Glossary | QBE Insurance Group Ltd. (2024)

The matching of all claims occurring (regardless of when reported or paid) during a given 12month period with all premium earned over the same period.

The total of net commission and operating expenses incurred in the generation of net earned premium and often expressed as a percentage of net earned premium.

Insurance written by an insurer that is admitted (or licensed) to do business in the (US) state in which the policy was sold.

One who negotiates contracts of insurance or reinsurance as an insurance company's representative i.e. the agent's primary responsibility is with the insurance carrier and not the insurance buyer.

Total of all claims with a net cost of less than US$2.5 million as a percentage of net earned premium.

One who negotiates contracts of insurance or reinsurance on behalf of an insured party, receiving a commission from the insurer or reinsurer for placement and other services rendered. In contrast with an agent, the broker's primary responsibility is with the insurance buyer not the insurance carrier.

In relation to a Lloyd’s member, the maximum amount of insurance premiums (gross of reinsurance but net of brokerage) which a member can accept. In relation to a syndicate, the aggregate of each member’s capacity allocated to that syndicate.

Net profit after tax attributable to QBE shareholders, adjusted for the post-tax effect of amortisation and impairment of intangibles and other non-cash items. This definition is used for the purpose of the Group’s dividend policy.

Insurance that is primarily concerned with the losses resulting from injuries to third persons or their property (i.e. not the policyholder) and the resulting legal liability imposed on the insured. It includes, but is not limited to, general liability, employers’ liability, workers’ compensation, professional liability, public liability and motor liability insurance.

A reinsurance contract (often in the form of excess of loss reinsurance) that, subject to specified limits and retention, compensates the ceding insurer for losses in related to an accumulation of claims resulting froma catastrophe event or series of events.

The amount payable under a contract of insurance or reinsurance arising from a loss relating to an insured event.

The aggregate of all claims paid during an accounting period adjusted by the change in the claims provision for that accounting period.

The estimate of the most likely cost of settling present and future claims and associated claims adjustment expenses plus a risk margin to cover possible fluctuation of the liability.

Net claims incurred as a percentage of net earned premium.

The measure of variability in the net discounted central estimate used in the determination of the probability of adequacy.

The sum of the claims ratio, commission ratio and expense ratio. A combined operating ratio below 100% indicates profitable underwriting results. A combined operating ratio over 100% indicates unprofitable underwriting results.

Refers to insurance for businesses, professionals and commercial establishments.

Fee paid to an agent or broker as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer and the marketing methods.

Net commission expense as a percentage of net earned premium.

The difference in yield between a corporate bond and a reference yield (e.g. LIBOR, BBSW or a fixed sovereign bond yield).

The weighted average term of cash flows for a corporate bond. It is used to measure the price sensitivity of a bond to changes in credit spreads.

The amount or proportion of some or all losses arising under an insurance contract that the insured must bare.

Acquisition costs relating to the unexpired period of risk of contracts in force at the balance date which are carried forward from one accounting period to subsequent accounting periods.

A form of reinsurance in which, in return for a premium, the reinsurer accepts liability for claims settled by the original insurer in excess of an agreed amount, generally subject to an upper limit.

Underwriting and administrative expenses as a percentage of net earned premium.

The reinsurance of individual risks through a transaction between the reinsurer and the cedant (usually the primary insurer) involving a specified risk.

Generally used to describe non-life insurance business including property and casualty insurance.

The amount of claims incurred during an accounting period before deducting reinsurance recoveries.

The proportion of gross written premium recognised as income in the current financial year, reflecting the pattern of the incidence of risk and the expiry of that risk.

The total premium on insurance underwritten by an insurer or reinsurer during a specified period, before deduction of reinsurance premium.

Claims arising out of events that have occurred before the end of an accounting period but have not been reported to the insurer by that date.

The sum of the underwriting result and investment income on assets backing policyholders’ funds.

The ratio of insurance profit to net earned premium.

See reinsurance

The aggregate of claims each with a net cost of US$2.5 million or more as a percentage of net earned premium.

A lead underwriter operates in the subscription market and sets the terms and price of a policy. The follower or non-lead is an underwriter of a syndicate or an insurance company that agrees to accept a proportion of a given risk on terms set by the lead underwriter.

A policy that protects the lender (e.g. a bank) against non-payment or default on the part of the borrower on a residential property loan.

Written undertaking by a financial institution to provide funding if required.

Insurance and reinsurance market in London. It is not a company but is a society of individuals and corporate underwriting members.

An underwriting agent which has permission from Lloyd's to manage one or more syndicates and carry on underwriting and other functions for a member.

Classes of insurance business involving coverage for risks where notice of a claim may not be received for many years and claims may be outstanding for more than one year before they are finally quantifiable and settled by the insurer.

A wholesale insurance agent with the authority to accept placements from (and often to appoint) retail agents on behalf of an insurer. MGAs generally provide underwriting and administrative services such as policy issuance on behalf of the insurers they represent. Some may handle claims.

An estimate of the largest claim to which an insurer will be exposed (taking into account the probability of that loss event at a return period of one in 250 years) due to a concentration of risk exposures, after netting off any potential reinsurance recoveries and inward and outward reinstatement premiums.

The weighted average term of cash flows in a bond. It is used to measure the price sensitivity of a bond to changes in interest rates.

US federally regulated crop insurance protecting against crop yield losses by allowing participating insurers to insure a certain percentage of historical crop production.

The amount of claims incurred during an accounting period after deducting reinsurance recoveries.

Net claims incurred as a percentage of net earned premium.

Net written premium adjusted by the change in net unearned premium.

Gross investment income including foreign exchange gains and losses and net ofinvestment expenses.

The total premium on insurance underwritten by an insurer during a specified period after the deduction of premium applicable to reinsurance.

The amount of provision established for claims and related claims expenses that have occurred but have not been paid.

Insurance for individuals and families, such as private motor vehicle and homeowners insurance.

The net insurance liabilities of the Group.

Amount payable by the insured or reinsured in order to obtain insurance or reinsurance protection.

Ratio of net tangible assets to net earned premium. This is an important industry indicator in assessing the ability of general insurers to settle their existing liabilities.

This comprises the sum of the capital charges for asset risk, asset concentration risk, insurance concentration risk and operational risk as required by APRA. The PCA must be disclosed at least annually.

A statistical measure of the level of confidence that the outstanding claims provision will be sufficient to pay claims as and when they fall due.

A type of reinsurance in which the original insurer and the reinsurer share claims in the same proportion as they share premiums.

The sum of the Prescribed Capital Account (PCA) plus any supervisory adjustment determined by APRA. The PCR may not be disclosed.

The amount of claims recovered from reinsurance, third parties or salvage.

An agreement to indemnify a primary insurer by a reinsurer in consideration of a premium with respect to agreed risks insured by the primary insurer. The enterprise accepting the risk is the reinsurer and is said to accept inward reinsurance. The enterprise ceding the risks is the cedant or ceding company and is said to place outward reinsurance.

A reinsurance agreement under which members of a syndicate, for a year of account to be closed, are reinsured by members who comprise that or another syndicate for a later year of account against all liabilities arising out of insurance business written by the reinsured syndicate.

The insurer that assumes all or part of the insurance or reinsurance liability written by another insurer. The term includes retrocessionaires, being insurers that assume reinsurance from a reinsurer.

That amount of liability for which an insurance company will remain responsible after it has completed its reinsurance arrangements.

Reinsurance of a reinsurer by another reinsurance carrier.

Divisional management-basis profit as a percentage of allocated capital as determined by the Group’s economic capital model.

Group statutory net profit after tax as a percentage of average shareholders’ funds.

Classes of insurance business involving coverage for risks where claims are usually known and settled within 12 months.

A form of excess of loss reinsurance which provides that the reinsurer will pay some or all of the reassured’s losses in excess of a stated percentage of the reassured’s premium income, subject (usually) to an overall limit of liability.

In contrast to "admitted insurers", every (US) state also allows non-admitted (or "surplus" or "excess lines") carriers to transact business where there is a special need that cannot or will not be met by admitted carriers. The rates and forms of non-admitted carriers generally are not regulated in that state, nor are the policies back-stopped by the state insolvency fund covering admitted insurance. Brokers must inform insurers if their insurance has been placed with a non-admitted insurer.

A measure of how many years it would take for dust disease claims to exhaust the current level of claims provision. It is calculated on the average level of claims payments in the last three years.

A member or group of members, underwriting insurance business at Lloyd’s through the agency of a managing agent.

A measure of performance of a company’s shares over time. It includes share price appreciation and dividend performance.

Reinsurance of risks in which the reinsurer is obliged by agreement with the cedant to accept, within agreed limits, all risks to be underwritten by the cedant within specified classes of business in a given period of time.

The process of reviewing applications submitted for insurance or reinsurance coverage, deciding whether to provide all or part of the coverage requested and determining the applicable premium.

The aggregate of policy acquisition costs, excluding commissions, and the portion of administrative, general and other expenses attributable to underwriting operations.

The amount of profit or loss from insurance activities exclusive of net investment income and capital gains or losses.

The year in which the contract of insurance commenced or was underwritten.

The portion of a premium representing the unexpired portion of the contract term as of a certain date.

A methodology used for determining the share price applicable to dividend and other share related transactions.

Premiums written, whether or not earned, during a given period.