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).
401(k) Fee Claims are claims alleging that those responsible for administering a company’s 401(k) retirement plan allowed the plan’s providers to charge excessive fees. Over many years, even a small difference in the amount of fees charged for administering such plans can have a significant impact on an employee’s balance sheet at the end of that period. Assume that a 401(k) plan investment returns 5 percent annually over a 40-year period. Let’s also assume that an employee contributes $7,500 per year to the plan. If the employee pays 2% per annum during this period, his balance will be $565,509.45. But if the annual pay were reduced to 1.5 percent, a reduction of just ½ percent, the worker’s balance would increase to $634,127.08, a difference of $68,617.63. 401(k) plan fee claims can be especially costly if multiple affected employees file such a class action lawsuit. Fortunately, 401(k) benefit claims are covered by the fiduciary liability policy, since such plans are governed by the Employee Retirement Security Act (ERISA).
A 401(k) plan is the most common type of defined contribution plan in which employees choose to set aside a portion of their compensation. Under a typical 401(k), employees contribute between 1 and 15 percent of their annual pre-tax salary to the plan each year. In addition to this amount, many employers pay an employee contribution, such as 50 to 6 percent of the employee contribution. For example, if an employee contributes 6 percent of their salary to a 401(k) plan, the employer will contribute an additional 3 percent so that the employee saves a total of 9 percent of their annual salary (i.e., 6 percent contribution plus 3 percent employer contribution). There are annual maximum amounts that employees can contribute, as well as distribution limits under the age of 59.5.
831(b) A captive is a captive that may be taxed under U.S. Internal Revenue Code § 831(b), which provides that a captive taxed as a U.S. insurance company may only pay tax on investment income in the year in which in which his insurance premium is registered. is at or below the threshold for the applicable tax year, which was set at $2.2 million or less in 2017, and the premium cap may be adjusted for inflation. Such captives are also known as “microcaptives”.
The contract for the construction of A201 is designed and published by the American Institute of Architects (AIA). This standard document sets out the general terms of a construction contract, including immunity clauses and insurance requirements. While modifications are common, the A201 contract is probably the most widely used of all standard building contracts; therefore, its provisions have risk and insurance implications for many construction projects.
Abandoned property is a clause on property insurance policies that prohibits the insured from leaving damaged property to the insurer for repair or disposal. Arrangement of repair or disposal is the responsibility of the insured, unless the insurer decides otherwise.
The ABC test is a test that is used in several jurisdictions (eg California, Massachusetts, New Jersey) to distinguish employees from independent contractors. The ABC test has three prongs. An employee is only considered to be an independent contractor who is not covered by the wage rules if the hiring organization specifies each of the following conditions. * that the employee is free from the control and direction of the employer in connection with the performance of the work, both in contract for such work and in fact * that the employee performs work that is outside the ordinary course of business of the employing organization * That the employee is usually engaged in an independently established profession, an occupation or business of the same nature as the work performed for the employing organization The ABC test makes it difficult for companies to correctly classify workers as independent contractors, as they must meet each of the criteria. Thus, jurisdictions that use the ABC test are considered to be favorable to plaintiff lawyers filing claims on behalf of employees.
“Absolute” exclusions are exclusions contained in certain forms of insurance policies that exclude coverage of claims that are remotely but not directly related to the actual nature of the exclusion. The effect of such wording is to waive coverage in situations where coverage could reasonably be expected to apply. For example, an absolute exclusion in a policy written to cover the risk of insurance agent errors and omissions (E&O) could be read as either implicitly arising from or related to any actual or perceived “injury”. Suppose, for example, that an insurance agent fails to provide bodily injury (BI) coverage for a customer and the customer is later held liable for BI. The client then sues the agent for failing to obtain the appropriate insurance policy. Given the wording of the “absolute” exception noted above, the agency policy may not respond to the claim. This is because the client’s assertion indirectly originated and was “linked” to BI. In recent years, these “absolute” exclusions have become more common, and insurers are increasingly using them to deny coverage to claims that would otherwise appear to be covered.
Absolute pollution exclusion is the standard pollution exclusion in Insurance Services Office, Inc. Commercial Liability Insurance (CGL) policies. (ISO) after 1986. This exception gets its name from the removal of the “sudden and random” exception from the standard 1973 CGL pollution exception. While it removes coverage for most pollution incidents that may occur in the course of an insured person’s business operations, coverage remains for some significant impacts, most notably certain incidental pollution losses (including hostile fire), product liability and completed operations, and some cases. - the premises are operated by contractors. Since the exclusion is not really “absolute”, a more appropriate nickname for it is “pollution exclusion in broad form”, and it is used in some IRMI publications.