until the insured value is exhausted.

Open treaty

Same as Facultative obligatory treaty.

Open year

A year of account or insurance in respect of which the financial outcome remains to be determined.

Opening the warranty

In marine insurance some exclusions begin with the words "Warranted free of...". Such a warranty is said to be opened when the insurers modify the extent of the exclusion.

Operating plan

The insurer's intended course of action in conducting his business.

Operative clause

That part of a policy that states what insurance is to be granted.


A choice of alternative courses open to a party to a contract. In life assurance, for example, the assured may be entitled to effect further assurance without evidence of health, or to take the sum assured on maturity of his policy either in cash or in the form of an annuity.

Optional benefits

Benefits that may be added to an insurance policy at the insured's option, on payments of additional premium.

Optional treaty

Same as Facultative obligatory treaty.

Optionally renewable

Annual insurances are renewable only if both insurer and insured opt to renew them. In long-term life assurance and permanent health insurance the insurer is bound to renew during the stated term on tender of the premium by the insured.

Or as Original

Term used by a reinsurer to indicate that he accepts not only the risk as it is presented to him but also any variation that may exist in the original policy. The wording protects the ceding insurer in case an error has arisen in transmission of the facts about the risk.


A request for insurance received by an insurer / A friendly society with branches.

Ordinary bond

A Customs and Excise bond covering a single transaction, as opposed to a general bond.

Ordinary business

Ordinary life assurance (q.v.).

Ordinary freight

The reward paid to a shipowner for the carriage of goods in his ship to the port of delivery.

Ordinary life assurance

All life assurance other than industrial life assurance (q.v.).

Ordinary share

A share in the capital of a company which gives the holder a right to share in the distribution of its profits and in the residue of the company's assets after it has paid its creditors and preference shareholders whatever is due to them.

Original conditions

The conditions in an insurance policy which is the subject of a reinsurance.

Original cover

The original slip used for placing an open cover.

Original deductions/discounts

The deductions or discounts allowed by a ceding insurer on a policy which is the subject of reinsurance.

Original gross premium

The premium charged by a ceding insurer to the original insured without taking into account any discounts by way of commission or the like.

Original insured

The insured under a policy which becomes the subject of reinsurance.

Original net premium income

The net premium income of a ceding insurer.

Original net retained premium income

That part of the net premium income of a ceding insurer that is retained by him after paying for reinsurance.

Original rate

The rate of premium charged on an insurance which has become the subject of reinsurance.

Original slip

The slip used for placing an insurance on which underwriters' acceptances are indicated by a line stamp and writing. From it are prepared duplicate slips and signing slip s (q.v.).

Original terms

A reinsurance expression signifying that the reinsurance is granted on the same conditions and at the same rate of premium as the original insurance.

Ostensible authority

The apparent power of an agent to bind his principal, whether or not he has been granted that power.

Other insurance clause

A clause in an insurance policy which restricts the right of the insured to effect other insurance on the risk or which seeks to provide how a claim shall be apportioned if other insurance has been effected.

Outstanding claims advance

A reinsurance treaty may provide that if claims payable by the reinsurer exceed the reserve held by the original insurer for the payment of claims the reinsurer shall make an immediate payment, or advance, without waiting for the claims to appear in the periodic accounts.

Outstanding claims portfolio

An amount payable by a cedent to a reinsurer in consideration of the reinsurer accepting liability arising under a contract of reinsurance in respect of reinsurance claims incurred and arising prior to a fixed date.

Outstanding claims reserve

A reserve held by an insurer to meet claims notified but not yet paid.


The amount or weight of the cargo discharged from a ship / The condition of a cargo on discharge.

Outwards reinsurance

Business ceded by an insurer by way of reinsurance to other insurers or reinsurers.


Additional premium payable on a marine insurance open cover or policy when the insured goods are carried on a vessel which does not come within the scope of the Institute Classification Clause (q.v.), usually because it is too old / The excess amount of a liquid cargo which weighs more when landed than the weight reported when shipped.

Overall insurance cover

A single insurance on a construction project. Also called wrap-up insurance cover.


The (impermissible) act by a broker, when closing a placing, of allotting to an underwriter a larger line than the underwriter has written.

Overdue Market

A market for the reinsurance of a marine insurance where a ship is overdue or has suffered a serious casualty which may result in a total loss, and thus a means for original underwriters of quantifying, and possibly cutting, their loss.


Fixed charges which do not vary proportionately with the amount of business done.


Insuring property for more than its value. May be inadvertent or fraudulent.

Overlapping insurance

Insurance by two or more policies the cover of which is in part duplicated.


An amount of insurance or reinsurance that exceeds the normal capacity of the insurer or reinsurer after allowing for automatic reinsurance facilities. An insurer who finds himself with more risk than he considers it prudent to bear is said to be overlined.


The action of a broker in obtaining acceptances of lines on an insurance which exceed 100% of the insurance offered.


Same as Overriding commission.

Overriding commission

A discount allowed to an agent or ceding insurer in addition to normal commission. In reinsurance it is commonly by way of contribution to the direct insurer's overheads. In direct insurance it may be payable to an employee or agent in respect of insurances written within his territory, even without his mediation.

Oversight clause

A provision in a reinsurance treaty that either party may correct a failure to comply with the agreement due to oversight or misunderstanding.


In Lloyd's practice it is common for a broker to obtain subscriptions from underwriters for more than 100 per cent for a proposed insurance. The share of each syndicate in the insurance is then reduced proportionately.

Own damage

In motor insurance, damage to the insured's own vehicle.

Own risk

A risk that a person retains for himself, without insuring it.

Owners' clauses

Clauses drafted by shipowners or large exporters or importers for use in their marine insurance policies.

Owner's liability

Liability of the owner of a building (as distinct from an occupier) for claims in respect of bodily injury or damage to property. See also Shipowner's liability.

Owner's trading freight

The addition to the cost of the goods of a shipowner (or a charterer) carried in the ship owned (or chartered) which he charges at the port of delivery as the price of carriage.