Glossary of insurance terms and concepts

Glossary of insurance terms and concepts
 
Insurance agent – natural person or legal entity carrying out the mediation inf concluding insurance contracts for and on behalf of the insurance company in accordance with the authorities provided.

Addendum – an additional agreement to the concluded contract of insurance or reinsurance, which includes changes agreed between the parties and/or additions to the previously adopted terms of the contracts.

Actuary – natural person engaged in activities related to the implementation of economic and mathematical calculations of the size of liabilities under insurance and reinsurance contracts in order to ensure the required level of solvency and financial stability of the insurance (reinsurance) company.

Underwriter – the person authorized by the insurance (reinsurance) company of Lloyds syndicate to accept risks for insurance (reinsurance). He (She) is responsible for the formation of the insurance (reinsurance) portfolio of the insurer or reinsurer. He (she) must possess the necessary knowledge and practice to identify an appropriate level of risk, insurance rates and conditions of insurance.

Annuity insurance – a set of types of personal insurance, providing for the implementation of periodic insurance payments in the form of a pension or annuity when the insured reaches a certain age, becomes disabled (because of age, disability, illness),  death of the breadwinner, unemployment and other cases that lead to a decrease or loss of personal income by the insured.

Database on compulsory motor third-party liability insurance – is the totality of information about the insurant, insured and the insurer.

Insurance broker -  a legal entity carrying out consultancy on insurance and reinsurance and mediation in conclusion of insurance contracts on its own behalf and on behalf of the insurer or reinsurance contracts on its own behalf and on behalf of the cedent (the insurance company).

Mutual insurance – individuals and legal entities may insure their property and other property interests on mutual basis by combining the required funds in the mutual insurance associations.

The Beneficiary – a person who, in accordance with the insurance contract or legislative acts on compulsory insurance, is the recipient of the insurance payment. The beneficiary can be a legal entity and an individual. The beneficiary may be appointed both for personal and property insurance. For obligatory types of insurance, the beneficiary shall be determined by legislative acts that regulate this type of insurance, on voluntary types – it shall be appointed by the insurant.

Group insurance – in case of a group insurance, one insurance contract shall cover several insured persons who are also beneficiaries. Group insurance may be both personal and property, personalized and impersonal, covering a certain category of persons.  The collective (group) insurance by the employer of its employees may be only personal insurance.

Double (multiple) insurance – insurance of one and the same object with several insurers under separate contract with each one. In case of double insurance of property, each insurer is liable to the insured within the contract concluded with it, but the total amount of insurance payments received by the insured from all insurers, cannot exceed the actual damage. In case of double (multiple) personal insurance each insurer shall meet its insurance liabilities to the insured independently regardless of the performance their obligations by other insurers.

Actual value - real (market) value of the object of insurance is calculated based on the prices effective on the date of the insurance contract and shall be determined:
For buildings and structures – the cost of construction of the building in this area, fully identical to the one that was lost, with consideration of the depreciation and operational-technical condition of the lost (damaged) building or structure;
For household goods and personal items;
Based on the amount required for purchasing the subject completely identical to the lost one, net of depreciation.

Voluntary insurance – the insurance carried out by the will of the parties.
Annuity contract – the insurance contract, under which the insurer is obliged to carry out insurance payment in the form of periodic payments to the beneficiary during the period specified by the contract. The annuity contract refers to the contracts of accumulative insurance.

Agency agreement – According to an agency agreement, one party (attorney) undertakes to perform on behalf of and at the expense of the other party (principal), certain legal actions. According to the deal, done by the attorney, the rights and obligations arise directly from the principal. The agency agreement shall be in writing.

The insurance contract, insurance policy – the documents confirming the emergence of legal relations between the insured and the insurance company and determining the conditions of insurance. Under the insurance contract, one party (the insurer) undertakes to pay the insurance premium, and the other party (the insurer) undertakes in the insurance event, to make insurance payment to the insured or any other person in whose favor the contract is concluded (beneficiary) within the amount (sum insured), specified by the contract

The insurant (insured) – the person, in which respect the insurance is made. Unless otherwise specified by the contract, the insurant shall be also the insured.

Property insurance - to property insurance refers insurance of property and the interests related to it, including insurance of business risks of civil liability.

CASCO – is a kind of voluntary insurance of the vehicle against any kind of risks: theft, intentional or negligent damage, road accidents, falling of objects on your car, fire, natural disasters and many other risks. CASCO protects only your vehicle (CASCO does not include insurance of the passengers, cargoes transported in the vehicle and liability to third-parties).

Combined insurance – insurance of dissimilar objects and insurance risks under one insurance contract.

Personal insurance – personal insurance includes life, health, disability insurance, and other interests of the individual citizen. Under a contract of personal insurance can be insured the insurant him/herself and also another person named in the contract (the insured). 

Compulsory motor TPL insurance (OГПО ВТС) – compulsory motor third-party liability insurance.

Health insurance – the set of various types of insurance providing for the implementation of the insurance payment in fixed amount and (or) in the amount of partial or full reimbursement of the costs of the insured in connection with disease and other health disorders, with the exception of insurance against accidents.

Mortgage insurance – a type of insurance, which includes the implementation of insurance payments in the amount of partial or full compensation for the damage caused to property interests of the lender as a result of default on its obligations under the contract of mortgage residential loan, in the event of reduction in the market value of housing acting as collateral for residential mortgage loan.

Insurance against other financial losses – a set of types of insurance, providing insurance payments in the event of loss due to loss of job, loss of income, adverse natural phenomena, continuous unexpected expenses, loss of market value and other damages as a result of the financial and economic activities, with the exception of insurance risks referred to in subparagraphs 12)-15) of paragraph 3 of Article 6 of the RK Law   “On Insurance activities”.

Legal expenses insurance – a set of types of insurance providing insurance payments for losses of the insurant (insured) as a result of expenses he incurred in connection with litigation.

Guarantees and bails insurance – a set of types of insurance providing insurance payments in the amount of partial or full compensation for the damage caused to the property interests of the person that issued the guarantee or bail, as a result of its liability for comply with the guarantee or bail issued.

Endowment insurance – the endowment insurance is the insurance providing performance of insurance payment on any of the following grounds: after expiration of the period set by the insurance contract or upon occurrence of an insured event, depending on which of them will come first. The contracts of endowment may be concluded solely on personal insurance.

The independent expert – a physical person or a legal entity having the license for carrying out valuation activities, accredited by the authorized public body for regulation and supervision оf financial market and financial organizations in accordance with established procedure.

Non-contributory insurance – insurance providing for an insurance payment only upon occurrence of an insured event.
Disproportionate reinsurance – reinsurance under which the reinsuring organization undertakes to make insurance payment upon occurrence of the conditions specified by the relevant contract of insurance in the amount of excess of the total amount of damages to be recovered over the sum of net retention of the cedent under the reinsurance contract.

The object of insurance – the object of insurance can be any interest of a legal entity or individual. The object of insurance under compulsory types of insurance is determined by legislative acts that regulate this type of insurance. Illegal interests of the insured shall not be subject to insurance.

Compulsory insurance – the insurance carried out by the requirements of the legislative acts.

Insurance portfolio – a set of risks assumed by the insurer for insurance for a certain period.

Reinsurance – the activities and associated with it relations, arising in connection with the subsequent transfer of all or part of the insurance risks, assumed by the insurance company  under the insurance contract, by reinsurance organization in accordance with the reinsurance contract concluded between them.

Reinsurer (cedent) – an insurance or reinsurance organization engaged in the transfer of insurance risks it has taken in reinsurance.

Reinsurance organization (reinsurer) – a legal entity carrying out the activities on conclusion and execution of reinsurance contracts under an appropriate license of the authorized body.

Rules of insurance – the document of an insurance organization that determines the terms of insuring on a certain type of insurance.
Proportional reinsurance – reinsurance in which the reinsurance organization undertakes the liability to make insurance payment upon occurrence of the conditions specified by the relevant insurance contract, in the amount in proportion to the share of insurance obligations assumed from the cedent under the reinsurance contract.

Professional participants of the insurance market – insurance (reinsurance) organization, insurance broker, actuary and authorized auditor that operate on the basis of the relevant license of the authorized body.

Prudential standards established by the authorized body and binding upon insurance (reinsurance) organizations.

Direct settlement – the mechanism of making insurance payment, where the compensation for the harm caused to life, health and/or property of the victim in the road accident is carried out by the Insurer with whom the victim signed the TPL insurance contract.

Retrocession – transfer by the reinsurer a part of risks it assumed optionally or under reinsurance contracts to other reinsurers.
Self-retention – a part of the sum insured, within which the cedent is responsible for its own account in accordance with reinsurance contract.

Coinsurance – the activities and associated with them relations, arising in connection with assumption of insurance risks under insurance contract simultaneously with a number of insurance companies with distribution of their responsibilities in accordance with the coinsurance agreement concluded between them.

Insurant – the person, who has entered into an insurance contract with the insurer. The insurant may be a legal entity and an individual.

Insurance – the complex of relationship for material protection of the legitimate interests of a natural or legal person in the insurance case or any event specified in the insurance contract by the insurance payments made by the insurance company at the expense of its assets.

Insurance payment – the amount of money paid by the insurer to the insured (beneficiary) within the sum insured in occurrence of the insured event or the date specified in the endowment insurance contract.
The order and timing of insurance payments are determined by the contract. For compulsory insurance they may be determined by legislative acts.

Insurance activities – Activities of an insurance (reinsurance) organization related to the conclusion and execution of insurance (reinsurance) contracts, carried out under the license of the authorized body in accordance with the requirements of the law.

Insurer – a person, who is liable in occurrence of the insured event to make insurance payment to the insured or another person for whose benefit the insurance contract was concluded within the amount specified by the contract.

Insurance premium – the amount of money the insured must pay to the insurer for the latter’s obligation to make insurance payment to the insured (beneficiary) in the amount determined by the contract of insurance or annuity.

Sum insured – the amount of money to which the insurance object is insured and which represents the maximum amount of liability of the insurer in the insurance event.

Insurance value – the real (actual) value of the object of insurance as of the time of conclusion of the insurance contract.

Insurance above the actual cost – if the sum insured as determined by the insurance contract exceeds the insurance value (the actual value of the insurance object), the contract is null and void for the part of the insured amount that exceeds the insurance value at the time of the contract conclusion.

Insurance lower than the actual cost – If the insured amount specified in the insurance contract, is less than the actual value of the property insured at the time of the contract, the size of the insurance payment is calculated according to the proportion of the sum insured and the actual value of the insured property.

Insured event – The event specified by an insurance contract, with occurrence of which the insurer has the duty to make insurance payment to the insured or beneficiary.

Insurance reserves – liabilities of an insurance (reinsurance) organization under insurance (reinsurance) contracts estimated on the basis of actuarial calculations.

Accident insurance – a set of types of insurance providing for making insurance payment in a fixed amount and (or) in the amount of partial or full reimbursement of the insured in case of death, loss (total or partial) of labor capacity (general or occupational) or other harm to the health of the insured as a result of an accident, occupational disease, except for health insurance.
Under an accident is understood the occurred beyond the will of the person sudden, short-term event (accident) as a result of external mechanical, electrical, chemical or thermal effect on the insured, which lead to harm to the health, bodily injury or death.

Insurance of means of (motor, railway, air, water) transport – a set of types of insurance, providing insurance payments in the amount of partial or full compensation for the damage caused to the property interests of the person connected with the possession, use and disposal of means of transport, including theft or robbery, and also due to its damage or destruction

Cargo insurance – a set of types of insurance providing for making insurance payments in the amount of partial or full compensation of the damage caused to the property interests of the person connected with the possession, use and disposal of cargo, including luggage, goods and all other types of products as a result of their damage, destruction, loss regardless of the mode of the transportation.

Property insurance – a set of types of insurance, providing insurance payments in the amount of partial or full compensation for the damage caused to property interests of the person connected with the possession, use, disposal of property as a result of damage or destruction, theft, with the exception of the property listed in subparagraphs 3)-7) of paragraph 3 of Article 6 of the RK Law “On insurance activities”.