As Their Interests May Appear (ATIMA) is a phrase added to insurance policies and endorsements to add others as insured. The use of ATIMA or similar phrases has been clearly embraced by firefighters’ insurers, especially in relation to mortgage endorsements, as a way of aligning coverage with the financial interests of a certain entity or individual and preventing violations of policy terms relating to sole proprietorship. . The phrase “ATIMA” continues to appear in builder risk policy today, reinforced in part by language in standardized contracts commonly used for construction work. For example, the American Institute of Architects General Conditions A201 requires that property insurance cover the interests of the owner, contractor, subcontractors, and sub-subcontractors in the project. The phrase may not be needed in a builders risk policy as it could lead to unforeseen consequences and unnecessary litigation.
Insurance is a contractual relationship that arises when one party (the insurer), for a fee (premium), agrees to compensate the other party (the insured) for losses caused to a certain subject (risk) caused by certain unforeseen circumstances (hazards or dangers). The term ‘guarantee’, commonly used in England, is considered synonymous with ‘insurance’.
The 10/10 Rule is a matter of analyzing and demonstrating the transfer of risk as a precondition for the use of reinsurance accounting, which was codified in the early 1990s with the adoption of Financial Accounting Standard (FAS) 113 (and its statutory counterpart, SSAP 62). FAS 113 itself was a response to alleged abuses and set the standard for testing whether something should be called an insurance contract. FAS 113 required that the transfer of risk be demonstrated by comparing the present value of the cash flows associated with the contract and, in particular, by exceeding certain thresholds of “significance” of risk. The thresholds, often referred to as the 9a and 9b tests, are: 9a. The reinsurer assumes significant insurance risk under the reinsured parts of the underlying insurance contracts. 9b. It is possible that the reinsurer could suffer a significant loss from the transaction. While neither “significant” nor “reasonably possible” was defined in this context, standard rules of thumb quickly emerged in the implementation of FAS 113. The most commonly cited is the “10/10 Rule”. This rule states that a contract reaches a threshold if there is at least a 10 percent chance that it will suffer a loss of 10 percent or more in present value (expressed as a percentage of the contract premium ceded).