CII IF4 key terms

The initial contact in which the policyholder or another party tells the insurer that an event has occurred which may give rise to a claim. It starts the claims process and captures basic details.

The administrative step of creating a formal claim record on the insurer's system, allocating a unique claim reference and assigning it to a handler. It follows first notification and precedes investigation.

A unique identifier the insurer allocates to each notified claim so that correspondence, documents, payments and reserves can be linked to one file throughout its life.

The complete record of a claim, whether paper or electronic, holding the policy documents, correspondence, evidence, notes, assessments and payment details needed to handle and audit it.

Checking that a valid policy existed at the time of the loss, that the claimant is an insured or otherwise entitled to claim, and that the loss falls within the cover, limits and exclusions.

The reasoned decision on whether a notified loss falls within the scope of the policy, taking account of insured perils, exclusions, conditions, warranties and limits, and stating which sections respond.

A written notice telling the insured that the insurer is investigating or defending the claim while keeping open its right to decline cover later. It prevents waiver of policy defences.

The insurer's formal decision to refuse a claim, in whole or in part, because cover does not respond, a condition has been breached, or the claim is excluded. Reasons must be explained to the insured.

A policy provision that removes specified losses, perils, property or circumstances from the cover granted. Claims falling within an exclusion are not payable unless another provision restores cover.

Policy terms that the insured must satisfy before the insurer's liability arises, such as notifying a loss promptly or submitting a proof of loss. Breach can entitle the insurer to refuse the claim.

A policy term that the insured promises to comply with exactly. Under the Insurance Act 2015, breach suspends cover for the period of non-compliance rather than automatically discharging the insurer.

The Insurance Act 2015 rules allowing the insurer to suspend cover during a breach of warranty and to limit recovery for a later loss if the breach increased the risk of that loss.

The mutual duty of insurer and insured to deal openly and fairly. For consumers it is largely replaced by the duty of fair presentation under the Insurance Act 2015 and consumer insurance disclosure rules.

The Insurance Act 2015 duty on commercial insureds to disclose every material circumstance they know or ought to know, and to present the risk clearly and accessibly, before the contract is formed.

The Insurance Act 2015 approach to deliberate, reckless or careless non-disclosure or misrepresentation. The insurer may avoid the contract, or reduce a claim proportionately to the premium it would have charged.

An independent specialist appointed by the insurer to investigate larger or complex claims, establish the cause and quantum of loss, and recommend how the claim should be settled.

A specialist engaged by the policyholder to prepare, present and negotiate a claim on the insured's behalf, particularly for large property or business interruption losses. The insured pays the fee.

The monetary amount of a loss or claim, calculated from evidence such as invoices, valuations and repair estimates. Establishing quantum is separate from deciding whether cover applies.

The residual value of damaged property, or the insurer's right to take over and sell damaged property after paying a total loss. Proceeds reduce the net cost of the claim.

The insurer's right, after paying a claim, to stand in the insured's place and pursue recovery from a third party responsible for the loss. It prevents the insured recovering twice.

The principle allowing an insurer that has paid a claim to recover a share from other insurers covering the same interest, peril and period, so that the insured does not recover more than the loss.

A condition reducing a claim payment where the sum insured is less than the value of the property at risk, applying the proportion that the sum insured bears to that value.

The situation where the sum insured is lower than the replacement or actual value of the property. It can trigger average and leave the policyholder bearing part of the loss.

The maximum amount the insurer will pay for a defined section of cover under the policy, before applying any average, excess or limit of indemnity.

The first amount of each loss that the insured must bear. The insurer pays only the amount by which the loss exceeds the excess, unless the policy states otherwise.

A sum deducted from a claim payment, often used in commercial or liability policies. It works like an excess but may be expressed differently and can apply to defence costs.

The principle that insurance should restore the insured, as far as money can, to the financial position held immediately before the loss, no better and no worse. It limits most property claims.

An improvement in the insured's position that can arise when a claim payment funds new or superior replacements for old property. Insurers may deduct for betterment to preserve indemnity.

A basis of settlement paying the cost of replacing damaged property with new items without deduction for age or wear, where the policy provides it and the sum insured is adequate.

A loss where the insured property is destroyed, or so damaged that repair is impossible or uneconomic, so the claim is settled on the full insured value subject to policy terms.

A marine or property loss where the cost of repair or recovery would exceed the repaired value, so the insured may treat the subject matter as lost and claim accordingly.

The amount set aside in the insurer's records to meet the expected future cost of a notified claim, including payments and handling expenses. Reserves are reviewed as the claim develops.

An estimate of the outstanding cost of an individual notified claim, set by the handler and revised as investigation, negotiation or litigation changes the expected settlement.

An actuarial reserve for claims that have occurred but have not yet been notified to the insurer. It is estimated from historical patterns rather than individual claim files.

An external organisation that handles claims or parts of the claims process on the insurer's behalf, such as notification, assessment or medical bill processing, under delegated authority.

The written permission given by an insurer to a person or organisation to act on its behalf, including the limits within which they may settle or decline claims without referral.

The financial and decision-making limits within which an individual claims handler may approve payments, appoint experts or decline a claim without referring it to a manager.

The process of referring a claim or decision to a more senior person or specialist committee when it exceeds a handler's authority, is complex, or raises conduct or fraud concerns.

An expression of dissatisfaction by a customer about the insurer's handling of a claim or service, which must be logged and resolved under the firm's complaints procedure and regulatory rules.

The independent UK body that resolves unresolved complaints between consumers and financial firms, including insurers, by making decisions that firms must generally accept.

The regulatory principle that firms must deliver fair outcomes for customers throughout the product life cycle, including prompt, clear and fair handling of claims.

The FCA rules requiring firms to act to deliver good outcomes for retail customers, covering products, price and value, consumer understanding and consumer support, including claims service.

A customer whose personal circumstances, such as health, bereavement, low income or limited capability, make them more susceptible to harm and who needs additional support during a claim.

Deliberate deception by a claimant or other party to obtain a benefit to which they are not entitled, such as exaggerating a loss or staging an incident. Suspected fraud is investigated and reported.

A UK industry body that gathers and analyses data to detect organised insurance fraud, including crash-for-cash and ghost broking, and shares intelligence with insurers and police.

A UK industry database of motor, home and personal injury claims and related incidents, used by insurers to check claim history and detect potentially fraudulent or duplicate claims.

The process of obtaining money back after a claim has been paid, whether through subrogation against a third party, salvage proceeds, reinsurance or uninsured loss recovery.

Insurance bought by an insurer to transfer part of its claims exposure to another insurer, protecting it against large individual losses or an accumulation of many claims.

A claim exceeding a defined financial threshold that is usually handled by specialist or senior adjusters, with closer monitoring, reinsurance notification and periodic reserve review.

The chronological record of actions, decisions, communications and payments on a claim file, showing who did what and when. It supports quality assurance, complaints and regulatory review.

The legal rules governing how personal data in a claim file is collected, used, shared and retained, including lawful basis, security, subject access and breach reporting obligations.

A lawful basis for processing personal data where the individual gives a clear, informed agreement. In claims it is often used for sharing medical or sensitive information with third parties.

A request by an individual to see the personal data an organisation holds about them. Insurers must respond within the statutory period, subject to limited exemptions such as fraud prevention.

The voluntary giving up of a known right, such as an insurer paying a claim despite a breach of condition. It may prevent the insurer relying on that right later.

The legal rule preventing a party from going back on a representation or promise on which another party reasonably relied to their detriment, often arising when an insurer delays or acts inconsistently.