Glossary

A financial institution bond is used to insure banks and other financial institutions against employee dishonesty, burglary, robbery, forgery, and similar crime exposures.

The financial interest clause amends an insurance policy to cover only the multinational organization's financial interest in its worldwide subsidiaries so that the parent company is the only legal entity covered by the global policy.

Financial interest coverage is insurance protection purchased by a multinational company against the risk of damage to the parent company's financial interest in its uninsured local subsidiaries.

Financial modeling involves the generation of pro forma financial statements over a multiyear period, created under various loss and financial scenarios.

Financial quota share is a form of reinsurance that enables a cedent to increase its statutory surplus by the amount of the ceding commission in the reinsured unearned premium reserve.

Financial reinsurance refers to a reinsurance contract where investment income is usually included in the pricing and where there is an aggregate limit on the risk transferred.

Financial responsibility is the legal requirement for an owner of an automobile to evidence ability to pay losses, either through purchase of insurance or by providing other proof of financial strength.

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.

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.