Nothing in life comes for free, apart from my Christmas missive. There is, of course, a reason for that.
So here it is. A Christmas gift which will keep on not giving, forever. Parsimony in perpetuity. You can print it off, place it in your pocket and bring it out to amuse friends and family during one of those ‘lull’ moments on Boxing Day. Or you can use it to swot up for that new year job interview. “Any questions from you?” “Yes, just one: what is dacoity?”. Happy Christmas everyone!
A – Assured: arcane term for the “Insured”, commonly deployed by learned Queen’s Counsel whilst ensuring the powder is kept extremely dry. Most assuredly so.
B – Barratry: The shipping heritage of insurance, wonderful pastures for word hunters! Misconduct of a ship’s crew resulting in its damage. This may be mutinous, or merely the result of being a bit like Tony Bullimore (allegedly). Or the captain of the Concordia (certainly)
C – Cedant. The world of reinsurance is also a fertile plain for esoteric language. An insurer cedes its risk to the reinsurer and thus becomes the cedant.
D – Dacoity. A term originally used to describe banditry on the Indian sub-continent (from the Hindi word daaku). Found its way into insurance policies to provide cover against organised robbery. “Don’t shoot, take my wallet – I got dacoity cover.” A real gem.
E – Endorsement. Add-on clause to an insurance policy which can vary, extend or limit the core wording. Like a rider clause. Some policies contain several endorsements; I refer to these as prolific riders.
F – Force majeure. Superior force sometimes referred to as an act of God. An unforeseeable and unavoidable event which is usually excluded from cover in insurance policies. Earthquake, tsunami, plague, pestilence, pyroclastic eruption, meteor strike type-thing. Big bad things we humans can’t control or predict. Speaking of which – this Beat Friday Toons to the spot by a short neck.
G – Garbling clause. The superb world of shipping again. Tobacco, coffee beans, grain etc needs to be sifted and cleansed (“garbled”) having been shipped. A garbling clause means the insurer will pay the cost of garbling. I’ve seen some really garbled garbling clauses I can tell you; they don’t separate the wheat from the chaff.
H – Hard market. What we are in now. Not much capacity, rising premiums, restricted cover, grumbly brokers. “Man, I can’t even get a garbling clause these days Clive”
I – Indemnity. This is the cash paid out upon the eventuation of the risk insured against. Of course, it might never happen. And therein lies the very nub! The ‘might’ is axiomatic – the doctrine of ‘fortuity’ old bean. You cannot insure against a certainty. Joke: unless you underwrite (insert appropriate profession as desired).
J – Joint and several. Bit of a tortious legal principle here: permitting the injured party to recover full compensation from any tortfeasor who is able to pay, irrespective of the degree of that party’s negligence where there is more than one tortfeasor. Said tortfeasors insurers end up carrying that particular baby. Annoying. Get a net contribution clause into your insureds’ contracts say I!
K – Kindred perils. Different types of dangers who get on really well and hang out together in the same bars/clubs. Risks of the same ilk. And what a great name for a rock band – The Kindred Perils.
L – Limit of Indemnity. The cap beyond which insurers will not pay. You have had your lot, there’s no more in the kitty. Sounds simple – but wait, aggregation, disaggregation, excess layer, defence cost in addition?! Let’s not go there, it’s Christmas. We’re not here to learn.
M – Minimum terms. A tightly worded policy, bejewelled with tailored endorsements. Just so. Perfect. But wait – certain professions are regulated by minimum insurance terms which take precedence over non-compliant wording. Rip it up and start again.
N – Non-disclosure. When obtaining insurance you must give a fair presentation of the risk you are seeking to insure (see Insurance Act 2015). Otherwise insurers will have remedies (said with quiet menace like the Godfather). The remedies are in point of fact not that great compared to in the old days (pre-Insurance Act 2015). But still. You can’t keep secrets – that’s fraud. You may not even be able to make an innocent mistake. Depending, like. This is no place for an actual explanation.
O – Operating ratio. Performance measure, being the sum of expenditures and losses expressed as certain percentage of the earned premiums. If you are at more than 100 you are, er, unable to generate profit from underwriting and investment activity. Begs the facetious the question: where might profit otherwise come from?
P – Premium. A type of lager. The money paid to the insurer in return for the policy of insurance. Later to be dwarfed by the size of the claims made against the policy.
Q – Quota share treaty. An agreement by which the reinsurer must accept and the cedant must cede a fixed share of the risk on a prospective book of business. Futures trading with risk as the currency. Also – the next band of the guitarist from Kindred Perils.
R – Retrocession. Where one reinsurer cedes to another reinsurer, in order to reduce net liability on individual risks. The recipient being the retrocessionaire. Where this happens in a sequence of ‘baton passes’ you get insurance ‘sprirals’. Remarkable Geoff.
S – Subrogation. What does it feel like to stand in the shoes of another? Depends what sort of shoes they are – hopefully brogues or similar with a leather upper. Insurers step into the shoes of their insureds for recovery action purposes so that they can pursue third parties in the name of the insured, to claw back losses on indemnities paid. This is subrogation and the shoes are not overly comfortable.
T – Third Party (Rights Against Insurers) Act 2010. Very topical. When your insured goes bust, this is how Claimants come at you directly. A nasty business. They can only get at you to the extent that the policy covers the underlying claim. This is slim solace.
U – Underwriter. The person whose fault it all is. The pain or the profit. A wholesale consumer and distributor of risk. “Fortuity” is their middle name.
V – Voidable quota share treaty. Another great prog rock band. [I’m running out of energy here].
W – Waiver. “It’s ok, this one’s on me” would be the express form of a waiver. But beware the lesser-spotted implied waiver; dangerous in the wild on account of the fact you can do it by accident. Oops.
X – marks the spot of a fraudulent signature. Bring in the graphologist.
Y – Yield. The ratio of the income earned on an investment to the face value of the investment. Ones investments at William Hill tend to zero on the yield front. Very little is yielded in that game.
Z – Zone A. I had to commit to using a search facility for this: Relating to application of the premium rates prescribed within the All India Motor Tariff relates to one of the two zones of operations of motor vehicles that comprise the Madras Region and Mumbai Region but excludes Mumbai itself. Don’t tell me this is not helpful, you never know when you may need to negotiate with a car hire company on the sub-continent.