Package policy

A policy that covers a number of different perils, e.g., a householder's policy.

Paid-up pension

A pension payable at some future date for which no further contributions have to be made.

Paid-up policy

A policy under which no further premiums are payable but some cover remains in force.

Paid-up share

A share in a limited company on which the face value has been paid up.

Pair and set clause

A clause in a property insurance policy which limits the insurer's liability for loss or damage to one constituent of a pair or set to the value of that constituent only.

Par value

Same as Nominal value.

Paramount clause

A clause in a contract that in the event of ambiguity overrides all other provisions of the contract.

Paramount War Clause (Cargo)

A clause in a marine cargo reinsurance contract which stipulates either that war risks cover is subject to terms and conditions no wider than those of the relevant London Institute War Clauses or that the reinsured shall apply the limitations of the U.K. Waterborne Agreement; and that war risks shall be cancellable at seven days' notice by either party.

Parent company

A company that owns another company.

Pari passu


Paris Club

An international forum in which a body such as the Exports Credits Guarantee Department can negotiate claims against countries seeking to reschedule their debts.

Parity clause

A clause in a marine insurance contract which is one of two or more such contracts and which provides that where there are differing rates of premium under them the lower rate shall prevail.

Parol evidence

Evidence by word of mouth or by documents not under seal. It is a general rule that such evidence is inadmissible to override a written contract, such as an insurance policy, unless fraud or mistake is alleged.

Part of

A reinsurance term used to make it clear that the reinsurer is accepting part only of the risk covered by the original insurance and that in the event of a short closing (q.v.) he will not be saddled with the whole risk.

Partial disablement

Reduction in one's ability to work, although one can do some work.

Partial indemnity clause

A clause in a Knock-for-knock agreement (q.v.) which applies where one insurer does not cover the damage to his insured's vehicle or covers it subject to a large excess. In any such case the insurer concerned agrees to reimburse the other insurer one-half of his payment for damage to the vehicle he insures regardless of the question of legal liability for the accident that caused the damage.

Partial loss

A loss not amounting to a total loss.

Participating policy

An insurance policy the holder of which is entitled to a share of the insurer's surplus.

Participating preference share

A preference share (q.v.) which gives the holder, in addition to his right to a fixed dividend, a limited right to a share in the residual profits of the company.


There is said to be participation when a number of insurers each accept a portion of an insurance / Sharing by a life assurance policyholder in the assurance company's surplus / Belonging to the state pension scheme for earnings-related benefits / Having a say in the running of a pension scheme.

Particular average

In marine insurance, partial loss of or damage to the subject-matter of insurance.

Particular charges

In marine insurance, expenses incurred by the insured or his agents to prevent or minimise a loss of the subject-matter insured from an insured peril. The term is customarily confined to charges incurred at destination.

Partnership assurance

Life assurance for partners an important object of which is to cope with the situation arising when the death of a partner gives rise to the need for paying off his share in the partnership.

Part-time agent

An agent who, as a subsidiary activity, introduces business to an insurer on which he receives a commission.

Party wall

A wall separating two buildings in respect of which the occupier on each side has a partial right.

Passenger liability

The limit of liability of a carrier to passengers for bodily injury varies with the nature of the transportation. Liability to passengers in aircraft is restricted in amount by international conventions and legislation. A shipowner's liability to passengers is limited by legislation. The user of a motor vehicle may not contract out of his liability to passengers and must insure in respect of it without limit of amount.

Passing off

A person who passes off his goods so as to mislead people into thinking that they are the goods of another is subject to an action. He may insure in respect of his liability under a policy covering infringement of industrial property rights.

Past service benefit

Benefit under a pension scheme in respect of years before a person became a member of the scheme.

Past service pension

A right granted to an employee at the inception of a pension scheme, or when benefits are improved, to receive a pension on retirement related to his service before the scheme started.


A monopoly granted by the state to an inventor of a manner of new manufacture for a limited number of years in return for his disclosure of his invention.


A marine cargo insurance term (Dutch and German) relating to a provisional annual premium paid in advance.

Pay as may be paid

A reinsurance term providing that the reinsurer will not question payment of any claim for which the insurer is liable under the original insurance.

Pay as paid policy

A policy on livestock under which insurers agree to pay a supplement of a given percentage of compensation paid for slaughter of stock by the Department of Agriculture when slaughter is ordered to prevent the possible spread of a disease.

Pay-as-you-go system

The system of paying benefits such as retirement benefits as they accrue without making provision for their cost in future years.

Payment in lieu

A payment by a pension scheme to the state scheme whereby the pension scheme transfers to the state liability to pay a pension to a person contracted out of the state scheme.

Payment order

An authority given by an insured to a broker to empower the broker to collect a claim on the insured's behalf.

Payroll basis

Where business interruption insurance is arranged on a payroll basis the rate charged on salaries and wages is lower than that on gross profit.

Peak risk

An exceptionally large insurance in a portfolio of smaller insurances.

Peak value clause

A clause used in cargo insurance on cotton which provides that the sum insured shall be the peak value pertaining in the cotton market at the time of loss.


The maximum sum named in a bond as becoming payable by the surety in the event of default by the person guaranteed.


A regular payment to a former employee or the like.

Pension administration

The work of managing a pension fund and calculating and paying pensions.

Pension fraction

Where in a pension scheme the premium depends on length of service or employment a given fraction of pay is used in calculating the pension due, e.g., 1/80 per annum.

Pension fund

Assets earmarked for the payment of pensions.

Pension guarantee

A guarantee that income payments under a pension scheme will be continued for a specified number of years even if the beneficiary dies during those years.

Pension mortgage

A mortgage loan by a pensions insurer, repayable out of the lump sum available at maturity of the insurance.

Pension plan

U.S. term for Pension scheme (q.v.).

Pension scheme

A systematic provision for retirement pensions and associated benefits.

Pension transfer scheme

An arrangement among groups of pension schemes or employers whereby a member of one pension scheme in the group may change to another without losing pension rights.

Pensionable salary

A definition in a pension scheme of what constitutes salary for the purpose of the scheme, e.g., whether overtime and commission are to be taken into account and how. (See Final pensionable salary.)

Pensionable service

A definition in a pension scheme of the nature and period of service to be taken into account in determining eligibility for membership of the scheme and the extent of pension entitlement.

Pensioneer trustee

A person approved by the Occupational Pensions Board as qualified to act to see that the conditions of a one-man pension scheme are observed.

Pensioner's rights premium

A payment to the state to ensure that members of a discontinued pension scheme who have reached state pension age receive from the state their guaranteed minimum pension (q.v.).

Pensions managed fund

A fund conducted by an insurance company for the provision of pensions, the investment profit being used for the benefit of the fund or of the employer, The insurance company may also administer the benefits / A pensions arrangement where outside investment managers look after the fund.

Per capita

(Counting) by heads.

Per capita premium

A premium payable per head in respect of each of a number of persons.

Percentage adjustments

An increase (or decrease) by a percentage of fire insurance rates made to reflect changes in experience in the various classes.

Percentage of fire loss insurance

Insurance of consequential loss under which the sum payable is expressed as a percentage of the payment made for material damage.

Performance bond

A guarantee that a contract for construction will be carried out.


A possible cause of loss, such as fire.

Perils of the sea

The causes of fortuitous accidents or casualties of the seas, such as stranding, collision and heavy weather, but not the ordinary action of winds and waves which is in the nature of wear and tear.

Period policy

Same as Time policy.

Permanent disablement

Permanent loss of ability, in whole or in part, to work.

Permanent health insurance

Insurance against disablement by sickness or accident which is renewable at the insured's option up to a stated age. The insurers are bound to accept the renewal.

Perpetual insurance

A system of fire insurance whereby the insured makes a deposit, either in a lump sum or by instalments, representing a percentage of the value of property, the interest on the deposit being receivable by the insurer for payment of claims. The insured may terminate the insurance by withdrawing his deposit. Some schemes provide for a call on the policyholder if the insurance fund is depleted.


An annuity payable without limit of time.


A measure of the extent to which policyholders maintain their cover with an insurer by renewal of their policies.

Persistency rate

A measure of the extent to which insurances on which premiums are payable annually are renewed.

Personal accident and sickness insurance

Insurance for fixed benefits in the event of death or loss of limbs or sight by accident and/or disablement by accident or sickness.

Personal accident insurance

Insurance for fixed benefits in the event of death or loss of limbs or sight by accident and/or disablement by accident.

Personal injury

Harm to the person, more safely referred to as bodily injury, since personal injury might be deemed to include damage to a person's reputation by defamation or the like.

Personal liability insurance

Insurance of an individual's liability to third parties, for injury or damage by negligent acts other than in connection with the use of a motor vehicle.

Personal pension plan

A fund created by an individual to buy a pension on retirement.

Personal property

The right or interest of a person in movable property as opposed to real property.

Personal reserve

A fund which an underwriting member of Lloyd's is obliged to accumulate as a reserve to meet potential liabilities under insurances written for his account. (Cf. Special reserve ).

Personal surety

An individual who acts as guarantor to answer for the conduct of another who is referred to as the principal.


Personal property. Pure personalty is property unconnected with land. Mixed personalty includes interests in land such as leaseholds.


A combination of unit-linked pure endowment and term assurance.

Physical hazard

A physical feature that introduces or increases the possibility of a loss arising from a peril or one that may influence the extent of a loss.


Petty theft without breaking open cases.

Pipeline premiums

Premiums in respect of risks which began to run before the end of an accounting period but are not entered in the accounting record until the next period.


Persons attacking property at sea, including passengers who mutiny and rioters who attack a ship from the shore.


Effecting an insurance / An insurance which has been effected.


A party who brings an action seeking legal redress. In Scots law called the pursuer.

Planned funding

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

Plurality of risk

There is said to be plurality of risk where a fire insurance policy covers more than one location or set of property.

Pluvius insurance

Insurance in respect of loss arising from adverse weather conditions, notably heavy rainfall which causes the cancellation of an outdoor event.


Division of insurance intermediaries into two categories - those placing business for one company only, and those free to place business with any insurer - without intermediate categories.

Policies incepting basis

A basis for a reinsurance treaty whereby the test of the reinsurer's liability is when the original insurance was effected - rather than whether the loss occurred or was notified during the reinsurance period.

Policies of Assurance Act 1867

An Act enabling assignees of life assurance policies to sue for the policy moneys in their own name.


A document setting out the terms of a contract to insure.

Policy conditions

The terms to which an insurance is subject.

Policy fee

A charge by an insurer for issuing a policy, as distinct from the premium.

Policy loan

A loan on the security of a long-term life assurance.

Policy owner

The person with proprietary rights in an insurance policy. The term is used in life assurance effected on the life of another to distinguish the owner of the policy from the person on whose life the assurance depends.

Policy proof of interest

A policy under which insurers agree to pay a claim without requiring the insured to prove that he has an insurable interest. By the Marine Insurance Act 1906, s.4(2), such a policy is deemed to be a gaming or wagering contract and is therefore unenforceable in a court.

Policy register

A record kept by an insurer of policies effected.

Policy reserves

Funds held by an insurer for the fulfilment of his obligations under policies.

Policy signing office

An office conducted jointly by a number of insurers, either Lloyd's underwriters or companies, where policies are signed on their behalf.

Policy year

The year that a policy runs, commencing with the inception date or the renewal date.

Policyholder (or Policy-holder)

The insured person.

Policyholders Protection Act 1975

An Act setting up the Policyholders Protection Board which is required to settle claims made by United Kingdom policy holders and third parties where the insurance company concerned is financially unable to meet them, the cost being met by a levy on other insurance companies and, in some cases, on intermediaries who placed life assurance with the insolvent company.

Policyholders' surplus

That part of the assets of an insurance company that is available for the benefit of policyholders.

Political risks

In credit or investment insurance, those risks that arise from political actions and are beyond the control of either party to the contract, such as currency transfer delays, moratoria, war, civil war or expropriation.


Damage to air, water, land, property or the atmosphere by some noxious emanation.


A pool is created when a number of insurers agree that all insurances of a defined character shall be shared among them in specified proportions.

Pool schemes

Arrangements at Lloyd's whereby very small premium or claim payments are pooled rather than being accounted for individually.

Port risks insurance

Insurance of a vessel in port, the cover for collision liability and protection and indemnity risks being more extensive than that provided under a marine insurance hull time policy.

Port to Port

The period of cover given by a voyage insurance. For goods the cover runs from the loading of goods on the vessel until the goods are discharged on to the quay at destination or into the consignee's own craft. In hull insurance the risk attaches when the vessel sails and ceases when the vessel is moored in good safety at the port of destination.


The extent to which pension rights are transferable on a change of employer.


The totality of the business of an insurer or reinsurer / A segment of the business of an insurer or a reinsurer, e.g., fire insurance business is called the fire portfolio.

Portfolio consideration

The premium payable for the reinsurance of a portfolio of insurance or reinsurance business to which may be added an extra payment to cover losses already outstanding or other charges.

Portfolio entry

At the outset of a reinsurance treaty a definition is necessary of the insurances to be included, viz., whether the treaty applies to business in force at its inception or only to subsequent insurances and renewals.

Portfolio insurance

Insurance against a fall in the value of investments.

Portfolio mix

The constituents in an insurer's portfolio of insurance or reinsurance.

Portfolio premium

The premium payable for the reinsurance of a portfolio of insurance or reinsurance business.

Portfolio reinsurance

The cession by way of reinsurance of a portfolio (q.v.).

Portfolio return

Descriptive of the procedure when a reinsurance treaty is terminated and the reinsurer returns the proportion of premium relating to insurances in force and has no liability for claims thereunder.

Portfolio run-off

Descriptive of the procedure when a reinsurance treaty is terminated but continues to apply to premiums and further losses in respect of insurances in course.

Portfolio transfer

The transfer of the portfolio (q.v.) of one direct insurer re another.

Positions bond

A bond covering persons occupying stated offices.

Possible maximum loss

Same as Maximum possible loss.

Power of attorney

A written instrument empowering a person to act on behalf of another.


Same as Recital clause.

Pre-Credit risk

In credit insurance, risks arising before the time for despatch of the goods to be sold.

Pre-existing condition

A state, usually of health, which existed before an insurance came into force.

Preference share

A share in the capital of a company which gives the holder preference over the holders of ordinary shares in the payment of dividends up to a stated amount, and in return of capital in a liquidation.

Preferred ordinary share

A share in the capital of a company which gives the holder the right to a fixed dividend, after payment of any dividend due to the holders of preference shares, in preference to the payment of dividend on other ordinary shares.


The beginning of an insurance policy or conveyance which sets forth the names of the parties and the consideration / The subject of a conveyance, such as land or buildings, specified in the premises (1 supra) of the deed / A building with its grounds and appurtenances, or that part occupied by the insured.


The consideration payable by the insured for an insurance / The excess over the original value of a thing or over its par value.

Premium advice note

A note sent to an insurer or a policy signing office by an insurance broker when the broker's client is debited with the premium or credited with a return premium.

Premium base

See Base premium.

Premium earned

That part of a premium that relates to so much of the period of insurance as has already run.

Premium income

The income of an insurer from premiums.

Premium limit

The maximum total of premiums that may be accepted on behalf of an underwriting member of Lloyd's. The limit is governed by the underwriter's means and the amount of the premium deposit he has made.

Premium loading

See Loading.

Premium rate

The price per unit of insurance.

Premium receipt

An acknowledgement that a premium has been received.

Premium receipt book

A book held by the holder of industrial life assurance in which the collector notes the premiums paid.

Premium reserve

In reinsurance the direct insurer may be allowed to retain part of the reinsurance premium to set up a reserve out of which to make payments of claims and premium returns.

Premium tax

A tax on insurance premiums.

Premium to be agreed

See Premium to be arranged.

Premium to be arranged

Phrase used when an insurer is asked to grant cover pending determination of the premium. By the Marine Insurance Act 1906, s.31, a reasonable premium is payable in such circumstances.

Premium transfer

Method used at Lloyd's where a risk is insured for more than twelve months. The premium for the period in excess of twelve months is paid over, as an internal transaction, by the original syndicate to its successor syndicate as reconstituted for the ensuing year.

Premiums reducing

In life assurance circumstances may arise where after a period premiums are payable at a reduced rate. For example, in a few cases, bonuses under with-profit policies are applied to reduce progressively the premiums payable rather than to augment the sum assured.

Premiums Trust Fund

The fund into which premiums must be paid at Lloyd's, the money being held in trust for fulfilment of insurance contracts.


Creation (or extinguishment) of a legal right or obligation by the lapse of time.


Keeping a right to a future pension from a scheme one has left.

Preserved pension

A deferred pension due to someone who has left a pension scheme. Since 1985 the rate of pension is increased annually to allow for inflation.


It is the duty of the insured to take all reasonable steps to prevent or minimise a loss, See Loss prevention.

Primary carrier

An original insurer as distinct from a reinsurer (U.S.).

Primary exposure

Term used in aviation insurance to refer to risk arising from occurrences which although they may be serious have no catastrophic feature.

Primary insurance

Insurance of the initial layer of cover as distinct from excess insurance.

Primary reinsurance clause

A clause occasionally found in a reinsurance contract, intended to make the reinsurers directly responsible to the original insured for the payment of losses.

Primary reinsurer

A reinsurer who also transacts direct insurance as opposed to a professional reinsurer.


One who uses an agent to perform some act on his behalf / One whose obligations are guaranteed by a surety under a bond.

Principal office

In life reassurance, the ceding assurer.

Private health insurance

Insurance to pay the fees for private medical or hospital treatment.

Private insurance

Insurance transacted by private enterprise insurers.

Private wording scheme

Same as Special wording scheme.

Pro rata

In proportion.

Pro rata reinsurance

Same as Proportional reinsurance.


The likelihood of an occurrence.

Probable maximum loss

An estimate of the maximum loss that is likely to arise on the occurrence of a single event considered to be within the realms of probability, remote coincidences and possible but unlikely catastrophes being ignored.


Legal recognition that a will is valid.

Procuration fee

A fee paid to the introducer of an insurance.


One whose business it is to obtain insurances for an insurer / The original broker who obtains a proposal for business effected at Lloyd's through a Lloyd's broker.

Products guarantee

Indemnity against claims arising out of the failure of a product to fulfil its intended function.

Products liability insurance

Insurance against the liability of a producer, supplier, tester or servicer of goods for injury to third parties or loss of or damage to their property caused by the goods.

Professional indemnity insurance

Indemnity to a professional man or firm against legal liability to compensate a third party who has sustained injury, loss or damage through breach of duty.

Professional reinsurer

A company that confines its business to reinsurance and does not undertake direct insurance.


See With profits.

Profit commission

A commission paid by an insurer in proportion to his profit on specified insurance business.

Profits insurance

Insurance against the loss of profits resulting from the occurrence of an untoward event such as a fire or machinery breakdown.


A system in group pensions and health insurance whereby if a scheme is profitable to insurers they will periodically return a proportion of the amount by which premiums exceed claims.

Project insurance

A combined insurance for a construction project, arranged by an employer, usually in the names of the employer and all the contractors.

Promissory warranty

A warranty (q.v.) that a particular state of affairs does or does not exist or that the insured has or has not acted in a particular way. It may be either a warranty as to the present situation, or a continuing warranty which promises that the state of affairs, or the action or non-action, will continue.

Proof of loss

A statement by the insured giving details of his loss / In law the onus of proving that a loss has occurred and that it was caused by an insured peril rests with the insured.

Property damage insurance

Insurance covering damage to the physical property of third parties (U.S.).

Property insurance

Insurance of physical property belonging to the insured or for which he is responsible.

Property-linked policy

A life insurance policy the benefits of which are calculated according to the value from time to time of specified properties.

Proportional reinsurance

Reinsurance of a part of an original insurance, premiums and losses being shared proportionately between reinsurer and insurer.

Proportional rule

The application of the Average condition (q.v.).

Proportionate benefits

Where, in permanent health insurance, the insured, while totally disabled from following his occupation, is able to earn something in another occupation, the insurance usually provides for payment of benefit proportionate to his loss of earnings compared with his previous average earnings.


An application for insurance, often on a printed proposal form / Formerly, the insurance company's prospectus, which set out the conditions on which insurance would be granted.

Proposal form

See Proposal.

Proprietary life company

A life assurance company owned by its shareholders.


Carrying on an activity with a view to accomplishing something / Bringing someone before a court to face an accusation.

Prosecution clause

A clause in an insurance policy covering loss by dishonesty which obliges the insured, if so required by the insurer, to prosecute the person alleged to have caused the loss.


One who is looked on as a potential policyholder.

Prospective rating

Basing a premium, in whole or in part, on the loss experience of a previous period.


A publication descriptive of services offered, e.g., a type of insurance / A publication describing a proposed venture, e.g., inviting applications for shares in a company.

Protected rights

Rights under a pension scheme which a member retains despite a change in the scheme.

Protected risk

Property subject to some special measure of protection, such as a burglar alarm.


Measure taken to guard against loss / The financial safeguard given by the existence of insurance.

Protection and Indemnity club

A mutual association of shipowners to protect themselves financially against certain marine risks. See Protection and indemnity risks.

Protection and indemnity risks

Certain risks have in the past not always been readily insurable in the marine insurance market and shipowners have formed mutual associations (clubs) to cover them. Protection risks include quarantine expenses, liabilities to crews, and collision and impact damage, wreck removal expenses and liability under towage contracts, also liability for damage to other vessels apart from collision, etc. Indemnity risks include shipowners' liability for cargo lost or damaged, fines for inadvertent immigration or customs offences, etc.


A declaration by the master of a vessel regarding damage to the vessel or its cargo.

Protracted default

Credit insurance protects the creditor against non-payment of a sum due, whether the non-payment arises from insolvency on the part of the debtor or his failure to pay over a substantial period, usually 90 days after due date. This latter is called protracted default.

Provident fund

A fund into which payments are made by individuals and their employers for the ultimate benefit of the individuals.


A term in a contract / An amount retained or written off to provide for (a) depreciation or a fall in the value of assets or (b) a known liability even though its exact extent cannot as yet be determined. Often used interchangeably with reserve (q.v.).


A condition inserted in a contract on the observance of which the validity of the contract depends.

Proximate cause

Every event is the outcome of a chain (or net) of previous events, but in the words of Bacon "It were infinite for the law to consider the causes of causes, and their impulsions one of another; therefore it contenteth itself with the immediate cause". This immediate or effective cause, not necessarily that closest in time to the event, is termed the proximate cause.


An abbreviation or combination of letters used in Lloyd's practice to identify a broker or underwriting syndicate.

Public adjuster

One who negotiates settlement of a claim on behalf of the insured (U.S.).

Public Authority clause

A clause in a fire insurance policy providing for the extra cost in rebuilding premises of meeting the requirements of public authorities.

Public liability insurance

The insurance of liability for accidental bodily injury or damage to the property of third parties.

Public policy

The courts may hold that an insurance is void because it is contrary to public policy, for example if it is an insurance for the benefit of an enemy alien in time of war.

Public Sector Transfer Club

A pension transfer scheme (q.v.) that covers most public sector and nationalised industry schemes and some private ones.

Punitive damages

In English law, damages awarded over and above what is required to compensate the plaintiff in respect of a limited number of torts, where either (a) there has been some abuse by the defendant in the exercise of a public function or (b) the defendant has obtained an advantage that outweighs any compensatory damages. In U.S. law, extra damages awarded by way f punishment or deterrence.

Purchased life annuity

An annuity bought by an individual out of his own money as distinct from one provided under a pension scheme.

Pure burning cost

Same as burning cost.

Pure endowment

A life assurance for a term of years providing for a sum of money to be paid only if the life assured survives to the end of the term. The premiums paid may or may not be returned in the event of earlier death, according to the terms of the contract.

Pure indemnity

In marine insurance, indemnity as provided for by the Marine Insurance Act 1906 for unvalued policies, e.g., in the case of total loss of hull, the actual market value of the vessel. (In practice a valued policy (q.v.) is always issued.)

Pure loss cost

The cost of paying claims expressed as a percentage of premiums.

Pure premium

The amount required by an insurer to pay losses under an insurance without taking into account the insurer's general expenses.

Pure risks

Risks inherent in the environment, such as fire or earthquake, as distinct from business risks or risks voluntarily undergone.

Pure salvage

Same as Salvage (1).


See Plaintiff.