Life Insurance Glossary - I

IBNR (Incurred but not Reported) provision
Provision for claims incurred but not reported by the balance-sheet date. That is, it is anticipated that there would be a number of policies that have, but for the advice of the claim to the insurer, occurred and therefore are likely to result in a liability on the insurer.
The magnitude of this provision can be expected to reduce as the time since the insurance risk on the contract expired extends. The magnitude is also likely to vary depending on the type of insurance risk covered by any particular class of insurance contract.

Illegal Contract
It is a contract, which is contrary to law and against the interests of public. It can not be sustained and does not have legal effect.

Imputed Negligence
Case in which responsibility for damage can be transferred from the negligent party to another person, such as an employer

Incurred Claims
Incurred claims equal the claims paid during the policy year plus the claim reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred claims.

Incurred Loss Ratio
The percentage of losses incurred to premiums earned.

Indemnification
Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement

Indemnify
Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.

Indemnity Period
The period, beginning with the date of the damage, during which the turnover of the business is affected by the damage. It lasts until the turnover recovers and reaches the point at which it would have been had the loss not occurred, or the expiry of the maximum indemnity period -the number of months selected by the insured -whichever occurs first.

Indemnity principle
Of a general legal principle related to insurance which holds that the individual recovering under an insurance policy should be restored to the approximate financial position he or she was in prior to the loss.

Independent adjuster
One who adjusts losses on behalf of companies but is not employed by any one. He or she is paid by fee for each loss adjusted.

Indirect Loss (Or Damage)
Loss resulting from a peril, but not caused directly and immediately thereby. For example: Loss of property due to fire is a direct loss, while the loss of rental income as the result of the fire would be an indirect loss.

Inherent vice
A characteristic depreciation such as the fading of ink, a cracking of parchment, the graying of hair

Insurable interest
An interest which might be damaged if the peril insured against occurs: the possibility of a financial loss to an individual which can be protected against through insurance.

Insurance
An economic device whereby the individual substitutes a small certain cost (the premium) for a large uncertain financial loss (the contingency insured against) which would exist if it were not for the insurance contract: an economic device for reducing and eliminating risk through the process of combining a sufficient number of homogeneous exposures into a group in order to make the losses predictable for the group as a whole.

Insurance Company
1. An organization chartered to operate as an insurer. (2) Any corporation primarily engaged in the business of furnishing insurance protection to the public

Insurance Entities
Any corporate body or individual which is operating as an insurer, reinsurer or insurance intermediary and which is subject to insurance regulation

Insurance Product
An insurance product is defined as a product that is provided by an insurance company.

Insurance Policy
Legal document issued to the insured setting out the terms of the contract of insurance.

Insured
The person to whom or on whose behalf benefits are payable under the policy

Insurer
A licensed legal entity, which underwrites insurance, including a mutual insurance company (but note the exemption of pure reinsurers)

Intermediary
Any person who, or organization which, gives advice by way of directly offering, advertising or on a person-to-person basis in respect of an insurance product and includes the promotion of such a product or the facilitation of an agreement or contract between an insurer and a customer. Intermediaries are generally divided into separate classes. The most common types are 'independent intermediaries' who represent the buyer in dealings with the insurer (also known as independent brokers) and 'agents' (which generally include multiple agents and sub-agents) who represent the insurer.

Irrevocable beneficiary
Beneficiary designation allowing no change to be made in the beneficiary of an insurance policy without the consent of the named beneficiary.


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