E

exclusion

A condition under which the benefit is not paid is referred to as exclusion. This is to avoid any misunderstanding. For example, for accidental policies, there is usually exclusion for suicide or self-inflicted injuries by the life insured.

ex-gratia payments

These are payments made by a company where the claim is a gray area, doubt exists but it may be to the benefit of the claimant and the company feels out of goodwill that some form of payment should be made. The claim is made without any admission of liability. Payment is only made on the understanding that the claimant accepts the amount in full satisfaction of all claims he or she may have on the policy.

 

expense ratio

Expenses associated with running an insurance business, such as commission, professional fees and other administrative costs, expressed as a percentage of premiums. Also the annual operating costs of an investment fund, expressed as a percentage of assets.

ex-gratia claim

This occurs where strict liability has not been proved but the insurer may decide that it would be unduly harsh or cause hardship, not to make some payment. Such payments are made out of goodwill, without admission of liability.

European embedded value (EEV)

Embedded value is a way of measuring the current value to shareholders of the future profits from a life and pensions business. EEV was launched in May 2004 by the CFO Forum (which represents chief financial officers of the biggest European insurers) as an improvement on the achieved profit method used to calculate embedded value results.

equity

Another word for " share". A shareholder’s equity is the value of the shares they hold. Also, a house owner’s equity is the value of their home minus the unpaid mortgage – so negative equity occurs if the house is worth less than the outstanding loan.

endowment plan

A plan in which the amount is paid to a policyholder if he outlives the tenure of the contract or to the beneficiary if the insured person dies before the date on which the policy matures.

emerging markets

Developing economies such as those in Latin America and Asia that do not have a long history of equity investment and stable, reliable returns. Speculative investors prepared to accept a higher level of risk see such markets as having attractive potential for rapid growth. See also mature markets.

embedded value

A way of measuring the current value of future profits. Embedded value represents the total of the profits expected to emerge in the future and the net assets already invetsed in the business. See also European embedded value.

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