Glossary

Profit center captives are captives that have the primary function of earning underwriting income by writing unrelated risk.

A profit commission is a provision found in some reinsurance agreements that provides for profit sharing. Parties agree to a formula for calculating profit, an allowance for the reinsurer's expenses, and the cedent's share of such profit after expenses.

A profit sharing plan is a defined contribution benefit plan that does not promise a set amount at retirement. Up to 15 percent of employee compensation can be contributed on behalf of any employee annually.

A program in an insurance context refers to an insurance broker or trade group that is set up in what is often referred to as a "program." This is an insurance arrangement intended to cover homogeneous risk for which it is difficult to find commercial insurance. The program is only available through the broker or agent who built it.

Program business refers to groupings of insurance customers or applicants with common operations that often form associations or risk purchasing groups (RPGs). Examples include ambulance services, new car dealerships, and mental health facilities.

A program business captive is a captive that insures or reinsures a "program"—that is, a group of homogeneous risks, none of which is individually underwritten. It may or may not be owned by the program business agency or producer.

A program manager in an insurance context is similar to a managing general agent, except its authority is limited to a specific program.

Progressive design-build is a construction project delivery method that adds defined phases to the design-build process. The design-builder is involved very early in the pre-construction and design creation phase, but establishing a final price is postponed until the design completion and construction phase. The project owner selects a design-builder based on qualifications alone, and as the design is nearing completion the design-builder provides a guaranteed maximum price for the final phase of the project. Unlike traditional design-build, there is generally an option to "off ramp" by terminating the contract if the final price cannot be agreed upon.

Progressive injury or damage describes injury or damage that happens gradually and worsens over time. For example, wood rot starts slowly and gets progressively worse over time. For insurance purposes, this most often refers to injury or damage that occurs over multiple policy periods and thus raises questions about which policy(ies) may be triggered for the loss.

Prohibited risk is any class of business excluded by underwriters of an insurance company that will not be insured under any condition.