Insurance Wiki - User contributions [en-gb]

Insurance Premium Tax

2025-08-12T09:56:23Z

PaulWaring:

Insurance Premium Tax (IPT) is a tax implemented by several countries which applies the majority of insurance products.

IPT is calculated based on the gross premium. For example, if the gross premium is £1000 and the IPT rate is 10%, the IPT amount will be £100 and the total amount charged to the policyholder will be £1100.

As a result of IPT being levied, insurance products are generally outside the scope of Value Added Tax (VAT).

== United Kingdom ==

The current rate of IPT in the UK is 12%, however a higher rate of 20% is charged on travel insurance. Some products are exempt from IPT, including:

* Most long-term insurance, e.g. life insurance.
* Reinsurance.
* Risks located outside of the UK - although these may be subject to IPT in the country where the risk is located.

Usually when the IPT rate changes, the rate applied to a policy is that in force at inception or renewal, and this applies to all premiums collected or returned. However, sometimes anti-avoidance measures will be implemented, such that an additional premium will be charged at the rate in force as of the effective date of the adjustment giving rise to the additional premium, even if a different rate was in force at inception or renewal.

== Channel Islands ==

Although some UK insurance policies cover the Channel Islands by default (especially motor insurance), the Channel Islands do not have IPT.

Insurance Premium Tax

2025-08-12T09:52:42Z

PaulWaring: /* United Kingdom */

Insurance Premium Tax (IPT) is a tax implemented by several countries which applies the majority of insurance products.

IPT is calculated based on the gross premium. For example, if the gross premium is £1000 and the IPT rate is 10%, the IPT amount will be £100 and the total amount charged to the policyholder will be £1100.

As a result of IPT being levied, insurance products are generally outside the scope of Value Added Tax (VAT).

== United Kingdom ==

The current rate of IPT in the UK is 12%.

Usually when the IPT rate changes, the rate applied to a policy is that in force at inception or renewal, and this applies to all premiums collected or returned. However, sometimes anti-avoidance measures will be implemented, such that an additional premium will be charged at the rate in force as of the effective date of the adjustment giving rise to the additional premium, even if a different rate was in force at inception or renewal.

== Channel Islands ==

Although many UK insurance policies cover the Channel Islands, they do not attract IPT.

Incurred But Not Reported

2025-08-12T09:49:33Z

PaulWaring:

Incurred But Not Reported (IBNR) refers to incidents giving rise to a claim under a policy which have already occurred but a claim has not been reported to the insurer. These can arise because:

* The policyholder has not yet reported the claim, e.g. if they were hospitalised as a result of the incident.
* A third party has suffered a loss but has yet to trace the policyholder and their insurer (e.g. hit by a policyholder's vehicle and the driver did not stop).
* The policyholder or a third party has suffered a loss but is not yet aware of it, e.g. in long-tail claims such as asbestosis where there is a long gap between the exposure and a medical diagnosis.

The quantum of IBNR is always an estimate based on what the insurer expects to pay in the future on policies already written. Some classes of business will be easier to estimate than others, e.g. motor insurance has a fairly predictable claims pattern with a short time between incident and claim, whereas infrequent but severe losses (e.g. aviation) or those with a long period between incident and claim are harder to estimate.

Incurred But Not Reported

2025-08-12T09:48:20Z

PaulWaring:

Incurred But Not Reported (IBNR) refers to incidents giving rise to a claim under a policy which have already occurred but a claim has not been reported to the insurer. These can arise because:

* The policyholder has not yet reported the claim.
* A third party has suffered a loss but has yet to trace the policyholder and their insurer (e.g. hit by a policyholder's vehicle and the driver did not stop).
* The policyholder or a third party has suffered a loss but is not yet aware of it, e.g. in long-tail claims such as asbestosis where there is a long gap between the exposure and a medical diagnosis.

The quantum of IBNR is always an estimate based on what the insurer expects to pay in the future on policies already written. Some classes of business will be easier to estimate than others, e.g. motor insurance has a fairly predictable claims pattern with a short time between incident and claim, whereas infrequent but severe losses (e.g. aviation) or those with a long period between incident and claim are harder to estimate.

Claims Made

2025-08-12T09:47:29Z

PaulWaring: Created page with "Certain policies - particularly professional indemnity - may be sold on a Claims Made basis. This means that the claim is covered by the policy in force at the point the claim is made, which could be a different policy to the one in force when the incident giving rise to the claim occurred. The insurer is therefore taking on a significant risk when offering a new policy, because they will be covering events that occurred prior to the policy starting if they result in a c..."

Certain policies - particularly professional indemnity - may be sold on a Claims Made basis. This means that the claim is covered by the policy in force at the point the claim is made, which could be a different policy to the one in force when the incident giving rise to the claim occurred. The insurer is therefore taking on a significant risk when offering a new policy, because they will be covering events that occurred prior to the policy starting if they result in a claim during the policy period.

One of the features of Claims Made policies is that cover needs to continue for some time after the insured risk has ceased. For example, if a firm of solicitors was to close, they would need to continue professional indemnity cover for several years afterwards, because poor advice given in the final year of trading may result in a claim several years later. This is usually accomplished via the purchase of run-off cover.

The alternative mechanism is [[Claims Occurred]].

Claims Occurred

2025-08-12T09:43:50Z

PaulWaring:

The vast majority of insurance policies are sold on a Claims Occurred / Occurences basis. This means that the claim is covered by the policy which was in force at the time of the incident which caused the claim. In most cases this will be the current or previous year's policy, however for long-tail risks (e.g. asbestosis claims under employer's liability) this could be a policy written decades ago.

The alternative mechanism is [[Claims Made]].

Claims Occurrences

2025-08-12T09:43:18Z

PaulWaring: PaulWaring moved page Claims Occurrences to Claims Occurred

#REDIRECT [[Claims Occurred]]

Claims Occurred

2025-08-12T09:43:18Z

PaulWaring: PaulWaring moved page Claims Occurrences to Claims Occurred

The vast majority of insurance policies are sold on a Claims Occurrences basis. This means that the claim is covered by the policy which was in force at the time of the incident which caused the claim. In most cases this will be the current or previous year's policy, however for long-tail risks (e.g. asbestosis claims under employer's liability) this could be a policy written decades ago.

The alternative mechanism is [[Claims Made]].

Claims Occurred

2025-08-12T09:42:11Z

PaulWaring: Created page with "The vast majority of insurance policies are sold on a Claims Occurrences basis. This means that the claim is covered by the policy which was in force at the time of the incident which caused the claim. In most cases this will be the current or previous year's policy, however for long-tail risks (e.g. asbestosis claims under employer's liability) this could be a policy written decades ago. The alternative mechanism is Claims Made."

Insurance Wiki

2025-08-12T08:27:21Z

PaulWaring: /* Claims */

Welcome to the Insurance Wiki, a collection of definitions and information about the insurance industry.

== Premiums ==

* [[Earned Premium]]
* [[Written Premium]]
* [[Insurance Premium Tax]]

== Claims ==

* [[Incurred But Not Reported]]
* [[Claims Made]]
* [[Claims Occurrences]]

Consolidator

2025-04-29T11:21:09Z

PaulWaring: Created page with "Consolidators are companies whose main business model is purchasing other companies, especially insurance brokers."

Consolidators are companies whose main business model is purchasing other companies, especially insurance brokers.

Insurance Wiki

2025-04-25T13:12:42Z

PaulWaring: /* Premiums */

MediaWiki:Mainpage

2025-04-25T11:01:55Z

PaulWaring: Replaced content with "Insurance Wiki"

Insurance Wiki

MediaWiki:Mainpage

2025-04-25T11:01:16Z

PaulWaring: Created page with "Welcome to the Insurance Wiki, a collection of definitions and information about the insurance industry. == Premiums == * Earned Premium * Written Premium == Claims == * Incurred But Not Reported"

Welcome to the Insurance Wiki, a collection of definitions and information about the insurance industry.

== Premiums ==

* [[Earned Premium]]
* [[Written Premium]]

== Claims ==

* [[Incurred But Not Reported]]

Insurance Wiki

2025-04-25T10:59:32Z

PaulWaring: PaulWaring moved page Main Page to Insurance Wiki

Insurance Wiki

2025-04-25T10:58:51Z

PaulWaring:

Insurance Wiki

2025-04-25T10:58:16Z

PaulWaring:

Welcome to the Insurance Wiki, a collection of definitions and information about the insurance industry.

== Claims ==

* [[Incurred But Not Reported]]

IBNR

2025-04-25T10:57:32Z

PaulWaring: Redirected page to Incurred But Not Reported

#REDIRECT [[Incurred But Not Reported]]

Incurred But Not Reported

2025-04-25T10:57:15Z

PaulWaring: Created page with "Incurred But Not Reported (IBNR) refers to incidents giving rise to a claim under a policy which have already occurred but a claim has not been reported to the insurer. These can arise because: * The policyholder has not yet reported the claim. * A third party has suffered a loss but has yet to trace the policyholder and their insurer (e.g. hit by a policyholder's vehicle and the driver did not stop). * The policyholder has suffered a loss but is not yet aware of it, e...."

Incurred But Not Reported (IBNR) refers to incidents giving rise to a claim under a policy which have already occurred but a claim has not been reported to the insurer. These can arise because:

* The policyholder has not yet reported the claim.
* A third party has suffered a loss but has yet to trace the policyholder and their insurer (e.g. hit by a policyholder's vehicle and the driver did not stop).
* The policyholder has suffered a loss but is not yet aware of it, e.g. in long-tail claims such as asbestosis where there is a long gap between the exposure and a medical diagnosis.

The quantum of IBNR is always an estimate based on what the insurer expects to pay in the future on policies already written. Some classes of business will be easier to estimate than others, e.g. motor insurance has a fairly predictable claims pattern with a short time between incident and claim, whereas infrequent but severe losses (e.g. aviation) or those with a long period between incident and claim are harder to estimate.

Combined Ratio

2025-04-25T10:22:20Z

PaulWaring:

The Combined Ratio is all costs incurred by an insurer (admin and claims) as a percentage of premium, i.e. the combination of the [[Loss Ratio]] and [[Expense Ratio]].

If the Combined Ratio is under 100%, the insurer has made an underwriting profit, i.e. it has collected more in premiums than it has paid out in claims and the costs of running the insurance business.

If the Combined Ratio is over 100%, the insurer has made an underwriting loss, i.e. it has collected less in premiums than it has paid out in claims and the costs of running the insurance business.

However, making an underwriting profit (or loss) does not mean that the insurer has made a profit (or loss) overall. This is because the insurer may have other income streams - in particular the income earned by investing the premiums for the period between policies starting and the payment of claims, which could be months or even years.

Combined Ratio

2025-04-25T10:20:14Z

PaulWaring:

The Combined Ratio is all costs incurred by an insurer (admin and claims) as a percentage of premium, i.e. the combination of the [[Loss Ratio]] and [[Expense Ratio]].

Combined Ratio

2025-04-25T10:18:56Z

PaulWaring: Created blank page

Expense Ratio

2025-04-25T10:18:48Z

PaulWaring: PaulWaring moved page Expense ratio to Expense Ratio without leaving a redirect

Expense Ratio

2025-04-25T10:18:25Z

PaulWaring: Created blank page

Loss Ratio

2025-04-23T11:14:28Z

PaulWaring:

The Loss Ratio for a policy or group of policies is the percentage of claim payments based on the premium charged. For example, if the premium was £1000 and £600 of claims had been paid, the loss ratio would be 60%.

Loss ratios may calculated against the gross or net premium, and on a written or earned basis.

As loss ratios only take into account claim payments, they do not allow for commissions, insurer costs etc. Therefore a loss ratio must be significantly below 100% for an insurer to make an underwriting profit.

Loss ratios vary based on the class of business, but a typical range for a loss ratio would be 50-70%. Anything below 50% may suggest that the insurer is overcharging policyholders and more competition will enter the market. Anything above 70% may suggest that the insurer is undercharging and will eventually be forced to increase rates.

Loss Ratio

2025-04-23T11:12:36Z

PaulWaring:

Earned Premium

2025-04-23T11:07:43Z

PaulWaring: Created page with "The Earned Premium is the part of the premium that has already been earned by the insurer, and is based on how far the policy has proceeded. For example, a typical 12 month policy will have: * 0% of the premium earned as of the start date * 25% of the premium earned at the end of month 3 * 50% of the premium earned at the end of month 6 * 100% of the premium earned at the end of month 12 This is different to the Written Premium, where the whole premium is recognise..."

The Earned Premium is the part of the premium that has already been earned by the insurer, and is based on how far the policy has proceeded. For example, a typical 12 month policy will have:

* 0% of the premium earned as of the start date
* 25% of the premium earned at the end of month 3
* 50% of the premium earned at the end of month 6
* 100% of the premium earned at the end of month 12

This is different to the [[Written Premium]], where the whole premium is recognised upfront.

Written Premium

2025-04-23T11:07:30Z

PaulWaring: Created page with "The Written Premium is the premium charged for the policy at inception or renewal. As soon as cover is agreed, the premium has been written, even if the policy does not start until a future date."

The Written Premium is the premium charged for the policy at inception or renewal.

As soon as cover is agreed, the premium has been written, even if the policy does not start until a future date.

Loss Ratio

2025-04-23T11:04:13Z

PaulWaring: Created page with "The Loss Ratio for a policy or group of policies is the percentage of claim payments based on the premium charged. Loss ratios may calculated against the gross or net premium, and on a written or earned basis."

The Loss Ratio for a policy or group of policies is the percentage of claim payments based on the premium charged.

Loss ratios may calculated against the gross or net premium, and on a written or earned basis.

Managing General Agent

2025-04-23T11:03:09Z

PaulWaring:

A Managing General Agent (MGA) is an entity which has authority to perform actions on behalf of an insurer. These may include:

* Underwriting new business and renewals
* Policy administration
* Opening, administering and settling claims

Any authority will be limited. Common restrictions include:

* Types of business permitted to underwrite
* Maximum exposure levels
* Maximum claim limits

Anything outside of the limits either has to be refused or referred to the insurer.

An MGA is usually remunerated via a commission based on the gross premium, however this is often adjusted based on loss ratios.

Managing General Agent

2025-04-23T11:02:09Z

PaulWaring:

MGA

2025-04-23T10:59:28Z

PaulWaring: Redirected page to Managing General Agent

#REDIRECT [[Managing General Agent]]

Managing General Agent

2025-04-23T10:59:13Z

PaulWaring: Created blank page

MIB

2025-04-23T10:56:57Z

PaulWaring: Redirected page to Motor Insurers' Bureau

#REDIRECT [[Motor Insurers' Bureau]]

ULR

2025-04-23T10:56:26Z

PaulWaring: Changed redirect target from Uninsured loss recovery to Uninsured Loss Recovery

#REDIRECT [[Uninsured Loss Recovery]]

Uninsured Loss Recovery

2025-04-23T10:56:07Z

PaulWaring: PaulWaring moved page Uninsured loss recovery to Uninsured Loss Recovery without leaving a redirect

Motor Insurers' Bureau

2025-04-23T10:55:32Z

PaulWaring: Created blank page

ULR

2025-04-23T10:54:42Z

PaulWaring: Redirected page to Uninsured loss recovery

#REDIRECT [[Uninsured loss recovery]]

Uninsured Loss Recovery

2025-04-23T10:54:24Z

PaulWaring: Created blank page

ANPR

2025-04-21T08:20:05Z

PaulWaring: Redirected page to Automatic number plate recognition

#REDIRECT [[Automatic number plate recognition]]

Automatic number plate recognition

2025-04-21T08:19:49Z

PaulWaring: Created page with "Automatic number plate recognition (ANPR) is a mechanism for automatically reading the registration number of a vehicle from the plates at the back or front. It has a number of purposes: * Ensuring a vehicle's owner has paid for fuel before they leave a petrol station. * Alerting the police to known stolen vehicles. In addition, registration numbers may be screened against the Motor Insurance Database to identify uninsured vehicles."

Automatic number plate recognition (ANPR) is a mechanism for automatically reading the registration number of a vehicle from the plates at the back or front. It has a number of purposes:

* Ensuring a vehicle's owner has paid for fuel before they leave a petrol station.
* Alerting the police to known stolen vehicles.

In addition, registration numbers may be screened against the [[Motor Insurance Database]] to identify uninsured vehicles.

Motor Insurance Database

2025-04-21T08:08:12Z

PaulWaring:

The Motor Insurance Database (MID) contains details of motor insurance policies, and the vehicles covered under them, in the UK.

The police have access to the MID and will routinely check whether a vehicle is insured when it is stopped for any reason (e.g. speeding).

Although the MID is not proof of insurance, if a vehicle is not registered on the MID then it will usually be assumed to be uninsured by the police. This assumption can be countered by production of the policyholder's insurance certificate, which is the legal proof of insurance.

The [[Motor Insurers' Bureau]] is responsible for the MID, however the implementation and operation of the system is outsourced.

MID

2025-04-21T08:06:42Z

PaulWaring: Redirected page to Motor Insurance Database

#REDIRECT [[Motor Insurance Database]]

Motor Insurance Database

2025-04-21T08:06:39Z

PaulWaring:

Motor Insurance Database

2025-04-21T08:06:31Z

PaulWaring: Created page with "The Motor Insurance Database (MID) contains details of all motor insurance policies, and the vehicles covered under them, in the UK. The police have access to the MID and will routinely check whether a vehicle is insured when it is stopped for any reason (e.g. speeding). Although the MID is not proof of insurance, if a vehicle is not registered on the MID then it will usually be assumed to be uninsured by the police. This assumption can be countered by production of th..."

The Motor Insurance Database (MID) contains details of all motor insurance policies, and the vehicles covered under them, in the UK.

The police have access to the MID and will routinely check whether a vehicle is insured when it is stopped for any reason (e.g. speeding).

Although the MID is not proof of insurance, if a vehicle is not registered on the MID then it will usually be assumed to be uninsured by the police. This assumption can be countered by production of the policyholder's insurance certificate, which is the legal proof of insurance.

Insurance Premium Tax

2025-04-21T08:02:40Z

PaulWaring:

Insurance Wiki

2025-04-21T08:00:55Z

PaulWaring:

Welcome to the Insurance Wiki, a collection of definitions and information about the insurance industry.

Insurance Premium Tax

2025-04-21T08:00:22Z

PaulWaring:

IPT

2025-04-21T07:59:01Z

PaulWaring: Redirected page to Insurance Premium Tax

#REDIRECT [[Insurance Premium Tax]]

Insurance Premium Tax

2025-04-21T07:58:39Z

PaulWaring:

Insurance Premium Tax (IPT) is a tax implemented by several countries which applies the majority of insurance products.

== United Kingdom ==

The current rate of IPT in the UK is 12%.

== Channel Islands ==

Although many UK insurance policies cover the Channel Islands, they do not attract IPT.