Insurance Terminology

1. Reinsurance
Reinsurance is the insurance from a third party of the insurance coverage offered by the insurer or more simply, the part of insurance risk undertaken by an insurer from another specialized insurer called reinsurer. In other words, reinsurance is the insurance of insurance.

2. Object Insured
The object insured can be anything of substantial value or any event which can cause the loss of a legal right or legal liability.

3. Deductible
Deductible is the agreed amount to be deducted from the compensation paid by the insurer and which burdens the policyholder. It can be agreed in terms of a contract that the insurer is exempted from paying a part of the losses, whenever called upon to compensate, charging the beneficiary with this amount of money. Therefore, it is required from the policyholder to assume part of the risk of liability on their behalf.

4. Compensation
Compensation is an insurance principle which aims, as far as possible, to place the insured  in the same position he was in before his damage. It is not applicable in Life Insurance and generally in the Insurance for Personal Accidents. Compensation is also the extent of liability of the insurer or reinsurer for any loss.

5. Insurance
Insurance is a mutual fund to which many people contribute to cover themselves from a random, unexpected loss (or/and from any damage which has been previously agreed on)

6. Percentage Insurance
Percentage Insurance is the insurance which is originally agreed on under the terms of a contract, to correspond in percentage with the value of the insured item. It goes without saying that in case that the risk has occurred, the reimbursement will be the corresponding percentage of the damage. It is possible for the insurer to insure a 50% of the value of an item. Therefore, when the risk occurs, he will reimburse the 50% of the damage. In other words, the rule of proportion applies. In the case that the 100% of the value of an item is less than the amount resulting from the reduction of the amount  of the insured value to 100%, the reimbursement is estimated in proportion to the insurance percentage against the actual value of the item.

7. First Loss Insurance
First Loss Insurance is the insurance practice that covers only up to a maximum a possible loss, disregarding the overall value of the insured item, which can be much higher and in a case of a damage  the average clause of underinsurance does not apply. The purpose of this form of insurance is to cover the highest amount of damage that can be caused and not the entire insurance value.

8. The Insured
In case of Life Insurance, the Insured is the person whose life is insured. The concept of the Insured includes the protected members, which are the spouse and unmarried children who may be insured in some additional coverages offered by certain insurance products.
In the case of General Insurance though, when we use the term “Insured” we refer to the person (natural or legal) whose property or interests are insured.

In both cases, the Insured and the Beneficiary can be either the same or different persons.

9. Insurance Contract
An insurance contract is a private written agreement issued as required by the insurance company (otherwise invalid) and proves the insurance treaty. This document is proof and not constitutive. If there is no insurance contract, the content of the insurance agreement can only be proven by oath or bond.

10. The Insurer
The word “Insurer” denotes the Insurance Business which is required to be of high capital base and high solvency and is responsible for compensating the beneficiary in the event that the covered risk occurs. Under Greek Law No400/70, there are two categories of Insurance Businesses:
Insurance Businesses for Damage (which insure Damages)
Life Insurance Businesses (which insure Life)
The term “Insurers” is unduly used for all those who intermediate in order to draw up the Insurance Contract such as the intermediaries in the sale of insurance policies and the rest of the employees of an Insurance Company.

11. Insurance Value
In the insurance agreement, the Insurance Value is called the objective, actual value of a real object at a given time. By definition, the insurance value refers only to the insurance of damage of items whose value can be objectively assessed in cash for replacement. In a contract, the insurance value can fluctuate at a given time due to age, devaluation or differentiation.

12. Amount Insured
The Amount or Sum Insured is the highest liability limit of the insurer which is concluded between the insurer and the insured, stated in the insurance contract and on which the premiums are calculated.
The insurance value or interest and insurance amount must be one and the same so as to offer full coverage.

13. Insurance Interest
Insurance Interest is the economic relationship of the individual towards the commodity. This relationship is usually legal (i.e. ownership).If it is not directly legal, it results from usufruct or other legitimate interest (i.e. from the operation of a leased shop).Insurance of interests against legal principles or illegal activities such as insurance for illegal drugs, contraband etc. is invalid.

14. Insurance Risk
The term Insurance Risk is used in 3 different concepts:
The insured item that is the insured property, the machinery, the pleasure vessel, the individual, etc.
The uncertainty or the probability of the event and the damage scale which can be caused.
The loss event against which the insurance is realized.

15. Insurance Agent
Insurance Agent is the natural or legal person whose sole responsibility is to undertake a contract on a commission insurance business in the name and on behalf of one or more insurance undertakings. The Insurance Agent presents, proposes, countersigns or establishes himself or through other intermediators insurance contracts for insurance businesses. He also provides the insured with all the necessary assistance during the insurance agreement and especially after the occurrence of the insured event. The agency contract may restrict the right of an Insurance Agent to enter into agency contracts with other insurance companies.

16. Insurance Consultant
Insurance Consultant is the natural or legal person who studies the market, presents and proposes insurance solutions to costumer needs, with insurance contracts on behalf of insurance companies, agents or insurance agents coordinators for the acquisition work. The relationship between the insurance agent with the above is the work contract. The Insurance Agent is not entitled to sign insurance policies nor represent the insurance business or intermediary. Any agreement to the contrary is void.

17. Insurance Employee
Employees of insurance companies, insurance agency businesses or insurance brokerage companies exercise intermediation insurance contracts on behalf of enterprises in which they work or others associated with them, after the approval of the employer. The relationship of the insurance employee with the aforementioned companies, on behalf of which they intermediate, is a project contract and independent of the employment contract.

18. Successive Insurance
In non-life insurance contracts, it is possible for the insured or the recipient of the insurance to be succeeded by another insured or insurance recipient. This can happen i.e. due to transferring of the title of the insured item such as the sale of a car or a shop, etc. In that case, within the next 30 days, at the latest, from the day that he becomes aware of the succession, the insurer is entitled to terminate the contract.

19. Beneficiary
Beneficiary is the individual or individuals designated to receive insured amounts in case of insurance risk. Beneficiary change can occur after a written request of the contracting party and the insured. The beneficiary can be a natural or legal person.

20. Additional Premium
Additional Premium is the extra amount of money paid by the insured, either because of profession or health condition. Professional additional premiums are determined in accordance to the specific characteristics of certain professions, while health additional  premiums are determined by health problems faced by the insured.

21. Recipient of Insurance
The Contracting Party or Insurance Recipient is the natural or legal person who enters into an insurance agreement with the company. The contracting party may be different from the insured person, as long as there is a family, professional or any other kind of relationship which can justify the insurance interest of the contracting party for that person.

22. Insurance Broker
Insurance Broker is the person whose main tasks, at the behest of the insured and against commission offered by insurance or reinsurance businesses, are to bring together  the insured or reinsured with the insurance or reinsurance undertakings, to carry out all the necessary preparatory tasks in order to draw up  insurance or reinsurance contracts, to receive the acceptance from the insurance  or reinsurance undertaking, the approval of the insured or reinsured and assist in their management and execution, especially if the risk materializes. An insurance broker is not bound as to the choice of the insurance or reinsurance undertaking.

23. Co-insurance-Multi Insurance
Co-insurance is the insurance of an item from two or more insurers against the same risk. These insurances are effective to the extent of the damage or proportionally for each insurer, up to the amount of his contract. The recipient of the insurance or the insured is obliged to inform each insurer of the existence of the other insurance contracts. The law provides that the Coinsurance may exist whether there is an agreement between the coinsurers or not. However, if  the recipient or the insured dishonestly fails to disclose the existence of Coinsurance to the coinsurers, then the insurance is invalid.

24. Coordinator  of Insurance Consultants
Coordinator of Insurance Consultant is the natural or legal individual working on commission, who, on behalf of a life insurance company or of a single insurance business against damage, mediates in drawing up insurance contracts through a group of consultants whom he selects, trains and supervises.

25. Underinsurance
Underinsurance exists when the covered sum insured or the insured capital is less than the insurance value of the item. So, in the occurrence of a risk, the proportional term applies. In Underinsurance, if the risk materializes, the compensation is proportional to the ratio of the insurance value and the insurance sum-insured capital.

26. Overinsurance
Overinsurance exists when the covered sum insured or the insured capital is greater than the insured value of an item. This may be due to either inadvertent overvaluation of the insurance value of the item or intentional fraudulent  purposes of the policyholder-insured. Regardless the case or the reasons behind this, it clashes with both the principles of insurance risk management and the existing legislation.