Policy, claims and reinsurance terms, defined

The terms specialty insurers, MGAs, program administrators and reinsurers use for the documents the automation reads. Plain definitions, written for people who work with these documents.

Policy wording

The text of an insurance policy: the insuring clauses, definitions, exclusions and conditions that set what is covered. A manuscript wording is one written for a single client or program rather than taken from a standard form.

Endorsement

A document that changes an issued policy, for example by adding an insured, changing a limit or amending a clause. A policy has to be read together with its endorsements to know what it says today.

Clause library

An insurer's collection of approved clauses, kept so that drafts reuse wording the legal team has already agreed.

House wording

An insurer's own standard policy wording, as opposed to a form written for one client or taken from the market.

Precedent

A previously executed deal or wording that a new draft starts from.

Slip

In the London market, the document that sets out the terms of a risk for underwriters to subscribe to. A market reform contract (MRC) is the standard layout for it.

MRC (market reform contract)

The standard structure for a London market contract, which sets out the terms of a placement in a consistent order.

Binding authority agreement

A contract in which an insurer gives a coverholder or MGA authority to bind risks on its behalf within set limits.

Delegated authority

Authority an insurer gives another firm, such as an MGA or coverholder, to underwrite, bind or handle claims on its behalf.

Coverholder

A firm authorised by an insurer, usually under a binding authority agreement, to bind risks and issue policies on the insurer's behalf.

MGA (managing general agent)

A firm that underwrites and administers insurance on behalf of one or more insurers under delegated authority.

Program administrator

A firm that manages an insurance program for a defined class of business, often on several carriers' paper under a binding authority or program agreement.

Fronting carrier

A licensed insurer that issues policies and passes most or all of the risk to reinsurers or other capacity providers.

E&S (excess and surplus lines)

Insurance for risks that standard admitted insurers do not write, placed with insurers not bound by the same form and rate filing rules.

Treaty reinsurance

A reinsurance contract covering a whole class or portfolio of business under agreed terms, rather than one risk.

Facultative reinsurance

Reinsurance bought for a single risk or policy, with terms agreed for that risk.

Legacy and run-off

Business that an insurer no longer writes new policies for but still has to administer and pay claims on.

Contract certainty

The principle that the terms of an insurance contract are agreed and documented before the risk starts. The London market's Contract Certainty Code of Practice sets out how.

FNOL (first notice of loss)

The first report of a loss to the insurer, which opens a claim file.

Excess

The part of a loss the insured bears before the insurer pays. It is also called the deductible, and it is often set by endorsement.

Sublimit

A lower limit that applies to one type of loss within the overall policy limit, such as flood.

Where these documents meet an engine

WYEA's workflow automation reads these documents where you keep them, links each one to the others, and shows the source of every line it writes. Read how the automation works or how it is used for policies and claims.