Premiums trust fund (PTF)

The premiums and other monies that members receive in respect of their underwriting at Lloyd’s are held by their managing agents in trust for them subject to the discharge of their underwriting liabilities. The premiums trust funds compromise a sterling fund, Lloyd’s American Trust Fund, Lloyd's Dollar Trust Funds, Lloyd's Canadian Trust Fund and the Lloyd’s Asia trust funds (which cover general business written through coverholders in Singapore). These premiums trust funds are available to fund overseas regulatory deposits, claims, return premiums, underwriting expenses and (once a year of account has been closed) any profit that is payable to the member.

Prior years

Earlier years. This term usually refers to earlier years of account which have been closed into another year of account by reinsurance to close.

Pro rata cancellation

When an insurance contract is terminated mid-term by an insurer, the return premium will usually be calculated on a pro rata basis. For example this means that if a 12 month contract is cancelled 4 months before its expected expiry date then the insured would receive back 4/12 of its premium.

Producing broker

This term may refer to
(a) the individual broker who obtains a proposal for insurance or reinsurance for the broking firm for which he works; or
(b) a broking firm or individual broker that is responsible for introducing a proposal for insurance or reinsurance to another broking firm.
The original producing broker will be the person who deals directly with the client. The term producing broker is often used in contrast to the term of placing broker although it is common for individual brokers and broking firms to undertake both functions.

Profit commission
A commission that is payable according to a pre-determined formula as an incentive and reward for profitable underwriting. The following are examples of profit commission:
(a) the commission paid to a coverholder by a managing agent for underwriting a profitable account;
(b) the commission paid by a Member to a managing agent in respect of the profitability of its syndicate in a given year of account; and
(c) the commission paid by a reinsurer to an insurer in respect of a profitable reinsurance treaty.

Proportional Reinsurance

A type of reinsurance in which the reinsurer shares similar proportions of the premiums earned and the claims incurred by the reassured plus certain associated expenses. Compare non-proportional reinsurance.
Quota share treaties and surplus line treaties are examples of proportional reinsurance.

Proposal form

A standard form which is prepared by an insurer and which contains a number of questions which a person seeking insurance is required to answer for the purpose of enabling the insurer to decide whether or not it is willing to grant cover and, if so, the terms on such cover. See duty of disclosure.

Proposer

A person who seeks insurance (frequently by means of completing a proposal form).

Proximate cause

An insurer will only be liable to pay a claim under an insurance contract if the loss that gives rise to the claim was proximately caused by an insured peril. This means that the loss must be directly attributed to an insured peril without any break in the chain of causation. Compare intervening event.

Pure year of account

A year of account viewed in isolation, which is to say disregarding any prior years that may have been reinsured into by means if reinsurance to close.