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Word/Phrase

Meaning

Abandonment

A term that applies to property and signifies both a relinquishing of it and the letting go of all legal rights to it, as well, with the intent to claim a total loss. Abandonment of property to an insurance company is something insureds are expressly prohibited from doing in most property polices.

Abandonment clause - A property policy provision that stipulates that the insurer need not accept any damaged property that the insured chooses to relinquish.

ABN

Australian Business Number, issued to businesses that are registered for GST.

Absolute Liability

The performance of an act so dangerous as to be sufficient to trigger liability regardless of the degree of negligence. Triggering explosives is often used as an example. Sending workers aloft for construction or repair at elevated heights is another. ``Strict liability'' is another term that is sometimes used.

Accident

An unforeseen, unintended, and unexpected event, which occurs suddenly and at a definite place. See Occurrence.

Accident Frequency

The rate of occurrence of accidents. Along with accident severity, it is taken into account in ratemaking.

Accident Severity

The measure of the seriousness of a claim, measured in, for example, dollars. Along with frequency, it is taken into account in ratemaking.

Accident Year Experience

Measures premiums and losses relating to accidents which occurred during a 12-month period.

Accommodation Line

Normally unacceptable risks that are written as an ``accommodation'' to an agent or broker who has an overall profitable relationship with the insurer. For example: a personal auto risk with a teenage driver of a sports car might be written if the other lines of insurance which it carries for the customer were profitable; or if the agency has had a good and profitable relationship with the insurer.

Advice

An express or implied (direct or indirect) recommendation or opinion that is intended to influence a person in relation to a Financial Product.

Advice

Either general or personal advice pursuant to the Corporations Act 2001

AFS Licensee

A party who possesses an Australian Financial Services licence.

Arranging

Performing one or more actions critical to the financial services transaction.

ASIC  

Australian Securities and Investment Commission

ATO   

Australian Tax Office

Australian Financial Services Licence

A Licence issued pursuant to the Corporations Act 2001 2001.

Authorised Representative

A party who provides advice or dealings relating to financial services business and includes both a corporate entity and natural persons.  They are Authorised by a Licensee.

Binder

An authority granted by an insurer to a broker or agent to handle underwriting or claims on their behalf

Broker Licensee

A broker who has obtained an AFS License

Claim

The indication to the insurance company of the loss that has occurred.

Claim Form

 

A form filled out by the Insured (or an agent/broker on behalf of the Insured) detailing the facts relating to the loss.

Claims Made Policy

A policy which covers claims made during the policy period of the Contract of Insurance (policy)

Contract Of Insurance

Policy issued by the Insurer.

Contribution

The amount provided by the Insured or others to a claim under the Contract of Insurance (Policy).

Cover Note

 

A Cover Note or Interim Contract as it is referred to in the Insurance Contracts Act is usually issued by the insurer is issued to provide temporary cover whilst a completed proposal is provided to the insured for consideration.

Dealing

Has the same meaning as stipulated in the Corporations Act 2001  2001.  This involves applying for or acquiring, issuing, varying or disposing of a financial product.

Deductible or Excess

The amount provided by the insured or others to a claim under the Contract of Insurance (policy)

Disclosure

Every matter that the Insured knows or could reasonably be expected to know that is relevant to the Insurer’s decision to accept the risk and if so on what terms.

Distributor

A person or business appointed by an AFS Licensee to arrange General Insurance.  Distributors cannot give Financial Advice

Endorsement

 

A written or printed recording on the Policy or an annexure to the Policy which alters provisions (terms or conditions) of the Contract of Insurance.

Financial Ombudsman Service (FOS)

The general insurance industry’s free consumer complaints scheme.  All AFS Licensees that deal with Retail Clients must be a member of an approved scheme.

Financial Product

Has the same meaning as stipulated in the Corporations Act 2001 2001, typically an insurance product, investment product etc.

Financial Services

Providing advice or dealing in financial products.

Financial Services Guide (FSG)

A Financial Services Guide issued to a Retail Client before or at the time of providing Financial Services as per the requirements as set out in the FSRA.

FOS

Financial Ombudsman Service.  An independent body to handle consumer complaints regarding the actions of insurers and their underwriting agents.

FSRA

The financial services reform programme implemented by the Corporations Act 2001 2001 together with regulations promulgated pursuant thereto and Policy papers issued by ASIC. 

General Advice

Advice which does not take into account a persons individual needs, circumstances or requirements.

GST

The Commonwealth Government’s goods and services tax regime implemented by the New Tax System legislation

Hold Harmless

An agreement whereby one party will not hold the other liable in the event of loss or injury

Indemnity

The potential recovery that the Insured have under a Contract of Insurance (Policy) which is payable by the Insurer in event of claim.

Input Tax Credit

Accounting credit in respect of GST paid

Insurable Interest

The subject matter of the insurance which is protected by the Contract of Insurance (Policy) and in which the Insured has a financial or pecuniary interest at the time of loss.

Insurable Risk

Risk that is capable of being Insured by an Insurer who assumes the risk from the Insured.

Insured (Client)

Is a consumer (customer) who has purchased a financial product or seeks advice in respect of a financial product.

Intermediary

Either an AFS Licensee, Authorised Representative or their employees.

Misleading or Deceptive Representation

A statement by the insured or their broker which conveys a false or wrong impression

Motosure

A trading name of Wallace Risk Solutions. Motosure is a brand of motorcycle insurance.

Misrepresentation

A statement by the Insured or their Broker which conveys a false or wrong impression.

National Insurance Brokers Association (NIBA)

Industry membership body with a focus on industry education, government interaction and professional standards.

Non-disclosure

A failure of the insured to provide information (disclosure) to the insurer

Personal Advice

Has the same meaning as defined in the Corporations Act 2001 and includes personal advice by way of a recommendation or opinion by the Intermediary which is in response to a client’s unique situation and needs and intended to influence or be reasonably regarded as intending to influence the client in relation to the financial product. 

Policy Disclosure Statement (PDS)

A Policy Description Statement issued by the Insurer and provided to a retail Client by the Intermediary before at the time of providing Financial Services as per the requirements as set out in the FSR.

Policy Wordings

The explanation of the different clauses in an insurance contract or slip.

Privacy Commissioner

The Commissioner appointed under the Privacy Act 2000

Proposal Form

 

The application form completed by the person applying for the insurance.

Proximate Cause

The most directly related uninterrupted cause which causes the injury or damage.

Renewal

 

The reissuing of a Contract of Insurance for a further period of insurance.

Renewal Notice

 

The notice given by the Insurer to the Insured informing the Insured that the Contract of Insurance is due to expire on a given date.

Representative

People employed or contracted by an AFS Licensee to provide financial services on behalf of the Licensee.

Retail Client

A client where the supply of the retail product is to an individual or a small business (ie A business which employs less than 100 people if it manufactures goods or otherwise if it employs less than 20 people).

Retail Product

A financial product falling into one or either of the following categories:

– motor vehicle Policies

– home building and/or home contents Policies

– sickness & accident Policies

– consumer credit Policies

– travel Policies

– personal & domestic product Policies

– any other Policies as may be prescribed by the FSR

Retail Product

Contract of Insurance (policy) designated as “Retail” under the FSRA

Risk

The potential loss the Insured may have through the loss or damage to their assets or their liability to others.

Schedule

 

A statement attached or part of an insurance Policy document where there are a multiplicity of locations, items, etc detail involved that form part of the Policy.

Small Business

The definition in the IEC’s Terms of Reference for small business is an individual or a company that has no more than five employees (including working proprietors) at any one time; and that has an annual revenue (including related enterprises or bodies corporate or other associated entities) under $400,000

Statement of Advice

Written personal advice given by a provider of financial services and contains matters which are prescribed under the Corporations Act 2001.

Subrogation

The right of an Insurer to “stand in the shoes” of the Insured and have all the rights that the Insured has to recover any money paid out under the Policy from the responsible party.

Subrogation

The right of an insurer to “stand in the shoes” of the insured and have all the rights that the insured has to recover any money paid out under the policy from the responsible party

Unregistered Insured

Insured who is not registered for GST

 

Utmost Good Faith

Each party must enter into the Contract of Insurance (Policy) with good faith and communicate every fact and circumstance which may influence the other in entering the contract.  Latin term – Uberrima Fideii.

Wallace Risk Solutions Pty Ltd

Insurance Broker AFSL 353275 ABN 93 130 907 253

Wholesale

All clients that do not fall within the Retail Client definition.