First Article - Glossary
IA-BOD-RES 25/2014 Effective from 28/12/2014The following words and expression shall bear the meaning indicated beside each of them unless the context provides otherwise:
| State | The United Arab Emirates. |
| Law | Federal Law No. (6) of 2007 on Establishment of the Insurance Authority and Organization of the insurance Operations and its amendments. |
| Executive Regulations | The Executive Regulation of the Federal Law. |
| Minister | The Minister of Economy. |
| Authority | The Insurance Authority established by virtue of the provision of the Federal Law. |
| Board | Board of Directors of the Insurance Authority. |
| Director General | Director General of the Insurance Authority. |
| The Company | The insurance Company incorporated in the State, or foreign branch of an insurance Company, licensed to carry out insurance operations in the State either through a branch or an insurance agent. |
| Board of Directors | Board of Directors of the Company or its equivalent in the governance structure of Foreign Insurance Companies. |
| Insurer | An insurance company incorporated in the State, or foreign branch licensed to carry out insurance operations in the State. |
| Insured | The person who has concluded an insurance contract with the Company. |
| Premium | An amount of money that the Company receives from the insured to provide him with the insurance coverage specified in the insurance policy. |
| Insurance Policy (Insurance Contract) | The insurance document (policy) concluded by the insurer and insured containing the terms and conditions of the contract between the two parties, their obligations, and rights or the rights of the beneficiary of the insurance or any endorsements therein. |
| Property and Liability Insurance | It covers the lines of business as detailed in Article (5) of the Executive Regulations. |
| Insurance of Persons and Fund Accumulation operation | It covers the lines of business as detailed in Article (4) of the Executive Regulations. |
| Technical Provisions | The provisions which the insurer (the Company) must deduct and maintain to meet the insured’s accrued financial liabilities as per Law's stipulations. |
| Actuary | The person who estimates values of the insurance contracts, documents and the related accounts. |
| Risk Management Policy | The process of identification, evaluation and mitigation of the economic effects of the past, present or future events, or their impact, that cause a Company to deviate from its stated objectives whether positively or negatively. These events can impact both the asset and liability side of the Company’s balance sheet, the Company’s profit and loss account, its cash flows, its earning capacity, profitability, ability to continue operating, reputation and its intellectual and technological capital. Risk management should be well integrated into the organizational structure and decision making processes. |
| Risk Appetite | The degree of risk that the Company and Board of Directors are willing to accept in respect of conducting the business. |
| Derivatives | A financial asset or liability whose value is derived from an underlying asset, liability or related index. Common forms of derivative instruments include forwards, futures, options, swaps, credit derivatives or combinations thereof (as applicable). |
| Investments | The act of investing, laying out money or capital by a Company with the expectation of profit. |
| Hedging | To invest in a manner that reduces the risks related to underlying assets or liabilities. |
| Total Invested Assets | The sum of all assets held for investment purposes, including derivatives or other hedging instruments and cash. |
| Admissible Assets | The value of total assets, after taking into account the constraints and limitations that are taken into consideration when calculating the solvency margin of the Company. |
| Solvency Margin | Funds that the Company is required to maintain to fulfill the obligations of the Minimum Capital Requirement, Minimum Guarantee Fund and Solvency Capital Requirement. |
| Minimum Capital Requirement | The minimum capital required to be maintained by a Company at all times as directed by the Authority. |
| Own Funds | The capital that an insurance Company has available to meet solvency requirements, which includes Admissible Assets less liabilities. |
| Solvency Capital Requirement | Funds that the Company must maintain to cover current and projected operations during the next twelve months, which are measured to ensure that all quantitative risks have been taken into account. |
| Minimum Guarantee Fund | Funds that the Company must maintain to cover current and projected operations during the next twelve months, which is at least one third of the Solvency Capital Requirement or a greater amount as determined by the Authority. |
| Unearned Premium Reserves (UPR) | Provisions for the premium which represents the portion of the premium corresponding to the responsibilities extended beyond the date of the statement of financial position. |
| Unexpired Risk Reserves (URR) | Provisions for the premiums which represent the portion of the premium subsequent to the financial statement date and where the premium is expected to be insufficient to cover anticipated claims, expenses and a reasonable profit margin. |
| Outstanding Loss Reserves (OSLR) | Provisions representing claims that have been reported but not yet settled. Typically, this is the sum of the remaining liabilities for each open claim estimated on a case-by-case basis. |
| Incurred but Not Reported (IBNR) | Provisions for claims that have been incurred but not yet reported or have not obtained enough information related to such claims as of the reporting date. |
| Allocated Loss Adjustment Expense (ALAE) or Unallocated Loss Adjustment Expense (ULAE) | Provisions representing future claim expenses and related handling costs. The Allocated (ALAE) reserve is for expenses and costs that can be assigned to a specific claim. The Unallocated (ULAE) reserve is for all other overhead expenses and costs that can’t be assigned to a specific claim. |
| Mathematical Reserve | Provisions created for long term insurance contracts (Insurance of Persons and Fund Accumulation operations products more than one year) to cover all future claim liabilities as determined by the Actuary. |
| External Auditor | The External auditor licensed to operate in the State. |
| Authority Examiners | Employees of the Authority, or delegated personnel, authorized to perform examination and inspection of Company records, transactions and documents. |
| Insurance Agent | The person approved and authorized by the Company to carry out insurance operation on its behalf or in behalf of any branch thereof. |
| Beneficiary | The person who acquired the rights of the insurance contract at the start or these rights that have been legally transferred thereto. |
| Unit Linked Insurance Policies | Insurance plans that provide the option to invest in any number of qualified investments, such as stock, bonds, mutual funds. |