Tail Value at Risk (TVaR or Tail VaR)

Value at risk (VaR) plus the average excess over the VaR if such excess occurs over a specified amount of time. Sometimes also called "Conditional value at risk", it asks the question "If things do get bad, how much can we expect to lose?"

Takaful

Insurance conducted according to relevant Islamic principles.

Technical liabilities

see Technical provision

Technical provisions

The amount that an insurer sets aside to fulfil its insurance obligations and settle all commitments to policyholders and other beneficiaries arising over the lifetime of the portfolio, including the expenses of administering the policies, reinsurance and of the capital required to cover the remaining risks. [Equivalent terms: Policy liabilities, Technical liabilities]

Tolerance limits

The level of risk to which the insurer is prepared to be exposed. The risk measure might be a supervisory one or an internal one or a combination of both.

Total balance sheet approach

A concept which recognises the interdependence between all assets, all liabilities, all regulatory capital requirements and all capital resources. A total balance sheet approach should ensure that the impacts of all relevant material risks on an insurer's overall financial position are appropriately and adequately recognised. It is noted that the total balance sheet approach is an overall concept rather than implying use of a particular methodology.

Treaty reinsurance (non-life)

Usually automatic arrangements in that the insurer does not have to make specific cessions in order to activate reinsurance protection. Exceptions to this general rule are special acceptances, a procedure by which risks that do not qualify for coverage under the terms and conditions of the treaty may be submitted to the reinsurer for specific underwriting evaluation and determination of any additional premium charge. Treaties are also usually obligatory, in that the cedant is obligated to cede all business defined by the reinsurance agreement, and the reinsurer is obligated to accept all such business, subject to the terms and conditions of the contract. Surplus treaties are sometimes nonobligatory from the insurer's standpoint as the insurer may elect not to cede a specific risk, or to cede something less than the maximum cession permitted under the contract provisions. Treaty reinsurance usually applies to a broad segment of the insurer's overall book of business (e.g., all Workers' Compensation business, all Commercial Property business, all Accident & Health business, all Aviation business, etc.). All sorts of segregations are possible, but the idea is to group together entire lines or classes of business. As long as the business to be reinsured is reasonably homogeneous in nature or exposed to loss arising from a common cause and written in sufficient volume it can be considered for treaty reinsurance. A sufficient volume of reinsurance is necessary in order to satisfy the reinsurers' need to collect reinsurance premiums that bear a reasonable relationship to the assumed liabilities. Treaty reinsurance is considered to be the most efficient and least expensive way of arranging for such transfers.