Glossary

A-B

AA1000 (AccountAbility1000): a standard developed by the Institute of Social and Ethical Accountability (ISEA) to promote the adoption of CSR principles, thus providing stakeholders with quality assurance in accounting, auditing and social and ethical reporting.

Accident insurance: insurance of individuals or groups against economic risks in the event of death or temporary or permanent disability by accident. A branch of non-life insurance.

Adjusted Net Asset Value (ANAV) corresponds to the consolidated market value of the assets backing the shareholders’ funds, net of taxes and policyholder interests on any unrealised capital gains and losses, after the elimination of goodwill and DAC, net of other adjustments required to maintain consistency with the valuation of the in-force business, and before the payment of dividends from profits of the year.

Agreed motor accident statement: it is a special form similar to a specific ministerial form used as a claim advice in motor third-party liability insurance. Both parties have to fill it in, sign it and describe how a road accident has happened in order to benefit from quicker claim settlement procedures.
 
Amount insured: amount up to which the insurer undertakes to fulfil its obligation. In property insurance, the amount insured usually corresponds to the value of insured property (insurable value). In third party liability insurance or expenses insurance, it is the agreed amount indicating the insurer’s maximum underwritten amount (limit). In life insurance, it is a lump sum payable to the beneficiary as an alternative to the payment of an annuity.
 
ANIA: Italian Association of Insurances Companies (Associazione Nazionale fra le Imprese Assicuratrici).
 
Annual Premium Equivalent (APE): is defined as new business annualised regular premiums plus 10% of single premiums.

Arbitration: a non-court procedure for resolving disputes arising between the insurer and the insured. In general, arbitration is envisaged by a specific clause in the insurance contract.
 
Area of consolidation: all the companies aggregated through the “full consolidation” method included in the Consolidated Financial Statements.
 
Asset: any item of economic value recorded in the assets such as owned properties, liquid assets, receivables, etc
 
Asset Management: the business of managing third party (and other) financial investments.
 
Assistance insurance: insurance contract whereby the insurer undertakes to immediately help the insured if he/she is in difficulties following an accident (e.g. a car breakdown, a personal accident abroad etc.).
 
Bankinsurance: term that is commonly used to refer to the sale of insurance products - mainly life insurance products - through banks.

Benchmark: an objective reference parameter used to evaluate company performance in relation to analogous companies.
 
Beneficiary: a natural person or legal entity entitled to the policy benefits provided by the insurance company (lump sum, annuity or refund of net premiums paid) upon the occurrence of the events described in the contract. The beneficiary is appointed by the contractor who can - with a few exceptions - revoke or change his/her decision at any time.
 
Best practice: le esperienze più significative o aventi i migliori risultati adottati in contesti affini a quelli oggetto di analisi.
 
Bonus-malus: clause of the compulsory motor third party liability insurance contract whereby the premium is adjusted according to the occurrence of claims caused by the insured over a certain period of time. This system divides drivers by classes that are different among companies; each class corresponds to a premium level. People who take out an insurance for the first time are included in the so-called starting class corresponding to an intermediate premium level. In the following years, the premium will increase or decrease according to the claim history of the insured.
 
Broker: an insurance or reinsurance broker whose profession entails creating direct contacts between an insurance or reinsurance company, with whom he has no binding commitments, and people who intend to draw on his services to obtain risk coverage. He helps determine the content of contracts and where necessary participate in their management and execution.

C-D

Cancellation: written notice to be sent to the insurer by the contractor, or vice versa, within a certain period of notice established by the contract, so as to avoid tacit extension of the insurance contract.
 
Captive company: company which provides its products and services to companies in its group.
 
Claim: an event insured against in the contract.
 
Claim advice: advice that the insured has to give his/her insurer or agent after a damage or loss. Unless otherwise specified in the contract, the advice must be given within three days from the date the damage or loss has occurred, or the date on which the insured has been informed thereof.
 
Claims adjuster: self-employed worker or employee of an insurance company who evaluates the economic damage when an accident occurs.
 
Claims adjuster: self-employed worker or employee of an insurance company who evaluates the economic damage when an accident occurs.
 
Code of Ethics: document written a voluntary basis outlining the Company’s commitments to internal stakeholders. The Code of Ethics also describes the Company’s attitude towards major social, environmental and economic issues; this is particularly important when operating in countries that do not provide for the safeguard of human rights, labour rights or the environment.
 
Coinsurance: contract whereby the same risk is shared and insured by one or more insurance companies. In the event of claim, each of the insurance companies has to pay an indemnity according to the share it has insured.
 
Coinsurance: contract whereby the same risk is shared and insured by one or more insurance companies. In the event of claim, each of the insurance companies has to pay an indemnity according to the share it has insured.
 
Collision damage waiver: policy that covers accidental damage to the insured vehicle.
 
Combined ratio: overall costs for claims and expenses expressed as a percentage of the value of earned premiums for the financial year. The combined ratio is equal to the sum of the expense ratio and loss ratio.
 
Commission: basic element of the work relation with the agency. The agent’s obligation to deal with contract underwriting corresponds to the insurer’s obligation to pay him/her a certain fee for the business made. A distinction is usually made between acquisition commissions (which are paid for the acquisition of new contracts) and collecting commissions (which are paid for premium collection and the administrative management of contracts).
 
Confindustria: Confederation of Italian Industry representing Italian companies.
 
Consolidated Financial Statements: a document that shows the financial and asset status, economic results and variations in the shareholders’ equity of a group of companies considered as a single economic body. It derives from combining the financial statements of the companies belonging to a group, net of amounts relating to internal group operations.
 
Core business: the main area of business for a company operating in many fields.
 
Core competence: competence critical to the development and success of a company.
 
Corporate Centre: The body of the Group that is responsible for managing, coordinating and controlling activities within the scope of the general guidelines defined by the Parent Company Board of Directors.
 
Corporate Governance: a governance system encompassing various bodies (levels, composition, competence, etc.) and the rules that govern the relations between them (right to vote, delegation of powers, etc.).
 
Credit rating: credit evaluation by quantifying the likelihood of a person’s/company’s insolvency.
 
Customer satisfaction: a process of knowing clients’ perceptions and expectations concerning a service or product.  It is used to compare in relative terms the value of a particular service offered to the public.
 
Customer service: a group of services provided to the client.
 
Deductible/excess: contract clauses limiting the insurance cover whereby a certain amount of the damage is still to be charged to the insured. The deductible - usually expressed with a fixed amount or in percentage - is applied on the sum insured and can therefore be established beforehand. It is different from the excess as the latter - expressed in percentage - is calculated according to the damage or loss, and as such cannot be established beforehand.
 
Direct business: Premiums from insurance contracts.
 
Dividend: part of the net profits of a joint-stock company distributed to shareholders annually.
 
Dow Jones EuroStoxx 50: this euro-area index represents 50 leading European companies in their fields, listed on the Dow Jones EuroStoxx Index.
 
Dow Jones EuroStoxx Insurance: a weighted index based on capitalization measuring the performance of the insurance sector in European Monetary Union member countries.

E-F

Embedded Value (EV) is an actuarially determined estimate of the value of a company, excluding any value attributable to future new business. With reference to the covered business, and to the relevant consolidation perimeter (i.e. the operating life, health and pension companies of the group), the EV is equal to the sum of the Adjusted Net Asset Value and the Value In-Force.

Embedded Value Earnings correspond to the difference between the closing and the opening EV, excluding adjustments to opening EV and capital movements.

Employed sellers: the sales force on payroll.
 
Engagement: the process of involving stakeholders.
 
Excess Capital: the amount by which the available capital (embedded value plus subordinated debt) exceeds the internally assessed risk based capital (economic capital) requirements of the Group.
 
Expense ratio: supply and administration expenses expressed as a percentage of the value of earned premiums for the financial year.
 
Fair value: evaluation of what could be defined as equitable “market” value in compliance with international accounting principles IAS/IFRS.
 
Financial advisors: professionals working in the field of financial brokerage.
 
Fire insurance: insurance contract whereby the insurer undertakes to indemnify the insured for direct losses caused by the fire of insured objects.
 
Formal receipt: a document issued by the receiver proving that a sum has been paid. The insurer issues a receipt when the premium is paid by the contractor; the insured or the injured party issues a receipt when indemnity is paid by the insurer.

G-H

 General terms of contract: basic clauses of an insurance policy concerning general aspects such as premium payment, inception and duration of the policy. They can be supplemented by specific and particular terms of contract.
 
General third party liability insurance: insurance contract whereby the insurer undertakes to cover a claim for damages to be paid by the insured as he/she is legally responsible for loss or damage unintentionally caused to third parties in relation to the risks covered by the insurance. Third party liability risks are manifold and include: ownership of a building, professional business, employer’s liability, pollution liability, etc...
 
GRI (Global Reporting Initiative): an institution created in 1997 by UNEP (see paragraph) and CERES (Coalition for Environmentally Responsible Economies) whose objective is to develop and disseminate the guidelines for drawing up a voluntary report on economic, environmental and business performance of company activities.
 
Guidelines for Corporate Governance and Multinational Enterprises in the OECD: recommendations addressed by governments to multinational enterprises, basically concerning voluntary principles and standards for responsible business conduct.
 
Health insurance: insurance contract whereby the insurer undertakes to reimburse the costs borne by the insured for hospitalisation or surgery due to illness or accident, specialist examinations or tests, or to indemnify the insured for loss or damage caused by illness leading to permanent disability or temporary disablement preventing him/her from working.

I-J

Implied Discount Rate (IDR): is the discount rate that, when applied to a deterministic projection of future distributable profits based on “real-world” best estimate assumptions, produces the same value as that arising from the market consistent valuation.

Index-Linked (contracts, products): Stock Market index-linked policies.
 
Indirect business: premiums from reinsurance contracts.
 
Individual pension schemes: supplementary pensions for individuals other than those paid by the public welfare system which are implemented either by joining open pension funds or by  taking out a life insurance policy meeting specific requirements envisaged by the law.
 
Information technology: technology used to gather, preserve, update and convey information needed by any operating body.
 
Institutional investors: bodies whose purpose is to carry out and manage investments for themselves or third parties (banks, insurance companies, trustees, pension funds, etc.).
 
Insurance agent: independent insurance professional who offers his/her technical skills to customers and deals with the management and development of business in an agency by selling and servicing policies on behalf of one or several insurance companies. He/she works at his/her own risk and expenses and is fully or partly paid on commission. Insurance agents are entered in a professional roll managed by ISVAP (Italian Insurance Supervisory Authority).
 
Insurance contract: a contract whereby the insurer undertakes, against payment of a premium, to indemnify the insured for damage or loss caused or pay a lump sum or an annuity upon the occurrence of a specific event in the life of the insured. In other words, the insurance contract is a tool whereby the insured transfers a risk he/she is exposed to to the insurer.
 
Insurance policy: document proving the existence and describing the content of an insurance contract. The policy is signed by both parties, issued by the insurer and given to the contractor. It includes all the terms of contract, be they general or particular.
 
Insurance surveyor: a person working for an insurance company - usually on a freelance basis - who is in charge of estimating the extent of loss or damage suffered by either the insured or, in third party liability insurance, the injured party following an accident. Insurance surveyors are entered in a professional roll managed by ISVAP (Italian Insurance Supervisory Authority).
 
Insurance year: twelve sequential months starting from the inception of a policy.
 
Insured value: it is the value of the matter insured, e.g. the sum insured for a vehicle against  the risk of theft. The insured value may not correspond to the insurable value, thus leading to underinsurance (or partial insurance) or overinsurance.

Internal Rate of Return (IRR): is defined as the rate that makes equal to zero the present value of new business distributable profits (therefore allowing for new business first year strain and required capital absorption) calculated using “real-world” best estimate assumptions.
 
Intranet: Internet network accessible only to company staff.

Investor relations: relations between the Company and its investors.
 
ISO (International Organization for Standardization): ISO (International Organization for Standardization): international network of technical standard-setting bodies. The major standards include ISO 14001 (referring to environmental management systems) and ISO 9000 (relative to quality systems).
 
ISVAP: Italian Supervisory Body for Private Insurance (Istituto per la Vigilanza sulle Assicurazioni Private e di Interesse Collettivo).
 
Joint venture: association of two or more companies, sometimes of different nationalities, working together on a single project.

M-N

Marine insurance: insurance contract whereby the insurer undertakes to indemnify the insured for loss or damage concerning a means of transport (ship, airplane or train) or its cargo. Hull insurance covers physical damage to the hull itself, whereas cargo insurance covers physical damage to or loss of the goods.
 
Media relations: relations between the company and the media.
 
MIB30: a weighted index of the 30 top Italian companies traded on the Milan Stock Exchange.
 
Mibtel: a capitalization-weighted index of all stocks traded on the Milan Stock Exchange computerized trading system.
 
Mission: the corporate mission and basic objectives pursued.
 
Motor third party liability insurance: compulsory insurance contract for motor vehicles and  craft covering the driver and the owner (if the latter is a different person) against the risk of indemnifying third parties for loss or damage caused by their craft or vehicle. Unlike the procedure adopted in third party liability insurance, in motor third party liability insurance the injured party can directly apply to the insurance company of the person liable for damage for claim settlement (direct recourse).
 
Multi-brand: a commercial approach based on the use of multiple brands.
 
Multi-local: marketing approach that aims to act as a local operator on all the markets in which the company is active.
 
Multi-channel: a range of products and services provided through multiple sales channels. The definition considers the type of distribution channel used to provide the products and services, as well as the methods by which clients can access them.

Multi-client (survey): a survey carried out for more than one client which is therefore more in-depth and takes into account a wider sample.
 
NAV adjusted: shareholder’s funds + shareholder’s share of unrealised capital gains/losses - goodwill - DAC - dividend.

New Business Value (NBV) is the present value, at the point of sale, of the projected stream of after tax industrial profits expected to be generated by the covered new business written in the year, taking into account the actual acquisition costs incurred in the year of sale, after allowance for:

• the cost of financial guarantees and options granted to policyholders;
• the frictional costs of setting up and holding the required capital;
• the cost of non hedgeable risks.

NBV is calculated according to year-end economic and operating assumptions.

Non-life insurance: it includes all insurance contracts protecting the insured against the risks concerning his/her individual properties (e.g. house or car), his/her assets as a whole and his/her own person. The first case refers to property insurance (such as theft insurance, fire insurance, etc.); the second case refers to third party liability insurance or expenses insurance; and the third case refers to personal accident insurance.

Normalised Embedded Value Earnings correspond to Embedded Value Earnings, net of economic variances and extraordinary expenses.

Normalised RoEV: return on embedded value net of investments and tax changes.

O-P

OECD (or OCSE): Organisation for Economic Co-operation and Development, grouping 30 countries that share a commitment to democratic government and market economy.

Payback Period is the period of time (in years) required to recover the cost of the initial investment in new business (i.e. new business first year strain and required capital absorption) calculated by means of a deterministic projection based on “real-world” best estimate assumptions.
 
Pension funds: they aim at providing workers (employees or self-employed workers) with additional pension benefits other than those paid by the public welfare system.
 
Performance indicators: specific indicators selected to meet corporate information needs and used to monitor the company. They can be of a financial, productive, commercial, environmental and social nature, or concern more than one aspect.
 
Period of insurance: period of time in which the insurance cover is in force subject to the payment of the relevant premium.
 
Policy: insurance contract.
 
Preda Code: a self-enforced code of conduct for listed companies.
 
Premium: is the sum the policyholder must pay the insurer; it is effectively the “price” of the insurance policy.
 
Premium / reserve ratio (non-life business): net technical reserves / net premiums underwritten.

Present Value of New Business Premiums (PVNBP): is defined as the present value of the future new business premiums, calculated using year-end assumptions for lapses and other exits and discounted to point of sale using the reference rates.
 
Principle of indemnity: one of the basic principles of non-life insurance. According to this principle, indemnity paid by the insurer should serve to make up for damage or loss suffered by the insured and cannot be a source of income for him/her.
 
Property risks: they include: fire, technological risks, theft, misconduct, suspension of business, hail, etc.
 
Proportional rule: it is a typical rule of property insurance in non-life insurance. It is used in the event of underinsurance, i.e. when the value of insured property is higher than the value stated in the policy at the time of the claim. In such cases, indemnity to the insured does not correspond to the full amount of the loss or damage, but it is reduced in proportion to the ratio between the insured value and the property value at the time of the claim.
 
Protected categories: the disabled, orphans and widows of men who died in the workplace or performing their duties or in war, refugees, victims of terrorism, etc...
 
Psychological damage: damage that does not concern property and can be indemnified only if it is caused by criminal tort. It describes the temporary physical and psychological sufferings of the tort victim (the injured third party).

R-S

Recourse: in  motor third party liability insurance, insurer’s right to recover the amounts paid to injured third parties from the insured when, by contract, the insurer should have had the right to refuse or reduce its obligations, but has not been able to do so given the unenforceability of contract exceptions for third parties envisaged by the law.
 
Retail: segment of the market which primarily includes individuals, professionals, shopkeepers and craftsmen.
 
Retirement products: life insurance products that cater for supplementary retirements needs.
 
Risk: likelihood that a future and uncertain event leading to harmful consequences (in non-life insurance) or related to human life (in life insurance) will occur. Risk is the main element of an insurance contract: the insurer must fulfil its obligation to pay insurance benefits upon its occurrence.
 
Risk Management: systematic application of management policies, procedures and practices aiming to identify, analyse and monitor risks.
 
Road show: a series of meetings between companies and institutional investors (or agents, etc.) which take place in different locations.
 
RoEV (Return on embedded value): (embedded value at period end - embedded value at beginning of period +/- capital movements/dividends) / embedded value at beginning of period.
 
Shareholders agreement: agreements among shareholders concerning the company management, i.e. the existence over time of the same shareholders as a “group”.
 
Speed of claims settlement: the percentage of claims reported in a financial year and settled in the same year.
 
Stakeholders: individuals and groups who can influence the success of a company, or who have an interest in the decisions made by the company: shareholders, employees, clients, suppliers, public institutions, competitors, local communities, lobbies, mass media, etc.
 
Stock Exchange capitalization: when referring to a company, it is the value obtained by multiplying the market price of a share by the number of shares outstanding.
 
Stock option: option contracts for purchasing the shares of a company – issued with an increase of capital for this express purpose – which grant the right to purchase the shares at a set price within an established period of time. They are used as a means to supplement salaries and as a loyalty tool for individual employees, special categories, or all staff members.
 
Subagent: a professional agent working at his/her own risk and expenses who mainly and usually deals with the task given to him/her by the agent to underwrite insurance contracts. He/she does not perform any other professional or working activity, whether in an employed or self-employed capacity.
 
Subsidiary agency: an agency depending directly on the Company and managed by a salaried member of staff (agent), employing internal members of staff, who are also company employees.
 
Supplementary retirement scheme: a form of retirement savings, designed to create income to supplement pensions paid by the public pension system during retirement.
 
Sustainable development: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (from: Brundtland Report, World Commission for Economic Development, 1987).

T-Z

Theft insurance: insurance contract whereby the insurer undertakes to indemnify the insured for direct losses caused by the theft of insured objects.
 
Turnover: an index indicating staff turnover due to resignations, retirement, death or other reasons which make it necessary to hire a new employee to replace a person who is no longer employed.
 
UN Global Compact: a voluntary initiative launched and sponsored by the United Nations, promoting and disseminating the principles of sustainable development.
 
UNEP: the United Nations Environmental Programme that promotes sustainable development among companies and the general public.
 
Unit-linked (contracts, products): policies that require paid up premiums and benefits to be expressed as units of an investment fund they are linked to.

Value In-Force (VIF) is the present value of the projected stream of after tax industrial profits that are expected to be generated by the covered business in force at the valuation date, after allowance for:

• the cost of financial guarantees and options granted to policyholders;
• the frictional costs of holding the required capital;
• the cost of non hedgeable risks.