The percentage of gross premium or gross profits necessary for covering future policy liabilities or amortizing DAC or PVFP asset. This factor, times the gross premium or gross profits, determines the amount used for valuation or amortization calculations.
Key Person Insurance
Insurance on the life or health of a key individual whose services are essential to the continuing success of a business and whose death or disability could cause the firm a substantial financial loss.
Kidnap and Ransom Insurance
Coverage up to specific limits for the cost of ransom or extortion payments and related expenses. Often bought by international corporations to cover employees. Most policies have large deductibles and may exclude certain geographic areas. Some policies require that the policyholder not reveal the coverage’s existence.
Knock for Knock Agreement
An agreement between two insurance companies where each insurer pays the vehicle’s repair costs of its own policy-holder regardless of who was responsible for an accident.
While an insurer may be able to pursue a recovery from the party responsible for an accident of from his insurer, this is a costly administrative procedure.
The Knock for Knock Agreement simplifies recovery claims among insurers and the cost is seen to balance out over a long period of time.