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Glossary of Terms used in ACTIA Agreements and Contracts Accident Aggregate Any one loss Aviation Insurance Consequence Control Claims Made Wording Claims Reporting Cross Liability Directors and Officers Insurance Entity Event Hazard Hold Harmless Agreement Incident Industrial Special Risk Inherent Risk Insurance claim Joint Insured or Co-Insured Clause Level of Risk Likelihood Medical Negligence Negligence Non-renewable Contract Occurrence Wording Policy Class Product Products Liability Professional Indemnity Public Liability Residual Risk Risk Risk Appetite Risk Control Effectiveness Rating Risk Description Risk Identification Risk Matrix Risk Owner Risk Register Risk Source Risk Treatment Risk Treatment Owner Third Party Travel Insurance (Corporate Travel Policy) Wrongful Act Bibliography
AccidentAny sudden event which is unintended. AggregateThe aggregate is the total amount payable for all events resulting in a claim for any period of insurance. For example if the annual aggregate is $20,000,000 and there are two claims made for $10,000,000 each – the annual aggregate will be exhausted and further claims will be required to be paid by the insured.Any one lossAny one claim or event / occurrence that results in a claim.Aviation InsuranceThe Territory maintains a non-owners Aviation policy. Cover is provided for the Territory’s legal liability arising out of their aviation and aircraft operations in connection with owned airstrips and/or elsewhere non-owned airstrips and/or elsewhere non-owned aircraft liability. The owners and operators of any aircraft used by the Territory are required to effect and maintain the appropriate Aviation insurance.ConsequenceOutcome of event affecting objectives.Note: an event can lead to a range of consequences. ( Bibliography reference 1) ControlMeasure that is modifying risk.Note 1: Controls include any processes, policy, device, practice or other actions which modify risk. Note 2: Controls may not always exert the intended or assumed modifying effect. ( Bibliography reference 1) Claims Made WordingA claims made wording provides indemnification for claims made and notified during the period of insurance. Should an insured become aware of a claim or an incident which may give rise to a claim it must be reported in the period that the insured first became aware of the event. The insurer is on risk only during the stated policy period for:
Thus insurer is providing current cover and limited retrospective cover only and can close his book at the end of the policy year. For example: if a writ is received in 2005 regarding a financial loss (event) arising from an inappropriate design in 1999, then (assuming that there were no prior indications of the claim) it is the 2005 policy which would respond. Claims ReportingTo ensure that the policy will respond any claim or incident likely to give rise to a claim it must be reported within 10 business days.Cross LiabilityCoverage in connect with a suit which is brought against an insured by another party that has insured status under the same policy. Cross liability provisions will treat each party as separate entities whilst allowing for the parties to claim against the policy, subject to the terms and conditions of the policy wording. Some policies will exclude cover for cross liabilities under “insured versus insured” exclusions.Directors and Officers insuranceDirectors and Officers insurance provides cover for “directors and officers” of the Territory. Directors and Officers will provide relief for managerial errors made by individuals or a group of individuals providing that they are acting honestly and without recklessness. (e.g. not fraudulently) It is intended to cover ACT public servants, statutory officers and appointees (i.e. members sitting on boards, committees and the like) who provide management functions; management advice; or recommendations.EntityThe term entity has been used in various insurance documents in order to describe a number of business relationships or titles used within Government including but not limited to: Agency; Business Unit; Authority; Community Council, Advisory Board, Board, Association or Territory owned Company.EventOccurrence or change of a particular set of circumstancesNote 1: An event can be one or more occurrences and can have several causes. Note 2: An event can consist of something not happening. Note 3: An event can sometimes be referred to as an “incident” or an “accident.” ( Bibliography reference 1) HazardSource of potential harm.Note: "Hazard" can be a "risk source". Hazard means a situation or thing that has the potential to harm a person. Hazards at work may include: noisy machinery, a moving forklift, chemicals, electricity, working at heights, a repetitive job, bullying and violence at the workplace. ( Bibliography reference 1) Hold Harmless AgreementA “hold harmless” clause or agreement is an agreement to hold the other party to a contract harmless. That is that one party can not sue the other party for losses, irrespective of the fault of the other party.Incidentany circumstances which may subsequently give rise to a claimIndustrial Special RiskThe Industrial Special Risks (ISR) policy was designed to provide coverage for larger organisations by combining a number of previously separate policies (fire, theft, money, glass and consequential loss). The ISR is a complex insurance contract which can be tailored to suit the needs of the individual insured. The policy is often referred to as a single all encompassing policy as it provides cover for loss or damage by any cause not otherwise excluded under the policy.Section One: Material Damage Accidental damage Fire Theft Money Section Two: Consequential Loss Gross Profit Claims Preparations costs Payroll Additional Increased costs of working Loss of rent Inherent RiskThe current or original risk rating which considers current controls prior to the addition of risk treatments.Insurance claimAn insurance incident which has developed to the stage where there has been a demand for compensation which may or may not involve legal proceedings.Joint Insured or Co-Insured ClauseA clause in a contract which requires the insured to add the other party to the contract to their insurance policy as a joint insured. This will give the other party equal rights to claim under the insurance policy. It will also remove the ability to recover costs off the other party should they have been liable for the loss or damage claimed.Level of RiskMagnitude or a risk or combination of risks expressed in terms of the combination of consequences and their likelihood.( Bibliography reference 1) LikelihoodChance of something happening.( Bibliography reference 1) Medical Negligence (may also be referred to as Medical Malpractice)Medical Negligence is a specific professional indemnity policy which provides cover for the liability arising out of a persons conduct as a healthcare or medical services provider. Medical negligence policies provide cover for an act, error or omission by a healthcare provider which deviates from the accepted standard of practice with in the medical community and which causes an injury or loss to a patient. An example of a medical negligence claim is a dentist removing the incorrect tooth.NegligenceNegligence is defined as the failure to use the reasonable care that a prudent person would have used in the same or similar circumstances. For a person to be held negligent they must have done something that they ought not to have done or not done something that they should have done.Non-renewable ContractCover terminates at the end of the period of insurance.Cover is not automatically given - a proposal must be completed and submitted for insurance to be considered for the new period of insurance. A proposal is required to be completed by the insured each and every renewal. Occurrence WordingPolicies with an occurrence wording will require the claim to be lodged on the policy that was current on the date that the incident resulting in the claim occurred.For example: If a writ is received in 2008 regarding an incident (event) that caused an injury to a member of the public in 2000, then the public liability policy which was in effect at the time of the loss in 2000 would respond to the claim. Policy ClassA policy class is a specific insurance classification such as:
ProductA product is any commodity, article or thing (after it has ceased to be in the possession of the insured or under the control of the insured) that is manufactured, constructed, erected, installed, treated, serviced, repaired, sold, handled, distributed by the insured.Products LiabilityProducts liability provides coverage for any personal injury or property damage suffered by a third party arising out of the insured’s (the Territory’s) products.Professional IndemnityProfessional Indemnity is liability arising out of a persons conduct as a professional. Professional indemnity provides cover for personal injury, financial loss or damage to property arising out of professional advice or professional services provided.For professional indemnity to apply: A person must be professionally qualified or have specific skills in an area of expertise. The general public because of the professional qualification or area of expertise are entitled to rely upon the professional advice – therefore a duty of care is owed to provide a level of service in line with the expertise or standard of the profession. For example: A wrongful action could be a real-estate agent failing to carry out a valuation in the agreed time frame which has resulted in the owner of the property suffering a financial loss for loss of rent. Public LiabilityPublic Liability provides cover for any injury / death or damage to the property of another person as a result of negligence. For a public liability policy to respond;
The insured (the Territory) is legally liable for the loss suffered. That is; negligence must be established. For example; you did something you should not have done, or did not do something that you should have done that has resulted in the loss suffered by the third party. Liability is NOT a person forgetting to tie their own shoe laces and tripping over them. Residual RiskRisk remaining after risk treatment.Note: Residual risk can be known as “retained risk”. ( Bibliography reference 1) RiskEffect of uncertainty on objectives.( Bibliography reference 1) Risk AppetiteAmount and type of risk that an organisation is willing to pursue or retain.( Bibliography reference 1) Risk Control Effectiveness RatingThis is a measure that defines how effectively the risk management controls are managing the risk. AdequateNothing more to be done except review and monitor the existing controls. Controls are well designed for the risk, are largely preventative and address the root causes and Management believes that they are effective and reliable at all times. Reactive controls only support preventative controls. Room for improvementMost controls are designed correctly and are in place and effective however there are some controls that are either not correctly designed or are not very effective. There may be an over-reliance on reactive controls. Some more work to be done to improve operating effectiveness or Management has doubts about operational effectiveness and reliability. InadequateSignificant control gaps or no credible control. Either controls do not treat root causes or they do not operate at all effectively. Risk DescriptionStructured statement of risk usually containing four elements: sources, events, causes and consequences.( Bibliography reference 1) Risk IdentificationProcess of finding, recognising and describing risks.( Bibliography reference 1) Risk MatrixTool for ranking and displaying risks by defining ranges for consequence and likelihood.( Bibliography reference 1) Risk OwnerPerson or entity with the accountability and authority to manage risk.In the ACT Government context this is the officer/manager who has the authority to manage the risk. ( Bibliography reference 1) Risk RegisterDocumented record of information about identified risks.( Bibliography reference 1) Risk SourceElement which alone or in combination has the intrinsic potential to give rise to risk.( Bibliography reference 1) Risk TreatmentProcess to modify risk.Note: Risk treatment can involve: - Avoiding the risk by deciding not to start or continue with the activity that fives rise to the risk; - Taking or increasing risk in order to pursue an opportunity; - Removing the risk source; - Changing the likelihood; - Changing the consequence; - Sharing the risk with another party or parties (including contracts and risk financing); and - Retaining the risk by informed decision. In Work Health and Safety risk treatment is defined as: "Risk control" and means taking action to eliminate health and safety risks so far as is reasonably practicable, and if that is not possible, minimising the risks so far as is reasonably practicable. Eliminating a hazard will also eliminate any risks associated with that hazard. ( Bibliography reference 2) Risk Treatment OwnerThe officer/manager responsible for managing the treatment of risks. This includes ensuring that the treatment strategy outlined is implemented and is doing what it was designed to do – manage the risk.The risk treatment owner is not always (will be in some cases) the risk owner. Third PartyA third party is a person, non-government entity, company or corporation that is independent to Government.Travel Insurance (Corporate Travel Policy)Travel insurance is intended to cover financial expenses, medical expenses, and other losses incurred while travelling for work related purposes internationally.The most common risks that are covered by travel insurance include (but are not necessarily limited to):
Wrongful ActDirectors and Officers Definition: An act, error or omission including breach of duty, breach of trust, neglect, misstatement, misleading statement, misrepresentation or breach of warranty or authority committed or allegedly committed by an insured person in his or her capacity as director or officer.Bibliography1 - ISO Guide 73:2009 - Risk management - Vocabulary2 - Work Health and Safety (How to Manage Work Health and Safety Risks) Code of Practice 2011
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