P

Partial Loss - Any loss that is not a total loss.

 

Paid-Up Additional Insurance - An option that allows the policyholder to use policy dividends and/or additional premiums to buy additional insurance on the same plan as the basic policy and at a face amount determined by the insured's attained age.

 

Particular Average Particular Average - accidental partial loss of the subject matter insured proximately caused by an insured peril.

 

Participation Rate - In equity-indexed annuities, a participation rate determines how much of the gain in the index will be credited to the annuity. For example, the insurance company may set the participation rate at 80%, which means the annuity would only be credited with 80% of the gain experienced by the index.

 

Percentage of Depreciation - The percentage, of the sound value of cargo, by which the cargo has suffered damage covered by the policy.  The percentage is applied to the insured value expressed in the policy to determine the measure of indemnity.

 

Peril - A term used in the Marine Insurance Act (1906) to denote a hazard.  The principle of proximate cause is applied to an insured peril to determine whether or not a loss is recoverable.  In modern practice the term “risk” often replaces “peril”.

 

Peril - The cause of a possible loss. Not to be confused with hazard.

 

Period of cover - means the current period for which we have agreed to provide you with insurance cover. The current period is shown on the most recent of your insurance schedule and renewal notice and any receipt we may send to you. When we make a writeoff payment, the period of cover comes to an end.

 

Personal Lines - Insurance for individuals and families, such as private-passenger auto and homeowners insurance.

 

Personal Valuables -  For most people, their Home contents include personal valuables which they often wear or take with them when they are away from their home. Cover for these items is often limited.  Extra cover is available by payment of an additional premium.

 

Point-of-Service Plan - Health insurance policy that allows the employee to choose between in-network and out-of-network care each time medical treatment is needed.

 

Policy - The written contract effecting insurance, or the certificate thereof, by whatever name called, and including all clause, riders, endorsements, and papers attached thereto and made a part thereof.

 

Policy schedule - A notice showing the particular details of a policy.

 

Policyholder - Generally use to describe the policy owner and/or insured. See Insured.

 

Policyholder Dividend Ratio - The ratio of dividends to policyholders related to net premiums earned.

 

Policyholder Surplus - The sum of paid in capital, paid in and contributed surplus, and net earned surplus, including voluntary contingency reserves. It also is the difference between total admitted assets and total liabilities.

 

Policy or Sales Illustration - Material used by an agent and insurer to show how a policy may perform under a variety of conditions and over a number of years.

 

Pollution Hazard Clause - A clause in a hull policy, whereby underwriters cover loss of, or damage to, the insured ship, where it is caused deliberately by Governmental authority in attempts to mitigate the effects of pollution by oil or other contaminating substance leaking from a stricken ship.

 

Portfolio Transfer - A procedure for transferring a long term insurance contract from one re-insurer to another, including outstanding losses.

 

Pre-Existing Condition - A coverage limitation included in many health policies which states that certain physical or mental conditions, either previously diagnosed or which would normally be expected to require treatment prior to issue, will not be covered under the new policy for a specified period of time.

 

Preferred Auto - Auto coverage for drivers who have never had an accident and operates vehicles according to law. Drivers are not a risk for any insurance company that writes auto insurance, and no insurance company would be afraid to take them on as risk.

 

Preferred Provider Organization - Network of medical providers who charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.

 

Premium - The price of insurance protection for a specified risk for a specified period of time.

 

Premium Reserve - A provision in a re-insurance contract allowing the reassured to retain an agreed proportion of the premium against payment of claims.

 

Premium Transfer - Syndicate accounting is on an annual basis but some long term insurance contracts run for more than 12 months.  Where the premium paid in the first year relates in part to subsequent years a transfer is arranged at the end of the year to carry forward the relevant premium to the subsequent underwriting year’s account.  The operation becomes a book entry only.

 

Premium Balances - Premiums and agents' balances in course of collection; premiums, agents' balances and installments booked but deferred and not yet due; bills receivable, taken for premiums and accrued retrospective premiums.

 

Premium Earned - The amount of the premium that as been paid for in advance that has been "earned" by virtue of the fact that time has passed without claim. A three-year policy that has been paid in advance and is one year old would have only partly earned the premium.

 

Premium to Surplus Ratio - This ratio is designed to measure the ability of the insurer to absorb above-average losses and the insurer's financial strength. The ratio is computed by dividing net premiums written by surplus. An insurance company's surplus is the amount by which assets exceed liabilities. The ratio is computed by dividing net premiums written by surplus. For example, a company with $2 in net premiums written for every $1 of surplus has a 2-to-1 premium to surplus ratio. The lower the ratio, the greater the company's financial strength. State regulators have established a premium-to-surplus ratio of no higher than 3-to-1 as a guideline.

 

Premium Unearned - That part of the premium applicable to the unexpired part of the policy period.

 

Pretax Operating Income - Pretax operating earnings before any capital gains generated from underwriting, investment and other miscellaneous operating sources.

 

Pretax Return on Revenue - A measure of a company's operating profitability and is calculated by dividing pretax operating earnings by net premiums earned.

 

Private use - see Use

 

Private - Passenger Auto Insurance Policyholder Risk Profile - This refers to the risk profile of auto insurance policyholders and can be divided into three categories: standard, nonstandard and preferred. In the eyes of an insurance company, it is the type of business (or the quality of driver) that the company has chosen to taken on.

 

Profit - A measure of the competence and ability of management to provide viable insurance products at competitive prices and maintain a financially strong company for both policyholders and stockholders.

 

Proximate Cause - The most direct cause of loss, that is, the most effective and dominant cause in a chain of events which ends in the loss.

Proximate cause The direct, real, or operative cause of loss or damage, as determined by applying common sense standards.