Glossary

A financial responsibility law is a statutory provision requiring owners of automobiles to provide evidence of their ability to pay damages arising out of the ownership, maintenance, or use of an automobile.

Financial restatement is a material adjustment to a corporate financial statement that affects the cumulative results of operations during past years. Most often, a financial restatement takes the form of a revision to a corporation's past operating results when they are significantly less favorable than was originally noted. In recent years, a number of major public corporations have issued restatements, which have, in turn, prompted major sell-offs of the organizations' shares of stock. This ultimately has resulted in claims against the firms' directors and officers, alleging fraud and mismanagement. Such claims are covered by directors and officers (D&O) liability insurance policies.

A financial restatment exclusion in directors and officers (D&O) liability policies precludes coverage for claims brought in conjunction with a corporation's restatement of its financial data. The rationale for this exclusion is that when a restatement is necessary, it is a strong indicator that either information was intentionally omitted from the original financial statement or data was willfully falsified. In either instance, the need for a restatement is normally caused by conduct far beyond mere negligence on the part of the organization's directors and officers.

Financial risk management encompasses methods or strategies used to mitigate financial risks, also known as speculative risks, as opposed to pure risks such as fire, windstorm, and flood for which insurance is typically purchased. Examples of financial risk include currency fluctuations and changes in the cost of raw materials. Financial risks have traditionally been handled by hedging strategies that utilize various derivative-type instruments. More recently, the concept of insuratization (i.e., using an insurance product to mitigate financial risk) is being applied and has helped to facilitate the slow but steady convergence of the reinsurance and capital markets.

The Financial Stability Board was created by the Group of Twenty (G20) finance ministers and central bank governors in 2009 as a successor to the Financial Stability Forum. It was created to coordinate the work of national financial authorities and international standard-setting bodies to develop and promote the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It was created to coordinate the work of national financial authorities and international standard-setting bodies to develop and promote the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. The FSB combines national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB advocates a major program of financial regulatory reforms to address the problems of the financial system to create consistent rules and a level playing field across countries. The goal of the FSB is to provide recommendations and explore how to treat globally systemically important financial institutions to prevent financial crises.

A financial statement is a firm's operating statements, including the balance sheet and profit and loss statement, along with associated information. Underwriters frequently request financial statements when they provide both new business and renewal quotations. This is because an insured's financial condition is an important factor in assessing its insurability, commitment to loss control programs, and ability to pay premiums.

A financial transformation in an insurance context describes broad changes occurring in the insurance and financial markets since the repeal of the Glass-Steagall Act. It also describes the new interface developing between insurance and capital market products.

Fine arts coverage is inland marine property insurance for works of art, typically written with special valuation provision covering the items on either an agreed value or fair market value basis.

Finite risk insurance refers to an insurance contract that shifts the risk of loss from an insured to an insurer during a stated number of years. Such contracts are subject to a specific limit of liability and include a "commutation feature" (i.e., a refund to the insured) if loss experience is better than expected. Part of the investment income derived from the insured's premium payment is also rebated to the insured. In lieu of an underwriting profit that an insurer seeks from a traditional insurance policy, a finite risk insurance contract provides the insurer with an administrative fee for writing and maintaining the contract plus a relatively stable investment income, which is earned on the insured's premium payments.

A firewall is a network security device that protects an organization's private network from from hackers and viruses.