-Q-

QUOTA SHARE REINSURANCE

The basic form of participating treaty whereby the reinsurer accepts a stated percentage of each and every risk within a defined category of business on a pro rata basis. The word quota means a definite share. Participation in each risk is fixed and certain.

QUOTATION

Also referred to as a Quote. The rate at which an insurance company indicates its willingness to assume certain liabilities, or provide coverage, under an insurance policy.

RATE, ADJUSTED

A rate arrived at by means of the application of a special rating formula to a manual rate, for a risk large enough to warrant variations from the average risk.

RATE MANUAL

A book of rates rules, classifications or instructions, on insurance, intended as a guide or reference work for writing insurance.

RATED-UP

A term used to describe insurance issued to a person, who is a substandard risk, at a premium rate which is higher than that charged for a standard risk.

RATING BUREAUS

Organizations which ascertain, determine and sometimes fix and regulate insurance rates.

RATING, EXPERIENCE

A form of merit rating based on the loss record, and the premiums, produced by a risk during a given period. Experience rates are determined through the use of a formula. If the experience of the risk is "better" than the average risks in the same classification, the risk develops an "experience credit" or reduction percentage factor which, when applied, results in an adjusted rate less than the manual rate. If the experience is worse than the average, the risk develops an "experience debit" which results in an adjusted rate higher than the manual rate.

RATING, RETROSPECTIVE

A method of rating that adjusts the final premium of a risk in accordance with the experience of that risk which took place during the term of the policy.

RATING SCHEDULE

A form of merit rating based principally on physical conditions existing in a risk, especially with respect to safety standards. This may take the form of driving hazards, in the case of garage liability insurance; or is used in elevator liability insurance, where credits from manual rates are allowed for approved elevator door interlocking devices, etc. Schedule rating entails an inspection by the carrier to secure information concerning the condition of the hazards of the individual risk, and the computation of an adjusted rate according to whether the risk is more or less hazardous than the average of its classification.

REAL PROPERTY

Fixed or immovable property such as land and attached buildings.

REBATE

Any return of money or its equivalent from a seller to a buyer. In insurance, the term applies most frequently to a refund of all or a part of a producer's commission to the insured. In most states this is unlawful.

REBATING

The granting of any form of inducement, favor, or advantage to the purchaser of a policy not available to all under the standard policy terms. Rebating in some states is a penal offense for which both the agent and the person accepting the rebate can be punished by fine or imprisonment, and with the agent also subject to revocation of license.

RECIPROCAL

A type of insurance carrier in which each policyholder is both insurer and insured. The individual policyholders assume their liability as individuals, not as representatives of a group. See "Inter-insurance or Reciprocal Insurance Exchange."

RECOVERY

Payment made by the insurer to the insured in settlement of a loss.

REDUCED PAID-UP INSURANCE

One of the nonforfeiture options contained in most policies provides that the insured may elect to have the cash surrender value of his policy used to purchase a paid-up policy for a reduced amount of insurance.

REDUCED RATE AVERAGE CLAUSE

See Coinsurance Clause.

REFORM

A court of equity may change an insurance policy under certain circumstances, particularly if it is evident that there was a mutual misunderstanding on the part of the contract parties. This change will conform the policy to the original intent of the parties.

REFUND ANNUITY [LIFE]

A contract which provides for the continuance of an annuity during the lifetime of the annuitant, but in any event until total payments equal to the purchase price have been made by the company.

REINSTATEMENT

A process for making a coverage or coverages applicable again after it has been canceled or suspended, but before the original normal expiration date of the policy in question,

REINSTATEMENT [LIFE]

By the terms of most life insurance policies, the policy owner has the right to reinstate a lapsed policy within a reasonable time after lapse, provided satisfactory evidence of insurability is presented to the company. The right is usually denied if the policy has been surrendered for its cash value.

REINSURANCE

An agreement by which one insurance company transfers to another carrier part or all of its risk of loss under its policies by means of a separate contract or treaty with another insurance company. The company providing reinsurance protection is the REINSURING COMPANY OR REINSURER. The one receiving reinsurance protection is the CEDING COMPANY.

Under the common form of reinsurance known as excess reinsurance, the reinsurer covers losses exceeding a certain limit specified in advance, and then only for the excess of the amount of the loss over the fixed limit. There are also quota share (pro rata) and stop loss (excess) types as well as facultative, which is specific for a given risk and may be of any type.

The liability retained by the ceding company is known as its "retention".

REINSURANCE [LIFE]

Companies place a limit on the amount of insurance they will risk on a single life and, therefore, when issuing policies for larger amounts than their own limit, they reinsure the excess over that limit with some other company.

REINSURANCE, PORTFOLIO

A block of business reinsured.

REINSURANCE PREMIUM

The premium paid by the ceding company to the reinsurer in consideration for liability assumed by the reinsurers. On a pro rata type of treaty the premium is a pro rata share of the ceding company's gross premium less a ceding commission. On excess of loss treaties the premium is a percentage of the ceding company's gross net premium income for the class of business being reinsured. It is usually calculated annually, and is not subject to a ceding commission.

RELEASE

An instrument signed by an insured or a third party claimant relieving the insurance carrier of any further liability (or any liability at all) with respect to a specific claim.

RENEWABLE TERM [LIFE]

Some Term contracts provide that they may be renewed on the same plan for one or more years without medical examination but with rates based on the advanced age of the insured.

RENEWAL COMMISSION

The commission paid or credited to the agent after the first policy year for premiums received by the company on business written by the agent.

RENEWAL POLICY-RENEWAL (REN.)

An insurance policy, effective as of the expiration date of the previous policy, which in effect extends the expired contract by continuing the insurance in force for a new policy period.

RENT OR RENTAL VALUE INSURANCE

Insurance which reimburses an owner of a building for loss of income as a landlord or, if he/she occupies the building, for loss of such comparable value.

REPLACEMENT

A new policy written to take the place of another policy already in force. Many states have strict replacement procedures for agents and companies to follow.

REPLACEMENT COST

The cost of replacing property without deduction for depreciation.

REPORTING FORM POLICY

A policy covering property with varying values (e.g., inventory), which contains a provision that requires reported values at stated intervals.

REPRESENTATIONS

Statements made by the insured in the process of securing coverage. Coverage may be voided if the representation is fraudulent and material to the risk. The standard of truth in representation is substantial, that is, "to the best of knowledge and belief," but not exact to detail.

RESCIND

To reject a contract induced by fraud, misrepresentation, duress or failure to perform a condition.

RESERVE, UNEARNED PREMIUM

A reserve equal or approximately equal to the total liability of the unearned premiums on insurance in force.

RESERVES

On the level premium plan, the reserve represents the combined funds held by the company for all policies which, together with future premiums and interest earnings, are sufficient to meet all future claims.

RETENTION

That part of the insurance on a risk retained or not reinsured, the balance of which is reinsured.

RETIREMENT ANNUITY; PENSION ANNUITY; RETIREMENT POLICY [LIFE]

All these terms refer to deferred annuity and life insurance contracts whose primary purpose is the supplying of annuity income at the selected retirement age. Excepting only the Retirement Policy, or Retirement Income policy, the only "insurance" involved is either return of premiums or cash value, whichever may be the higher. The usual settlement and annuity options are available for income purposes at retirement age.

RETIREMENT INCOME

One of the basic uses for life insurance. Life income, beginning at a selected retirement age, derived by applying contractual settlement options to policy or annuity case values. The definition may apply to individual or to joint lives. See Joint Life Annuity; Joint Life and Survivorship Annuity.

RETROACTIVE DATE

A date that may be entered by the insurer on the Declarations Page of a "claims

made" policy. This provision establishes that no claims for injury of damage that occurred before the Retroactive Date will be covered by that policy.

RETROACTIVE RESTORATION

Reinstatement of a policy or bond to its original face value after payment of a loss, to take care of prior losses which may be discovered later.

RETROSPECTIVE RATING PLAN

A rating plan in which the final premium is determined in retrospect, because the cost of all basic losses actually becomes part of the premium. In effect, the insured pays all losses up to a $10,000 limit per loss. The basic minimum annual premium is $30,000.

REVOCABLE BENEFICIARY

A beneficiary whose rights in a policy are subject to the policy owner's reserved right to revoke or change the beneficiary designation and the right to surrender or make a loan on the policy without the consent of the beneficiary.

RIDER

Another word for endorsement.

RIDER [LIFE]

A special policy provision, added to the standard contract, which expands or limits the standard benefit thereof (e.g., Double Indemnity, Waiver of Premium, Family Income, Premium Refund, Aviation Exclusion, Guarantee Issue, etc.)

RIOT

A disturbance created by three or more persons assembling together with the intent to assist one another against any person who attempts to oppose them, thereby resulting in terror to the public and/or damage to property.

RISK

The hazard, or chance of loss, on any particular item of insurance. The term "risk" usually is used in a general way to designate the entire subject matter of insurance covered under a policy or upon which an application for insurance has been received. Risk is also sometimes used to designate a policyholder.

RISK CHARGE [LIFE] (Universal Life and Uniflex)

The portion of the monthly deduction which pays for the risk of loss.

RISK, IMPAIRED OR SUBSTANDARD [LIFE]

An insurance applicant whose physical condition does not meet the company's standards for normal good health.

ROBBERY

The felonious and forcible taking of property by violence inflicted upon the victim of the robbery, or by putting such person in fear of violence. This includes money, checks, and goods taken from such person during a holdup.