CIIN Certificate CF7 key terms

A mutual duty on the proposer and the insurer to disclose all material facts honestly and without concealment, so the risk can be assessed fairly. Breach can let the wronged party avoid the contract.

A financial relationship to the subject matter of insurance such that the insured benefits from its survival and suffers loss from its loss or damage. It must exist at inception for life cover and at the time of loss for indemnity covers.

The principle that a property or liability claim restores the insured to the financial position held before the loss, no better and no worse. It prevents profit from loss and underpins subrogation and contribution.

Any information that would influence a prudent insurer's decision on whether to accept a risk, what premium to charge, or what terms to impose. It must be disclosed even if the proposer is not asked directly.

Failure by a proposer to reveal a material fact to the insurer, whether deliberately or by oversight. It differs from misrepresentation, which is a positive untrue statement, though remedies may be similar.

The dominant, effective cause of a loss that sets in motion an unbroken chain of events leading to the damage. Insurers pay only where a peril insured against is the proximate cause.

The insurer's right, after paying a claim, to step into the insured's shoes and recover the loss from a third party who caused it. It supports indemnity by preventing double recovery.

The principle allowing an insurer who has paid a claim to recover a proportionate share from other insurers covering the same interest, peril and period. It prevents the insured recovering more than the loss.

A condition applying where the sum insured is less than the value at risk, reducing the claim payment in the same proportion as the underinsurance. It penalises inadequate cover on property and marine policies.

A policy term the insured promises to fulfil exactly, such as installing an alarm. Breach traditionally discharges the insurer from liability for the loss, even where the breach did not cause it.

Insurance bought by an insurer to transfer part of the risks it has accepted to another insurer, the reinsurer. It protects solvency and capacity and does not alter the original insured's rights.

The portion of risk an insurer or reinsured keeps for its own account after ceding the rest, whether under a treaty or facultative arrangement. It is set by capital, appetite and solvency limits.

An automatic agreement under which the reinsurer accepts a defined class or share of all risks the ceding insurer writes that fall within the treaty terms, without individual negotiation.

Reinsurance arranged risk by risk, where the reinsurer may accept or decline each individual submission. It suits large, unusual or hazardous risks that fall outside automatic treaty capacity.

The consideration paid by the insured for cover, calculated from the rate applied to the sum insured or exposure base, plus fees and levies. It must be paid for the contract to be enforceable.

The maximum amount the insurer will pay under a policy, representing the insured's estimate of the value at risk for property or the chosen cover for life and liability.

A premium reduction earned for each claim-free year, common in motor insurance. The discount is scaled and lost or reduced when a claim is made, rewarding careful risks.

The first amount of each claim the insured must bear, agreed in the policy. Raising the excess lowers the premium because the insurer carries less of the loss frequency.

A stated amount deducted from a claim settlement before the insurer pays, so the insured absorbs the initial loss. In commercial property and liability it is often applied per occurrence.

Cover protecting the insured against legal liability for injury to other people or damage to their property arising from the insured's activities, premises or vehicles.

The minimum motor insurance required by law, paying for injury or death of third parties and damage to their property caused by the insured vehicle. It does not cover the insured's own vehicle.

Motor insurance extending beyond third-party liability to cover accidental damage to or theft of the insured's own vehicle, subject to excess and policy exclusions.

Marine insurance covering vessels and their machinery (hull) and goods in transit by sea, air or land (cargo), including perils of the seas, fire, jettison and general average.

A maritime principle where a sacrifice or expense deliberately incurred to save a ship and cargo from a common peril is shared proportionately by all parties whose property was saved.

Specialist cover for aircraft hulls, passenger and third-party legal liability, and related risks, rated by aircraft type, use and pilot experience, and heavily reinsured internationally.

Life cover paying a lump sum only if death occurs within an agreed period, with no payout if the life survives. It provides pure protection at low cost for temporary needs.

Life cover with no fixed expiry, paying the sum assured on death whenever it occurs, provided premiums are maintained. Some versions build cash value that can be surrendered.

Life cover paying the sum assured on death within the term, or on survival to the end of the term if earlier. It blends protection with a savings element.

A contract where the insurer pays a regular income for a set period or for life in exchange for a lump sum or series of premiums. It is the standard tool for converting pension savings into retirement income.

The amount a policyholder receives if they terminate a life policy with savings value before maturity or death. It is usually lower than total premiums paid in the early years.

The termination of a life policy because premiums were not paid within the grace period. The policyholder loses cover and may receive only a reduced paid-up value or nothing.

A regular income payable in retirement, funded by contributions made during working life through a personal scheme or an employer's scheme and usually managed by a licensed administrator.

The process of assessing a proposed risk, deciding whether to accept it, and setting the premium, terms and exclusions. It protects the insurer's portfolio from adverse selection.

Estimating the funds an insurer must hold to meet claims already reported but not settled and claims incurred but not reported, based on past experience and actuarial methods.

Incurred but not reported claims: losses that have already happened but have not yet been notified to the insurer by the reporting date. They must be estimated and reserved for.

The excess of an insurer's admissible assets over its liabilities, required by the regulator to remain above a minimum so that claims can still be paid in adverse conditions.

The requirement that an insurer holds enough capital relative to the risks it underwrites, judged against regulatory ratios. It protects policyholders and the wider financial system.

An insurance intermediary's obligation to act honestly and in the client's interest, disclose material information to the insurer, and avoid conflicts such as undisclosed commission arrangements.

The principle that insurers and intermediaries must deliver fair outcomes in product design, sales, claims and complaints, not merely comply with the letter of the rules.

Low-premium, simple cover designed for low-income households and small businesses, with small sums insured and simplified claims. It is a growth area in Nigerian inclusive insurance.