Dishonesty: Any Conduct on the part of the member’s employee which is deceitful or fraudulent and which has resulted in a monetary loss to the member, or could have resulted in such loss if not discovered prior to the commission of the conduct. Thus an attempt to commit an act or deceitfulness or fraud will be constituted as dishonesty.

Theft: Of any nature

Bribery or Corruption: Offence includes giving or accepting or receiving money, goods, reward or services as an inducement to do some act which is detrimental to the employer.
Misappropriation/Misrepresentation: Offence includes giving or accepting or receiving money, goods, reward or services as an inducement.

Fraud and/or Alleged Fraud: Defined as the unlawful and intentional misrepresentation which can lead to actual or potential disadvantage to another individual or group.

Forgery: Consists in unlawfully making, with intent to defraud, a false document which causes actual prejudice or which is potentially prejudicial to another.

Deliberate falsification of records

Deliberate falsification of South African Identity documents

Deliberate falsification of Documentation

Deliberate falsification of Qualifications

Deliberate falsification of references

Concealed criminal record / employment history / employment record / adverse financial / credit history

Industrial Espionage: Includes divulgence/falsification of company information/documentation and breach of client or staff confidentiality, the selling or passing on of client or company information, records or electronic data to any unauthorised person.

Aiding or abetting: Any other person or persons that commit or attempt to commit any conduct outlined in offences 00 to11.

Conspiring: Conspiring with any other person or persons to commit or attempt to commit any conduct outlined in offences 00 to 13

Deliberate giving of untrue / misleading /erroneous information – be it verbal or written



Accident: An unforeseen and unintended event.

Accident insurance: A contract of insurance to provide for loss sustained through an accident, or as compensation for personal injuries. Various types of policies are included within the category of accident insurance. These include personal accident and health insurance.

Act of God: An event caused by the forces of nature.

Additional premium: The premium due from the insured arising from an endorsement.

All risks: An all risks policy covers the insured against all risks of loss or damage to the property insured other than loss or damage specifically excluded.

Allied perils: Risks associated with a fire policy including flood, earthquake and landslip. See Fire insurance.

Arson: The malicious of fraudulent burning of property.

Assurance: A term commonly used to distinguish life (long-term) “assurance” from short-term (i.e. non-life and property) “insurance”.

Average clause: A clause in a policy requiring that, where assets are insured for less than their full value, the insured is required to bear a proportion of any loss. The proportion is the amount by which the assets are under-insured expressed as a percentage of its indemnity value, at the time of the loss.

Aviation insurance: Insurance of aircraft and related aircraft activities. One aspect of aviation insurance is Aircraft Hull. Another aspect is aircraft operators carrying passengers which may incur public liability for which Aircraft Liability insurance is required. Airports can also incur liability, this is termed Airport Owners and Operators Liability insurance


Balance of third party: Third party liability cover provided by an insurer in a motor policy other than compulsory insurance provided for under the Road Accident Fund.

Broker: An agent who acts on behalf of the insured in effecting and servicing an insurance policy.

Business interruption insurance: Insurance that will protect the owner of a business from losses sustained during a period of suspended business caused by fire or other hazard. See also loss of profits insurance.


Cancellation: A complete termination of an existing policy prior to its expiration. Usually the insured may only cancel a policy if all premiums due have been paid.

Cancellation clause: Clause in a policy which allows the insurer to cancel after due notice.

Cancellation, pro-rata: A cancellation on which the earned premium is calculated in the exact proportion that the elapsed period of the policy bears to the policy term. For example, an annual policy in force for six months would have a pro-rata earned premium of 50% of the total premium.

Capacity: The amount of insurance or reinsurance available from an individual underwriter or from the entire insurance market in a particular locality or country.

Catastrophe: Conflagration, earthquake, windstorm, explosion, and other similar events that result in substantial losses. Catastrophe losses (the whole loss of an insurance company arising out of a single catastrophic event) are usually protected by Excess of Loss treaties in order to limit any one such loss to a specific amount.

Claims: A demand on the insurer for indemnification for a loss incurred from an insured event.

Claims incurred: These are the claims costs for an accounting period made up of:

  • Claims paid for the period
  • Less outstanding claims at the end of the preceding accounting period including IBNR
  • Plus outstanding claims at the end of the current period including IBNR

Claims incurred but not reported (“IBNR”): Claims resulting from accidents or occurrences which have taken place, but of which the insurer has not received notice or report of loss. An estimate is made of the amount of these claims based on previous experience. Also termed Losses incurred but not reported.

Claims intimated but not finalised: Amounts provided to cover the estimated ultimate cost of settling notified claims arising out of insured events that have occurred by the end of the accounting period, less amounts already paid in respect of those claims.

Claims made basis: See Losses made basis.

Claims occurring basis: See Losses occurring basis.

Claims ratios: Ratios expressing the relationship between claims and premiums. Two ratios in common usage are:

  • The paid claims ratio: paid claims divided by earned premiums and;
  • The incurred claims ratio: incurred claims divided by earned premiums.

Claims reported: Claims resulting from accidents or occurrences which have taken place and have been recorded in the insurer’s accounts.

Co-insurance: Is an arrangement whereby two or more insurers enter into a single contract with the insured to cover risk in agreed proportions at an overall premium.

Collective policy: A policy issued by the lead insurer on behalf of a number of insurers who share the risk.

Collision: Physical contact of a motor vehicle with another object (including another vehicle) resulting in damage.

Combined ratio: The aggregate of the expense and claims ratios.

Commission: Commission is the fee paid to a broker for the broker’s services and is calculated as a percentage of the premium generated on the insurance policy. Commission levels are presently capped by law and a broker may not be paid more than 12.5% of the premium on motor policies and 20% on other business. There are moves towards decapping these maximum percentages of commission and to introduce disclosure requirements.

Comprehensive motor vehicle insurance: Primarily insurance which covers any loss of, or damage to an insured motor vehicle (including motor cycles, caravans and trailers) arising from an accident, fire or theft. Also included in this class of business is third party and property damage arising from motor vehicle accidents.

Consequential loss: A loss not directly caused by damage to property, but arising as a result of such damage. For example, lost production and loss of profits following a factory fire.

Contract: The policy of insurance. The agreement between the insurer and the insured.

Contractors All Risks insurance (“CAR”): This is a prescribed class of insurance sometimes known as Contractors Works Insurance. CAR covers the insurance of materials, buildings, structures, works and other property in the course of construction. The policy can be extended to include the contractor’s plant and equipment on site.

Cover: The scope of the protection provided by an insurance policy.

Cover note: Confirmation of insurance cover.

Credit life insurance: A single or recurring premium term life insurance policy taken out by borrowers. Its purpose is to cover payment of outstanding loan balances in the event of their dying, or on the happening of other specified events. This class of business is sold in both the life and short term insurance industries.

Creditor insurance: This is a class of insurance taken out by an insured to repay loans when the insured (borrower) is incapacitated through illness or injury.

Crop insurance: Insurance in respect of damage to crops in the event of hail, fire, flood, wind and lightning.


Damages: Financial compensation due to a third party for loss, damage or injury.

Date of attachment of risk: The date with effect from which an insurer accepts liability under an insurance policy.

Depreciation: The extent to which property decreases in value due to use, wear and tear or other factors.

Direct premiums: Premiums arising from policies written directly by an insurer.

Direct response marketing: Selling insurance directly to the insured through the mail, by telephone, through the press or through electronic networks.

Direct writing company: An insurance company whose business is produced without the use of brokers.

Directors and officers: Insurance of directors and officers in respect of claims made against them for actual or alleged wrongful acts arising from negligence, omission or misleading statements.

Disability: A physical or mental condition that makes an insured person incapable of performing one or more duties of his or her occupation.

Duty of disclosure: The duty on the insured and the insurer to disclose every material fact in relation to the policy. See Uberrimae fidei.


Endorsement: Documentary evidence of a change to an existing policy, for example, change of address, increase in sum insured, etc. An endorsement may result in an additional premium, a return premium or no premium adjustment.

Exceptions: Clauses which exclude certain perils as being insured events. See Exclusion.

Excess: A policy condition whereby the insured is required to pay a portion of the loss, as stipulated in the policy (for example the first R2000 of a motor vehicle damage claim). The insurer would pay the balance over that amount.

Exclusions: Provisions in a policy or treaty that exclude certain types of risk from coverage under the policy or treaty. Two of the more common exclusions are in connection with aviation and war.

Ex gratia: Literally “an act of grace”. If a claim is paid in full or in part by an insurer without admission of liability and without waiver of right, it is paid ex gratia.

Experience: Refers to the losses or ratio record of a particular risk, of a particular cover, or of a particular insurer.

Experience rating: Premium on a policy is determined by claims experience.

Expiry date: The date and hour stated in the policy or endorsement on which the insurance policy ceases to be in force.

Exposure: This is the possibility of loss. It is criterion used in measuring the extent of a risk assumed by an insurer. Exposure serves as a basis for determining the loss cost, or pure premiums on expired policies. The unit of exposure for an individual comprehensive motor vehicle is one year. The term is also used generally to represent the state of being in danger of loss from a particular hazard or the hazard threatening a risk.

Extended-warranty insurance: Extension of a manufacturer’s warranty for a specified period, generally for a single premium. This may cover motor vehicles or other manufactured items.

Extra premium: An additional charge, over and above the regular standard premium for the insurance, to pay for some extra risk inherent in the situation.


Fire insurance: A contract which, in consideration of the payment of an annual premium, indemnifies the policy owner for loss by fire and allied perils (in South Africa these perils include storm, wind and water, impact by aircraft, impact by road vehicles and cattle, earthquake, earth-tremor and subsidence and landslide except property fire losses of a private or domestic nature which are covered by houseowners’ and householders’ policies). Loss of profits insurance are also generally included with fire insurance business for reporting purposes. Also known as Property insurance.

Fire insurance policies: Fire insurance policies can be broadly divided into the following different types: 

  • Specific Policy: A policy which insures a particular item of property for a specific amount. 
  • Blanket or General Policy: A policy covering different classes of property which are grouped and insured for one fixed amount. The value of any particular item is not stated separately. 
  • Floating Policy: A policy insuring property (e.g. Trading stock) which may be situated at various locations. 
  • Declaration Policy: A policy insuring trading stock which may vary to a great degree in quantity and value during the period covered by the policy. 
  • Replacement and/or Reinstatement Policies: Fire policies which are designed to protect the insured against the effect of inflation in property values.

Fire protection: Various measures taken by the insured to reduce the risk of damage from fire. This includes fire resistant contraction material, fire walls (walls separating parts of a building) and fire proof materials.

Foreign insurer: In South Africa, an insurer situated outside the Republic of South Africa.

Funeral insurance: A life policy with a low sum assured intended to pay for the burial costs on the death of the insured.


Health insurance: Insurance providing for the payment of benefits as a result of sickness or injury. Includes various types of insurance such as accident insurance, disability income replacement insurance, accidental death, dismemberment insurance and hospital cash plans.

Home owners insurance: This covers loss or damage to the home of the insured from a variety of perils, essentially fire and allied perils.

Hospital cash plan: A policy which provides for payment of a fixed amount per day or week in the event of the insured being hospitalised.

Householders insurance: This covers loss or damage in respect of household contents.

Hull insurance: Insurance against loss of or damage to an aircraft, ship and other air and water borne craft.


Insolvency clause: The clause that holds the reinsurer liable for his pro-rata share of any loss (or losses) assumed under the treaty, even though the direct company has become insolvent.

Insurance broker: An agent on behalf of the insured who negotiates the terms and cover provided by the insurer in the insurance policy.

Insurance policy: A contract whereby one party (the insurer), in return for consideration known as a premium, agrees to indemnify another party (the insured) against specified damage, loss or liability arising from the occurrence of specified risks or to compensate the insured or beneficiary upon the occurrence of a specified event.

Insured: The person whose interest is insured, usually the policy owner.

Insured peril: Source of loss which is covered under an insurance policy.

Insurer: Company offering risk protection via insurance policies.

Intermediary: A person who negotiates contracts of insurance or reinsurance with the insurer or reinsurer on behalf of the insured or reinsured.


Key man insurance: Insurance on the life of a person on whom the continued successful operation of a business depends.

Knock-for-knock agreement: An arrangement between motor vehicle insurers whereby each will pay its own repair costs on claims made. Each insurer agrees to forego recovery action against the other irrespective of the question of fault providing all the vehicles involved in an accident are insured with signatories to the agreement.


Limit of liability: The maximum amount for which an insurer is liable on any one loss. This is sometimes referred to as Limit of Indemnity.

Lloyds of London: An association of persons grouped together in syndicates providing insurance.

Lloyd’s broker: A broker that has been given the responsibility by Lloyds of placing insurance at Lloyds.

Lloyd’s syndicate: A group of underwriters with Lloyds of London who specialise in underwriting particular risks.

Lloyds underwriter: An individual member of a Lloyds syndicate.

Loss adjuster: A person who acts on behalf of the insurer, or the insured, to investigate the circumstances of a loss and to recommend the amount to be paid. Also known as Loss assessor.

Loss of profits insurance: A form of consequential loss insurance which compensates the insured for loss of earnings resulting from the interruption of business, usually as a result of fire of flood. See Business interruption insurance.


Marine insurance: Marine insurance covers the risk of loss to ships and vessels and also provides Cargo cover. Marine Cargo insurance may be divided into two divisions: inland marine, which covers property and goods in transit between locations without requiring sea transport, and ocean marine, which covers property and goods subject to a sea voyage. Marine Cargo policies are issued in various forms depending on the requirements of the shipper, the shipowner, the charterer, the consignee, etc.

Material fact: A fact that would influence a prudent underwriter in determining the premium for a policy.

Misrepresentation: Information supplied by the insured to the insurer which is incorrect to a material degree. The supply of such information whether innocently or fraudulently gives the insurer the right to repudiate the contract.

Motor insurance: Cover in respect of motorised vehicles including fire, theft, impact, collision and third party liability cover.


Negligence: The basis for liability insurance. It is the failure to act with the legally required degree of care for others. Also known as neglect.

Net claims: The aggregate of claim payments less all deductions for reinsurance and other recoveries during a given period.

Net line: The insurance business retained by a ceding company solely for its own account and which is not reinsured other than by catastrophe cover, stop loss cover or some other form of aggregate protection. Also known as retention or net account.

New business: Policies written in response to applications for insurance, as distinguished from renewal.

No claims bonus: The amount by which a renewal premium is reduced if the insured has not made a claim under the insurance policy for one or more consecutive preceding years. Applied particularly to motor comprehensive cover.

Non-disclosure: The failure to disclose material facts before entering into a policy.

Nuclear risks: By international agreement, such risks are excluded from all policies.


Over insurance: Insurance exceeding the amount of the possible loss on a policy.


Peril: Possible loss occurrences against which insurance cover is obtained. For example, fire, windstorm, collision, hail, bodily injury, property damage, loss of profits, etc.

Permanent disability: Disability which prevents a person from working in his/her normal occupation. This may be total or partial (able to still work but not in the same occupation).

Personal accident: A class of insurance which provides a fixed payment in the event of an insured being injured in an accident or killed in an accident. The amount paid varies according to the nature of the injury, for example, loss of a finger, loss of an arm.

Policy: The legal document, issued by the insurer to the policyholder, that outlines the conditions and terms of the insurance. Also called the contract.

Policy fee: An amount added to the basic premium to reflect the cost of issuing the policy.

Policyholder: A person who owns an insurance policy. Also known as the policyowner.

Policy schedule: The tabulated portion of a policy giving particulars of the policyholder, goods insured, sum insured, period of cover, excesses and similar information

Premium: The monetary consideration which the policyholder pays to the insurance company for a contract of insurance.

Prescription period: The period within which action must be taken by one party against another to secure fulfilment of an obligation.

Product liability insurance: Insurance taken out by manufacturers, wholesalers, distributors and sometimes retailers against claims arising out of the consumption, handling or use of a product or goods away from the premises where the goods are manufactured or sold. Product recall is also written under this heading if specified.

Property insurance: See Fire insurance

Proposal: A request for insurance submitted to the insurer by or on behalf of the insured. The proposal usually includes sufficient facts for the insurer to determine whether or not it wishes to accept the risk. It will be illegal for a broker to allow an insured to sign a partially completed or blank proposal form upon the introduction of the Policy holder protection rules.

Proximate cause: The direct, dominant or specific cause of a loss or the uninterrupted chain of events that brought about the loss.

Public liability insurance: A prescribed class of insurance business covering liability exposures of individuals and businesses for damage to property and injury to individuals.


RAF: Road Accident Fund. This is a state insurer that provides compulsory third party liability insurance for motorists for bodily injury. The premiums are paid via levy on petrol purchases.

Rating agency: An independent organisation which provides opinions on the claims paying ability of insurers.

Reinsurance: An agreement whereby an insurance company transfers part or all of its risk of loss under insurance policies it writes by means of a separate contract or treaty with another insurance company. The insurance company providing the reinsurance protection is the Reinsuring Company or Reinsurer. The insurance company receiving the reinsurance protection is the Ceding Company. Reinsurance protection provided is known as Reinsurance Accepted; from the standpoint of the ceding company, reinsurance protection received is known as Reinsurance Ceded.

Risk: The hazard exposure, or chance of loss. The term “Risk” is used also in a general way to designate the subject matter of an insurance policy. It may also be used as a generic term for the insured.

Risk management: Procedure to minimise the possibility of loss.


SAFSIA: The South African Financial Services and Intermediaries Association. This is one of the associations of insurance brokers. It lays down a code of conduct for members.

Salvage: The amount received by an insurer from the sale of property (usually damaged) on which he has paid a total loss to the insured.

SASRIA: The South African Special Risks Insurance Association. This insurer provides cover against loss from political riot. This is an insurer not for profit.

Schedule: A document forming part of the policy indicating the sum insured, premium period of insurance and applicable information.

Self insurance: An insured protects his/her own risk out of own resources. This can be done via a risk financing arrangement.

Short term insurance: Non-life insurance. In the United States, this is referred to as property and casualty insurance and in the United Kingdom, as general insurance.

Special Perils: Extra risks added to a policy not originally designed to cover those risks.

Sum insured: The stated monetary amount or amounts of indemnity or cover under an insurance policy.

Syndicate (Lloyds): A group of individuals or companies at Lloyds who pool resources to underwrite risks.


Territorial limits: The geographical area within which an insured event must occur to be covered in terms of the policy.

Third party cover (under motor vehicle insurance): Provides cover for legal liability for damaging Third Party property from the use of a motor vehicle.

Third party: Any person, not a party to the insurance contract, who has an alleged or actual right of action for injury or damage against the person insured under the policy.

Total loss: Loss entailing the payment of the total sum insured under an insurance policy.

Treaty insurance: Is an arrangement that covers all risks written within agreed guidelines. The insurer cedes or is obliged to cede and the reinsurer is obliged to accept these risks. This type of arrangement covers different risks that have certain characteristics in common. Individual risks are not normally negotiated. Commission is paid to the cedent by the reinsurer only on proportional treaties.


Uberrimae fidei: In all contracts of insurance, it is a fundamental principle that the parties must exercise the utmost good faith towards each other. Any material fact which would influence the parties to the contract must be disclosed, otherwise there is ground for avoiding the policy. This applies to both intentional and innocent failure to disclose material facts. The test of materiality is whether that fact would have influenced a prudent insurer in his decision to accept the risk and the premium to charge. The test is considered in view of all circumstances at that time, including the full circumstances of the fact undisclosed.

Under insurance: The difference between the possible loss and limit in insurance.

Underwriter: One who determines the acceptability or retention of business. Loosely, the person involved in setting premiums. The term is also used to denote an insurance company.

Underwriting result: The underwriting profit or loss ascertained by deducting claims incurred, net commission and management expenses from premiums earned.

Utmost good faith: See Uberrimae fidei.


Void: Of no legal effect. The insurance policy has no legal effect.


Waiver: The surrender of a right or privilege which is known to exist, or might exist.

War clause: By international agreement, insurers do not underwrite war risks.

Warranty: A clause in an insurance contract presenting a condition relating to the degree of risk, non-compliance with which invalidates the contract.

Warsaw convention: An international agreement specifying the liability of airline operators to their passengers and in respect of their baggage.