International Insurance Glossary

International Insurance Glossary


Admitted Insurance

Insurance coverage written by an insurer licensed to do business in the state or country in which the insured exposure is located.

Accounts Receivable Insurance

A coverage which protects a business when records are destroyed by an insured peril and the Insured Company cannot therefore recover moneys owed. This policy covers this uncollectible money including the cost of record reconstruction and additional collection charges.

Actual Cash Value

Refers to the cost of replacing damaged or destroyed property with new comparable new property less depreciation.

Additional Insured

Another person, company or entity with the same insurance protection as the Named Insured.


A person or company hired by an Insurer to settle claims brought by an Insured. Independent Adjusters often are individuals or firms which represent a number of Insurance Companies. Public Adjusters on the other hand usually represent the Insured (claimant) and work on a fee basis.

Agreed Amount

Refers to a provision in a fire insurance policy whereby the coinsurance clause is suspended as long as the Insured carries an amount of insurance specified by the Insurer (usually 90% or more).

All Risks

Refers to policies which cover each and every loss except for those specifically excluded. If a peril is not excluded, it is automatically covered.


Refers to the valuation of property for establishing a proper amount of insurance prior to a loss or determining the value of the property resulting from a loss by an insured peril.

Arbitration Clause

Refers to a clause in a property insurance policy that states that in the event that an Insured and the Insurer cannot agree of the amount of a loss settlement that each party will appoint its own appraiser.


The act of comparing a measurement to a standard. It shows you where you are and helps you decide where you want to go. In employee benefits, it is used to help ensure that an employer’s employee benefit program remains competitive, in its sector, in any given country.

Blanket Insurance

Refers to a single property policy covering different types of property in more than one location with no specified limit on each property.

Bodily Injury

Refers to physical damage to an individual. Liability insurance covers bodily injury to a Third Party resulting from the negligent acts of an Insured.

Boiler & Machinery

Protects Insured’s from losses resulting from the malfunction of boilers and machinery.

Broad Form Property Damage

This endorsement to a General Liability policy eliminates the exclusion of property in care, custody or control of the Insured and therefore provides coverage for said property.

Broker of Record Letter

Provides a contractual agreement between the Insured and the Broker or Agent. This letter gives the Broker / Agent authority to represent the Insured’s interest with the Insurer and gives the Broker / Agent the legal right to commissions.

Builders Risk

This type of policy insures contractors for damages to buildings under construction. The coverage can be written on either of two forms. Completed Value, which states that the insurance carried represents 100% of the completed value of the building; or Reporting basis, which contemplates carrying an amount of insurance which corresponds to the stage of completion at any given time.

Business Interruption

Indemnifies the Insured for the loss of profits and any continuing fixed expenses. This insurance is written on a variety of different forms which include: Gross Earnings, Loss of Profits, Extra Expense, Contingent Business Interruption, Contingent Extra Expense.


The cancellation provision of a policy allows either the Insured or Insurer to cancel a policy. These provisions vary depending on country requirements, market practices, and type of insurance. A careful reading of the provision for each policy is advised.

Captive Insurance Company

This usually is an insurance company formed to insure the risks of its owner (parent company).


Refers to the transfer of risk from an Insurer to a reinsurance company (Reinsurer).

Claims Made Basis (Liability Coverage)

Claims made during the effective period of a policy require the Insurer to be responsible for payment (up to the policy limit), regardless of when the event causing the claim occurred.

Claims Occurrence Basis (Liability Coverage)

If a claim arises out of an event during the policy period, the Insurer is responsible for payments (up to the policy limits) regardless of when the Insured reports the claim.


A property insurance policy clause which states the amount of insurance the Insured is required to carry. This usually refers to a stated percentage of the value of the property at risk.

Combined Single Limit

Refers to bodily injury liability and property damage liability expressed as a single sum of coverage.

Compulsory Insurance

The requirement that foreign countries impose on businesses to purchase certain types of insurance coverage to operate in the country — for example, fire insurance on certain types of buildings, automobile liability, workers’ compensation, or inland marine on goods transported by trucks. Frequently, these coverages must be purchased from an admitted insurer in the host country or from the foreign government itself.

Consequential Loss

Refers to the value of loss resulting from the use of property. Business Interruption policies can be used to cover the loss of income – the consequential loss – until the business can reopen following a direct damage loss (fire, for example).

Contingent Business Interruption

This form of coverage protects the Insured for the loss of net earnings due to the loss of a key supplier’s inability to operate as a result of damage or destruction of its property.

Controlled Master Program (CMP)

Refers to a program wherein all policies and their terms and conditions are agreed centrally with a worldwide Insurer(s) and supported by underlying (admitted where required and/or desired) policies issued in each country where the Insured operates.

Controlled/Global Master Program

Are written at the direction of the controlling broker with the global carrier who then directs the placement of the local country coverage policies with (for example) AIG or AIG’s locally licensed sister companies, in each of the specific countries the client is located in. The carriers in each country will all be part of the global carrier’s “family of carrier’s”.

Controlling Broker (a/k/a: Controlling Global Broker)

A licensed insurance broker who has the relationship with the global client and has been given the authorization, by the global client, to place, handle and run their global insurance program.

Cut-Through Endorsement

This guarantees that a reinsurance company will pay losses incurred by a Third Party even though that Third Party has no contractual arrangement with the reinsurance company. In practical terms such an endorsement permits the Controlled Master Program underwriter / Insurer to pay the claim directly to the Insured, instead of paying the claim through the local admitted Insurer (as its reinsurer).

Debris Removal

Used in property insurance and provides for the reimbursement for the removal of debris resulting from an insured peril.


Refers to the amount of loss that the Insured pays in a claim amount. Deductibles apply to both direct damage to property and business interruption losses. Direct damage losses call for an agreed amount that the Insured will pay before the Insurer pays. The deductible amount in a business interruption contract is often referred to as a ‘waiting period or elimination period’. This waiting period refers to the length of time an Insured must wait before any benefits from the policy are paid.

Defense Costs

Refers to the expense of defending a lawsuit. Ideally the Insured should require a policy which pays all the defense costs in addition to the policy limits.


Refers to the decrease in the value of an asset (property – real or personal) over a period of time based on a predetermined schedule.

Difference in Conditions (DIC)

An insurance policy that is designed to fill the gaps between the coverage provided by a multinational organization’s master insurance policies (property or liability) and coverage provided by policies purchased locally in accordance with each country’s insurance requirements so that the organization has uniformity of coverage regardless of location.

Difference in Limits (DIL)

A provision contained in a master international insurance program (often referred to as a master controlled program) that provides coverage for the difference in limits between the limits of local underlying policies and the limits of the master international policy.

Drop-Down Clause

Refers to a provision in an umbrella liability policy wherein losses which come within the retention limits of the underlying (primary) policy are paid by the umbrella Insurer because the underlying limits have been exhausted.

Employee Benefits Liability

Liability of an employer for an error or omission in the administration of an employee benefit program, such as failure to advise employees of benefit programs. Coverage of this exposure is usually provided by endorsement to the general liability policy but may also be provided by a fiduciary liability policy.

Employer’s Liability Coverage

This coverage provided by part 2 of the Workers’ Compensation policy provides coverage to the insured (employer) for liability to employees for work-related bodily injury or disease, other than liability imposed on the insured by a workers’ compensation law.

Employment Practices Liability Insurance (EPLI)

A type of liability insurance covering wrongful acts arising from the employment process. The most frequent types of claims covered under such policies include: wrongful termination, discrimination, sexual harassment, and retaliation. In addition, the policies cover claims from a variety of other types of inappropriate workplace conduct, including (but not limited to) employment-related: defamation, invasion of privacy, failure to promote, deprivation of a career opportunity, and negligent evaluation. The policies cover directors and officers, management personnel, and employees as insureds. The most common exclusions are for bodily injury (BI), property damage (PD), and intentional/dishonest acts. EPLI policies are written on a claims-made basis. The forms contain “shrinking limits” provisions, meaning that insurer payment of defense costs — which are often a substantial part of a claim — reduce the policy’s limits. This approach contrasts with commercial general liability (CGL) policies, in which defense is covered in addition to policy limits. Although EPLI is available as a stand-alone coverage, it is also frequently sold as part of a management liability package policy. In addition to providing directors and officers (D&O) and fiduciary liability insurance, management liability package policies afford the option to cover employment practices liability (EPL).

Excess of Loss Reinsurance

Refers to a method whereby an Insurer pays the amount of each claim for each risk up to a predetermined limit and the Reinsurer pays the amount of claim in excess to a specific amount.

Ex-Patriot (a/k/a Ex-Pat)

A person living and working in a country other than his or her own homeland.

Exporters’ Insurance Packag

Refers to insurance coverage applicable to U.S. businesses that have foreign exposures (goods, services and people travelling outside of the U.S.) but no “bricks and mortar” outside of the U.S.

Extra Expense Insurance

Coverage for exposures related to efforts to get a business damaged by an insured peril back to the position it would have been had no loss occurred.

Extra-Territorial Benefits

This refers to Workers’ Compensation Schemes (Private or State-run) where covered employees working abroad are injured and afforded benefits under such scheme. Extra-Territorial Benefits vary from country to country.

Facultative Obligatory Treaty Reinsurance

This type of reinsurance treaty is a cross between facultative and treaty reinsurance. The ceding company can assign certain risks to its Reinsurer which it is then obliged to accept.

Facultative Reinsurance

Refers to individual risks offered by an Insurer to a Reinsurer. Each party is free to negotiate terms as they wish.

Fire Legal Liability

This insurance applies to property loss liability as the result of negligence on the part of the Insured which allows the spreading of fire to others’ property.

F.O.C. (Foreign) Form

Standard foreign fire policy conditions written by the Fire Offices’ Committee in London.

Foreign National

Is a person who is not a citizen of the host country in which he or she is residing or temporarily located. For example, a foreign national in Canada is someone who is neither a Canadian citizen nor a permanent resident of Canada. However, in the European Union, a foreign national is a third country national, i.e. someone who is not a citizen of any of the member states of the European Union.

Fortuitous Loss

Refers to a loss occurring by pure chance or accident – not intentional.

Fronting (Company)

In international insurance, this refers to a locally admitted Insurer ceding the local risk, less any retention – fronting fee – and/or taxes, to its Reinsurer.


Foreign Account Tax Compliance Act — enforces transparency in foreign bank accounts and insurance placements.

Freedom of Services (FOS) Program

Allows a carrier who is licensed in the European Economic Area (EEA) (the countries of the EU plus Iceland, Liechtenstein and Norway) to write insurance coverage on a crossborder, non-admitted basis, within the EEA. The policies can be underwritten by a carrier in any EEA member state/country, to cover exposures in any other EEA member states/countries the client is located in.

General Liability Insurance

Refers to coverage for an Insured when negligent acts or omissions result in bodily injury and / or property damage on the premises of a business, when an individual is injured as the result using the Insured’s product manufactured or distributed by a business, or when someone is injured in the general course of operations of a business.

Global Insurance

Worldwide insurance coverage which includes the parent company’s domicile. As opposed to a Controlled Master Program (CMP) which covers mostly only the foreign operations of a multinational company.

Global Carrier

An insurance carrier with coverage territory capabilities throughout most of the world, including the country in which the global client is domiciled.

Global Client

Is the headquarters of the client. The global client has worldwide decision-making authority for the company. The global client is the controlling broker’s domestic client.

Gross Earnings (Business Interruption)

Refers to coverage for loss in the gross earnings (minus expenses that cease during the period of interruption) as a result of a business interruption caused by damage to covered property by an insured peril.

Gross Negligence

Refers to reckless action with regard to consequences.

Guarantee Endorsement

In non-restricted countries, achieving the terms, conditions and coverage of the Master Policy is not a problem; however, rather than translating each and every policy to be sure it agrees with the Master, a Guarantee Endorsement should be endorsed so that all its provisions apply locally – regardless of the local terms and conditions.


Refers to an occurrence that increases to likelihood of a loss.

Highly Protected Risk (HPR)

Are generally risks where some action has been taken to reduce the possibility and severity of loss. The construction of a functioning sprinkler system in a building is an example of such an action. HPR properties are better risks and therefore result in lower premium rates.

Hold Harmless Agreements

Refers to the assumption of liability by way of a contractual agreement by one party, which relieves the other party of any liability.

Home Foreign

Describes the international insurance program of a multinational company and is a phrase used principally by international Brokers and Insurers to connote a type of program.


Used in marine insurance to indicate coverage for property damaged or destroyed as a result of negligence on the part of the crew.

Increased Cost of Construction

Used in property insurance when after a loss local laws require a certain type of construction be used to repair or replace the damaged or destroyed building in order to conform to current code(s) at an increased cost.


Compensation for a loss.

Indemnity Agreement

A policy clause that provides that the Insured will be restored to the financial condition it would have been in had no loss occurred.


Native to the country or region.

Inflation Endorsement

This endorsement is attached to property policies in order to automatically adjust the amount of insurance based on the construction cost index in a given country.

Inherent Vice

This property insurance exclusion excludes construction which is likely to cause of loss and also other ‘attractive nuisances’ such as rodent droppings in a sugar warehouse.

IPT — Insurance Premium Tax

Joint Loss Agreement

Refers to the division of a loss payment among policies and / or Insurers in the proportion that each policy bears to the total.


The combination of a number of policies which each add to the total limit available by attaching above the limits which came before (under it). Layering applies mostly to large companies with the need for capacity not afforded by a single Insurer.

Locally Admitted and Placed Program

Policies written by carriers licensed in each of the specific countries that the client is located in. The local country carriers may or may not be part of the global carrier’s “family of carriers”, but even if the carriers have the same parent they are not joined up or controlled when they are not placed by the controlling broker through the global carrier. The program is legally compliant but the global client and the controlling broker have NO CONTROL over the local insurance policies.

Local Broker

A licensed insurance broker operating in a specific country.

Local Broker Network

A network or group of licensed insurance brokers operating in specific countries.

Local Carrier

An insurance carrier located, licensed and operating in a specific country. The carrier may or may not be a part of a global carrier’s “family of carrier’s.

Local Client

The subsidiary client of the global client in a specific country.

Local Government Institutional Coverage

Coverages that can only be accessed “in country” such as: the Terrorism GAREAT and Natural Catastrophe CAT NAT Funds in France.

Long Term Agreements (LTAs)

These agreements between the Insured and the Insurer usually range in policy periods of 3 to 10 years, provide a premium discount for the Insured and are usually noncancelable except under certain conditions.

Loss of Income Insurance

This coverage applies to property policies and provides for employees’ loss of income after damage by an insured peril and causes unemployment.

Loss Reserves

This refers to provisions being taken for known claims but not paid and for incurred but not reported (IBNR) claims.

Maximum Foreseeable Loss (MFL)

This refers to the worst case scenario where an estimate is made of the maximum loss amount in the event of a catastrophe loss.

Maximum Probable Loss (MPL)

This refers to the maximum value of a loss under realistic circumstances in which, for example, various fire protection and suppression systems extinguished a fire before additional damaged could be done.

Monopolistic State Fund — USA

This refers to State operated insurance schemes for Workers’ Compensation insurance. These schemes are not unlike many programs around the world which are operated either as part of a Social Security Program or simply as State run insurance.

Multinational Pooling Program (with regards to Employee Benefits)

Is a global financing mechanism that allows multinational organizations to benefit from favorable claims experience on life and health insurance through the payment of dividends and achieving purchasing scale. The concept of pooling is: “Centralized profit and loss account, combining the experience of a multinational company’s global employee benefits portfolio into a centrally administered account, for the purpose of providing a global profit sharing.” The profit sharing is made possible by a centralized flow of reinsurance and an accounting system designed to allow a multinational employer to participate directly in the experience of the sum of all its local employee benefit plans on a global basis. A “pool” is set up through an agreement between the client’s headquarter and the carrier and is not to cost more than the sum of all premium collected locally from a client’s subsidiaries. There are no implementation costs to set up a pool and no penalties charged in case of a pool’s cancellation. All local policies are issued and administered in compliance with local laws and regulations.

Multinational Pooling Carrier Network

A network of multinational carriers that work together. Each network can enter into agreements with local carriers in countries that they themselves are not licensed in, to provide local country coverage for their pool clients. The main providers in the market are: All Net, GENERALI Employee Benefits Network, ING Global Employee Benefits Network, Insurope, International Group Program (IGP), Maxis Global Benefit Network, Swiss Life Network, Zurich Employee Benefits Network.

Multinational Program

Multinational programs are written by carriers licensed in each of the specific countries that the client is located in. The local carriers may or may not be part of the global carrier’s “family of carriers” in each of the countries that the client is in. The controlling broker writes a Global Master Difference in Conditions /Difference in Limits (DIC/DIL) to come in over the top of the locally placed policies that may be insufficient, either in coverage or in limits. This is excess coverage that will come into play in the event of a loss where the local policies are insufficient, either in coverage or in limits. The Multinational Insurance Program only works if the local carrier is part of the global carrier’s “family of carriers”, if it is not, the global carrier writing the global master DIC/DIL will have to be requested by the controlling broker to agree to going over the locally placed carrier policies. It is the global carrier’s decision to go over or not.

Mutual Insurance Company

An insurance company owned by the policyholders.

Named Perils Policy

An insurance policy which specifies the perils which will be covered. An event caused by an unnamed peril will not be covered.

No-Fault Automobile Insurance

A type of automobile policy in which the Insured’s own policy provides indemnity for bodily injury and / or property damage without regard to fault.

Non-Admitted Insurance

Insurance coverage written by a company that is neither licensed nor registered to do business in the country where the property or risk is located. Some countries allow nonadmitted insurance; others do not.

Pan Regional Program

An insurance program that is multinational but contained within a certain region – you could have a Pan-European Program that would cover the countries of the EU and you could have a separate Pan-Asia program that covers multiple selected countries in Asia.


A method by which each Insurer in a pool shares in each and every risk written by other members.

Probable Maximum Loss (PML)

Maximum Probable Loss (MPL), above.

Product Recall Insurance

This coverage is most often excluded from General Liability policies; however, in some instances in certain countries this coverage can be purchased. The coverage provides for the expenses incurred by a company recalling its product whether or not defective.

Public Liability Insurance

This broad coverage is intended for companies and generally covers all exposures for property damage and bodily injury except aviation and automobile exposures.

Quota Share Reinsurance

This is a form of automatic reinsurance which requires the Insurer to transfer and the Reinsurer to accept a previously agreed percentage of every risk within a defined category of business written by the Insurer.

Replacement Cost (less physical depreciation)

This is the amount it takes to replace an Insured’s damaged or destroyed property with one of like kind and quality. The objective is to put the Insured back in the financial position it would have been in had no loss occurred.

Retrospective Rating

This refers to a way of establishing rates in which the current year’s premium is calculated to reflect the actual year’s loss experience. Premiums are adjusted at the end of the year to reflect the actual loss experience.

Reverse Flow Business

Is where you as a licensed local insurance broker receive a local country insurance client in your country, which is a part of a multinational client. The policy is given to you by either the controlling broker or by the global or local insurance carrier, to act as the local client’s local country insurance broker.


Request for Proposal.

Self Insurance

Protecting one’s self or company by putting aside money to pay for otherwise insurable and predictable losses. To purchase insurance for these types of losses would cost more because in addition to the premium charged, Insurers charge for their overhead, selling, general and administrative charges plus any premium taxes.

Self-Insured Retention (SIR)

Refers to the portion of a loss that is retained by the Insured.

Tacit Renewal

All French annual policies include a “tacit renewal” clause whereby they renew automatically unless the Insured or Insurance Company has given notice of cancellation at anniversary date. The usual notice period is 2 months prior to anniversary date but some policies provide for 3 months. There are specific, formal rules as to how notice must be given. Notice by email or by scanned documents is not valid. Other countries can include “tacit renewal” clauses too.


Refers to standard rates set by a rating bureau, Government Authority, or associations of Insurers for a particular line of coverage. In some countries and /or markets, tariff rates are strictly enforced and in others, they act as guidelines.

Tax Liability Endorsement

This endorsement should be made part of a Controlled Programs’ Master Policy. It provides that if a valid foreign claim must be paid in the USA (other countries should check their tax laws for applicability), Insurer(s) will pay any income tax the Insured will incur as a result of the claim payment.

Third Country National (TCN)

Any person who is not a citizen of the country they are in.

Third Party

Refers to an individual other than the Insured who has incurred a loss as the result of the acts or omissions of the Insured.

Umbrella Liability

This is a form of excess insurance (over primary liability policies) but it also serves to fill gaps in coverage under the basic primary policies.

Undirected or “Orphan” Placements

The global carrier is working either with a controlling broker who does not have a local country broker network or with a broker who did not stipulate at the time of binding coverage, which local country broker to use in a specific local country. Undirected policy placements occur when the global carrier assigns the undirected placement with a local broker of their own choice.


Refers to either the failure to purchase adequate insurance limits or the failure to meet a coinsurance requirement.

Workers’ Compensation — USA

Coverage A — This section refers to the agreement under which the Insurer agrees to pay all compensatory benefits required of an Insured under the WC Act of the appropriate State(s). Coverage B — This section provides coverage for situations when a worker is not covered under the WC law and can sue for injuries suffered under common law.

Worldwide Insurance

Means an international insurance program with a policy territory consisting of the entire world EXCEPT the country where the insured is domiciled.