CIIN Certificate CF2 key terms

The financial or legal relationship a person has with the subject matter of insurance, so that they gain from its safety and lose from its damage or loss. It separates genuine insurance from a wager.

The duty on both parties to an insurance contract to deal openly and honestly, disclosing everything relevant and not misleading the other side. A serious breach by the insured can let the insurer avoid the policy.

Any detail that would influence a prudent insurer's decision to accept a risk, or its choice of premium, terms and conditions. A proposer must volunteer such details even if not asked.

The principle that a property or liability policy should put the insured back, in money terms, where they stood before the loss, no better and no worse. Life and personal accident covers are not contracts of indemnity.

The dominant and effective cause of a loss, the event that sets the chain of events in motion. Insurers use it to decide whether the operative peril is covered or excluded by the policy.

The insurer's right, after settling a claim, to stand in the insured's place and recover the loss from whoever caused it. It stops the insured from being paid twice for the same damage.

The rule that lets an insurer that has paid a loss recover a fair share from other insurers covering the same interest against the same peril, each paying its rateable proportion.

A claims calculation used when the sum insured is below the actual value of the property, reducing the payout in the same proportion as the shortfall. It penalises inadequate sums insured on property policies.

A promise in the policy that something is true, has been done, or will be done, for example a burglar alarm being maintained. Under traditional insurance law it must be complied with exactly or the insurer may escape liability.

The interpretation rule that unclear words in a policy are read against the party who drafted them, normally the insurer. It protects policyholders where wording is ambiguous or unnecessarily technical.

The National Insurance Commission, the statutory regulator of the Nigerian insurance market. It licenses insurers, brokers, loss adjusters and agents, sets capital and solvency rules, approves products and supervises market conduct.

The main Nigerian statute governing insurance business, covering licensing, minimum capital, solvency margins, policyholder protection, reinsurance and the supervisory powers of the regulator.

Compulsory cover under the Motor Vehicles (Third Party) Insurance Act, requiring every vehicle owner on Nigerian roads to insure against liability for death, bodily injury or property damage caused to other people.

A property settlement basis under which the insurer funds rebuilding or replacing the damaged item with new equivalent property, rather than paying its worn or depreciated value. It normally needs an adequate sum insured.

A case where insured property is not wholly destroyed but the cost of recovering or repairing it would exceed its insured value, so the loss is treated as a total loss.

Property or value saved from a loss, such as damaged stock or a wrecked vehicle. An insurer that pays a total loss may take over the salvage, and its sale value reduces the net cost of the claim.

A liability policy covering the insured's legal liability to outsiders for death, bodily injury or damage to their property arising from the insured's premises or business activities. Injury to employees is excluded and needs separate cover.

A policy that reimburses an employer for money or property lost through the fraud, dishonesty or theft of employees, either named individuals or any employee in a defined class.

A marine rule under which a sacrifice or expense deliberately made to save a ship and cargo from a shared peril is apportioned among the owners of the ship, the freight and the cargo.

A standing marine agreement under which the insurer automatically accepts shipments declared by the insured within agreed limits, classes and rates, with declarations made as each consignment moves.

A cooperative, Shari'ah-compliant insurance arrangement in which participants pay contributions into a shared pool used to compensate members who suffer loss, with surplus and investments handled on Islamic principles.

The basic amount stated in a life policy that the insurer undertakes to pay on death, on maturity, or on the agreed insured event, before any bonuses are added or deductions made.

The cash amount a life insurer pays when a policyholder ends a savings-type policy early. It is usually lower than the premiums paid and may be nil in the first years of the contract.

A borrowing facility allowing a policyholder to take an advance against the surrender value of a life policy while the policy continues in force, with interest charged and the amount deducted from any later benefit.

An agreed window after a premium falls due, commonly thirty days in life assurance, during which the policy stays in force even though the premium has not yet been paid.

Nigeria's mandatory retirement savings system created by the Pension Reform Act, under which employees and their employers each contribute a set percentage of monthly pay into an account owned by the employee.

The personal pension account an employee opens with a licensed pension fund administrator, into which monthly contributions are paid and from which retirement and other permitted benefits are drawn.

A single life policy taken out by an employer or association covering a defined group of members, typically paying a multiple of salary on death and usually granted without individual medical evidence.

A contract in which an insurer pays a regular income, often for the rest of a person's life, in exchange for a lump sum. Retirees commonly use their pension savings to buy one from a licensed insurer.

The underwriting process of measuring a proposed risk against the insurer's acceptance standards so as to decide whether to take it, and on what terms, limits, excesses and premium.

The amount or share of a risk an insurer deliberately keeps for its own account before passing the balance to reinsurers, reflecting its appetite, capacity and capital strength.

A reduction in premium given at renewal when the insured made no claim during the expiring period, widely used in motor insurance to reward claims-free experience.

A reinsurance arrangement where the insurer offers one individual risk and the reinsurer is free to accept or decline it, used for large or unusual risks that fall outside existing treaties.

A proportional reinsurance agreement under which the reinsurer takes a fixed percentage of every risk in a defined class, receiving the same percentage of premiums and paying the same share of claims.

A non-proportional reinsurance cover under which the reinsurer pays the portion of each loss, or of losses in total, that runs above an agreed retention up to a stated limit.

An independent professional appointed by an insurer to investigate a claim on the spot, establish the cause and amount of loss, and recommend a settlement, especially on large or complex claims.

A payment an insurer makes although it has no legal obligation to do so, usually as a goodwill gesture and without admitting liability or creating a precedent for similar claims.

The obligation of an intermediary or trustee to put the client's interests first, hold client money separately from their own, and avoid personal gain from the position of trust.

The identity checks and due diligence an insurer or intermediary must carry out on customers and beneficial owners in order to prevent money laundering, fraud and terrorism financing.