Home / Glossary of Terms

Overview

Insurance industry terms might be very tricky not even to the newcommers, but also to the profesionals from the different continents. Historicaly and geographically insurance terms evolved and deviated differently, the same term have multiple synonims. We believe that glossary defined below will help you to find the lighthouse in the insurance ocean.

Insurance Parties

Term Related Term Description
Client Insured, Policy Holder An individual or corporate person/party which is insured by the issued insurance policy. Used in the Insly system views.
Insured Policy Holder, Client Same as client.
Policy Holder Insured, Beneficiary, Client Same as client, but sometimes policy holder is understood as a person to whom the policy is issued, but not always he might be beneficiary (claim payment receiver).
Beneficiary Insured, Policy Holder, Client Exclusively understood as a payment receiver in case of the claim by the insurance policy.
Co-insured Insured, Policy Holder, Client Sometimes policies are issued for the group of insured, so multiple persons could be covered with one policy.
Agent Brokerage, Agency An intermediary which participates in the policy issuing process, in most cases handles/sales policy for the insured, gets agent commission for policy sales.
Broker Brokerage, Agent Retail broker is similar to agent, but in some context broker is understood not only as the insurance reseller, but also as the consultant, subject matter expert, who can elaborate on insurance terms to insured.
Lloyds Broker Broker A broker representing Lloyd's syndicates/insurers. In most cases MGA/Coverholder can’t have direct access to Lloyds syndicates/funds, the deals for the yearly binders should be made via Lloyds broker.
Brokerage Broker A synonym for the broker, mostly used term in the North America.
Lloyds Market - An insurance organization in London, containing association of Lloyds syndicates/funds, which works as groups of insurance capacity providers, insurers.
Insurer Carrier Insurance company that undertakes to indemnify for losses and perform other insurance-related operations, its issued policy is as confirmation contract for insurance cover between insurance and the client.
Carrier Insurer A synonym of the insurance company, or risk capacity provider. Used a lot in the UK market.
Capacity Provider Insurer, Carrier A synonym of the insurance company, or Lloyds fund. Used a lot in the UK market.
Syndicate - A synonym of insurance company, in Lloyds market.
Market Insurer A synonym of the insurance company, or Lloyds fund. Used a lot in the Canada market.
Re-insurer Insurer Insurer that accepts all or only a part of the liabilities of the ceding company in return for a stated premium.
MGA Coverholder Specialized type of the insurance agent/broker that, unlike traditional agents/brokers, is vested with the underwriting authority from an insurer. Accordingly, MGAs perform certain functions ordinarily handled only by insurers, such as binding coverage, underwriting and pricing, appointing retail agents within a particular area, and settling claims.
Coverholder MGA Coverholder means a company or partnership authorised by the Managing Agent to enter into a contract or contracts of the insurance to be underwritten by the members of a syndicate managed by it in accordance with the terms of a Binding Authority.
Claims TPA (Third Party Administrator) - A company hired to take care of claims administration on behalf of the MGA and insurance company. Insureds are reporting claim/FNOL (first notification of loss) to TPA and they deal with the claims administration process. TPA will send aggregated claims information to the MGA, Insurer.

Monetary Terms

Term Related Term Description
Premium Net Premium, Gross Premium Insurance policy premium (expected payment for the insurance policy) in general.
Gross Premium Premium Total insurance policy premium containing all commissions (agent’s, MGA’s and other commissions).
Net Premium Premium Net insurance premium payable to insurer (without any commission).
Commission - A part of gross premium paid as the remuneration to the MGA/Agent for intermediation of insurance policy. Refers to the general commission term.
Gross Commission Commission A total sum of all commissions paid per policy.
Net Commission Commission An intermediary which participates in the policy issuing process, in most cases handles/sales policy for the insured, gets agent commission for policy sales.
Agent Commission Commission Specifically refers to the net commission which is received by the agent.
MGA Commission MGA Specifically refers to the net commission which is received by the agent.
Fee - Fee is an additional receivable payment for conducting the policy. Fee always goes on the top and is not a subject as insurance premium taxation. Fees might be taxes with VAT, but that is optional. Also fee might be owned by any party.
Agent Fee Fee Fee is owned by the agent for some extra policy issuing activities. It is a very rare case, that agent collects extra fee per policy as in most cases they are remunerated from the agent commission.
MGA Fee Fee Fee is owned by the MGA for extra policy issuing activities, it is related to survey, document printing, documents emailing, etc. In most cases fixed amount per policy. Sometimes depends on the policy premium size (over 1M premium fee is 200, less 1M premium fee is 50)
Termination Fee Fee Fee applied by the MGA for policy termination expenses (in most cases MGA has to do some administrative work).
Insurer Fee Fee In very rare cases insurer (carrier) besides insurance premium asks to pay specific administration fee, mostly in the case if there is a need to do some administrative work related with policy from insurer side (e.g. print policy hardcopy).
Tax - This applies to the general financial tax term, collector might be any party.
Insurance Tax Tax, IPT This specific definition of insurance premium/commission related to tax (in UK is IPT), might be on top of the premium or included in the premium.
Non-insurance Tax - This is a non-insurance specific tax applies to the other/non-insurance services, like administration fee or any other receivable amount, like consulting or insurance survey service.
IPT Tax Insurance Premium Tax is applicable for in the United Kingdom territory issued policies.
VAT Tax< Value Added Tax, it is the generic non insurance tax across multiple countries.
Stamp Duty Tax< Oceania (Australia, New Zealand, etc.) specific governmental tax applicable to the most of the sold services.
Fire Levy Tax< Oceania (Australia, New Zealand, etc.) specific fire protection tax applicable to the most of the sold services.
Commission Tax Tax< Calculated from the insurance commission basis, applicable sometimes in Australia, other countries.
Withholding Tax Tax A principle of tax paying when it is payable by buyer, and it is deducted from the premium in the invoice issued by the seller.
Invoice - A financial document to state total receivable(payable) amount for the insurance premium, taxes and fees.
Debit Note Invoice A synonym for the invoice and mostly represents positive amount payable by the insured or broker to the insurance seller.
Credit Note Invoice A synonym for the invoice and mostly represents negative amount (returnable premium in case of the policy termination) payable by the insured or broker to the insurance seller.
Receivable - Amount that expected to be received by MGA or Broker for insurance services, issued policy.
Payable - Amount that is being payable to MGA or Broker for insurance services, issued policy.
Payment - Actual payment by the insured for the policy.
Transaction Receivable, Payment General definition of money/financial activity done by two parties, it can be either expected or actual payment for the policy/services.
Installment - A split of the insurance premium for the specific policy validity period part. E.g. for one annual policy there might be 4 installments payable every quarter.
Premium Financing Premium Financial service (Premium leasing) when 3rd party pays all policy premium to insurer fully, and client pays to that 3rd party in multiple installments (monthly, quarterly).
Premium Reconcilliation - A process where MGA tries to reconcile monthly payable amount between MGA and insurer. Sometimes also used in the MGA and brokers policies reconciliation.
Bordereaux (BDX) - A generic naming of the document (report) used to report on the MGA issued policies or received premiums to the insurer/carrier.
Policies(Risk) Bordereaux Bordereaux A specific implementation of bordereaux to report only on MGA issued policies to insurer. Mostly issued/prepared for previous month in the beginning of current month.
Premium Bordereaux Bordereaux A specific implementation of bordereaux to report only on MGA issued premiums to insurer. Mostly issued/prepared for previous month in the beginning of current month.
Broker Statement - A document (report) to reconcile broker payable amounts (from issued policies) to MGA. Mostly issued/prepared for previous month in the beginning of the current month.

Policy Terms

Term Related Term Description
Policy - A general term referring to the insurance contract made between client(insured) and insurer(carrier).
Policy Schedule Policy A document (PDF) referring to already generate policy document.
Policy Order - A request to issued insurance policy, like a confirmation to insurance quote.
Order/Share - A percentage of the risk that policy insurer takes for that case in that policy.
Certificate Policy Schedule Is similar to the policy schedule and confirms the insurance coverage. A difference might be that in some cases the certificate does not contain the insurance premium, but just the insurance fact (so it could be distributed to the 3rd party as a proof of insurance without disclosing the insurance costs).
Statement of Fact (SoF) Policy Schedule A document list with all information collected/used to conduct the insurance policy.
Declaration Page Statement of Fact Is similar to the statement of fact but mostly used in the North America market.
Wordings Policy A set of rules which is legal document and might be treated as annex of the insurance policy. Defines all the clause and exception cases of the insurance coverage.
Issue - An act of the quote converting to policy, in other words acceptance of the insurance. Issuing is mostly done by the MGA, but sometimes can be done by an insurer or a broker, that depends on the agreed authority levels between partners. Also the issuing process is understood as the policy related documents generation act on the same time.
Bind Issue Synonym to issue, just sometimes it is considered as the conversion of the quote to policy without the actual policy documents generation/preparation activity.
Cancellation Termination An act of early cancelation of the issued policy. In EU we have law, that a policy can be cancelled within the first 2 weeks from the issuing date without any applied penalties.
Termination Cancellation An act of the issued policy termination during its validity period, part of the unused policy premium will be returned. A termination fee might be applicable for that activity (depends on the MGA internal policies/procedures).
Quote A proposal (or draft policy) to offer the insurance premium and cover conditions to customer. If the quote accepted and issued it will be converted to policy.
Submission Quote Quote synonym, mostly used in the North America.
Quote Application - A form which is used to capture the client/risk details in order to prepare the quote and calculate policy premium.
Quote Schedule A document (PDF) generated and printed to the client once the quote is prepared, it states the actual offer fact to the client.
Quatation Quote Schedule Quote schedule synonym, mostly used in the North America.
Renewal - A process of extending the insurance with the new policy.
Renewal Quote Renewal A quote, that is used to calculate and offer the next (renewal) policy.
Renewal Policy Policy A type of the policy stating that it has been already extended/renewed (in other words: not the first policy in the row)
Endorsement - A special condition or clause added to the Quote/Policy to decrease/increase/limit insurance coverage by the policy.
Subjectivities Endorsement A special condition, declaring what is need to be provided before or after issuing policy.
Mid Term Adjustment (MTA) - A change of the policy once it is issued. To accommodate it, new version of the quote should be created. In North America for such adjustment the Endorsement term is used.
Expiration of Policy - A fact when the policy has naturally ended.
Schema - Insly specific term. A collection of rules and settings that makes the insurance product functional on Insly platform. Encompasses quote submission forms, external integrations, documents templates etc.
Product - An insurance product, that is covering risks of the specific property or business. E.g. motor insurance, property insurance, liability insurance.
Binder - A contract/agreement (mostly annual) signed between the MGA and insurer, which allows MGA to issue policies for specific risks within the pre-agreed authority level and within the pre-agreed limits (see Binder Limit).
Note: Not to be confused with the temporary proof of cover (see the North American term).
Binder Limit - Agreed limit between the MGA and insurer on how much the MGA is allowed to write a particular risk within the binder period (year or longer depending on binding agreement term).