PACKAGE POLICY
A single insurance policy that combines several coverages previously sold separately. Examples include homeowners insurance and commercial multiple peril insurance.

PAY-AT-THE-PUMP
A system proposed in the 1990s in which auto insurance premiums would be paid to state governments through a per-gallon surcharge on gasoline.

PENSION BENEFIT GUARANTY CORPORATION
An independent federal government agency that administers the Pension Plan Termination Insurance program to ensure that vested benefits of employees whose pension plans are being terminated are paid when they come due. Only defined benefit plans are covered. Benefits are paid up to certain limits.

PENSIONS
Programs to provide employees with retirement income after they meet minimum age and service requirements. Life insurers hold some of these funds. Since the 1970s, responsibility for funding retirement has increasingly shifted from employers (defined benefit plans that promise workers a specific retirement income) to employees (defined contribution plans financed by employees that may or may not be matched by employer contributions). (See “Defined benefit plan” and “Defined contribution plan”.)

PERIL
A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood or theft. A named-peril policy covers the policyholder only for the risks named in the policy, in contrast to an all-risk policy, which covers all causes of loss except those specifically excluded.

PERSONAL ARTICLES FLOATER
A policy or an addition to a policy used to cover personal valuables, like jewelry or furs.

PERSONAL INJURY PROTECTION COVERAGE / PIP
Portion of an auto insurance policy that covers the treatment of injuries to the driver and passengers of the policyholder’s car.

PERSONAL LINES
Property/casualty insurance products that are designed for and bought by individuals, including homeowners and automobile policies. (See “Commercial lines”.)

POINT-OF-SERVICE PLAN
Health insurance policy that allows the employee to choose between in-network and out-of-network care each time medical treatment is needed.

POLICY
A written contract for insurance between an insurance company and policyholder, stating details of coverage.

POLICYHOLDERS’ SURPLUS
The amount of money remaining after an insurer’s liabilities are subtracted from its assets. It acts as a financial cushion above and beyond reserves, protecting policyholders against an unexpected or catastrophic situation.

POLITICAL RISK INSURANCE
Coverage for businesses operating abroad against loss due to political upheaval such as war, revolution or confiscation of property.

POLLUTION INSURANCE
Policies that cover property loss and liability arising from pollution-related damages, for sites that have been inspected and found uncontaminated. It is usually written on a claims-made basis so policies pay only claims presented during the term of the policy or within a specified time frame after the policy expires. (See “Claims-made policy”.)

POOL
See “Insurance pool”.

PREFERRED PROVIDER ORGANIZATION
Network of medical providers which charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.

PREMISES
The particular location of the property or a portion of it as designated in an insurance policy.

PREMIUM
The price of an insurance policy, typically charged annually or semiannually. (See “Direct premiums”, “Earned premium” and “Unearned premium”.)

PREMIUM TAX
A state tax on premiums paid by its residents and businesses and collected by insurers.

PREMIUMS IN FORCE
The sum of the face amounts, plus dividend additions, of life insurance policies outstanding at a given time.

PREMIUMS WRITTEN
The total premiums on all policies written by an insurer during a specified period of time, regardless of what portions have been earned. Net premiums written are premiums written after reinsurance transactions.

PRIMA FACIE
Prima facie is a Latin expression meaning “on its first appearance” or “by first instance.” It is used in modern legal English to signify that on first examination, a matter appears to be self-evident from the facts. In common law jurisdictions, prima facie denotes evidence that (unless rebutted) would be sufficient to prove a particular proposition or fact. Most legal proceedings require a prima facie case to exist, following which proceedings may then commence to test it, and create a ruling.

PRIMARY COMPANY
In a reinsurance transaction, the insurance company that is reinsured.

PRIMARY MARKET
Market for new issue securities where the proceeds go directly to the issuer.

PRIME RATE
Interest rate that banks charge to their most creditworthy customers. Banks set this rate according to their cost of funds and market forces.

PRIOR ACTS COVERAGE
Liability insurance coverage for claims arising from acts that occurred before the beginning of the policy period. Policies written on a claims made basis, such as Malpractice Liability Insurance, Errors and Omissions Liability Insurance, and Employment Practices Liability Insurance, cover only claims during the policy period. Prior acts coverage is necessary for covering a claim made during a current policy period for an event that happened before a policy was in force.

PRIOR APPROVAL STATES
States where insurance companies must file proposed rate changes with state regulators and gain approval before they can go into effect.

PRIVATE MORTGAGE INSURANCE
See “Mortgage guarantee insurance”.

PRIVATE PLACEMENT
Securities that are not registered with the Securities and Exchange Commission and are sold directly to investors.

PRODUCT LIABILITY
A section of tort law that determines who may sue and who may be sued for damages when a defective product injures someone. No uniform federal laws guide manufacturer liability, but under strict liability, the injured party can hold the manufacturer responsible for damages without the need to prove negligence or fault.

PRODUCT LIABILITY INSURANCE
Protects manufacturer and distributor exposure to lawsuits by people who have sustained bodily injury or property damage through the use of the product.

PROFESSIONAL LIABILITY INSURANCE
Covers professionals for negligence and errors or omissions that injure their clients.

PROOF OF LOSS
Documents showing the insurance company that a loss occurred.

PROPERTY/CASUALTY INSURANCE
Covers damage to or loss of policyholders’ property and legal liability for damages caused to other people or their property. Property/casualty insurance, which includes auto, homeowners and commercial insurance, is one segment of the insurance industry. The other sector is life/health. Outside the United States, property/casualty insurance is referred to as nonlife or general insurance.

PROPERTY/CASUALTY INSURANCE CYCLE
Industry business cycle with recurrent periods of hard and soft market conditions. In the 1950s and 1960s, cycles were regular with three year periods each of hard and soft market conditions in almost all lines of property/casualty insurance. Since then they have been less regular and less frequent.

PROPOSITION 103
A November 1988 California ballot initiative that called for a statewide auto insurance rate rollback and for rates to be based more on driving records and less on geographical location. The initiative changed many aspects of the state’s insurance system and was the subject of lawsuits for more than a decade.

PURCHASING GROUP
An entity that offers insurance to groups of similar businesses with similar exposures to risk.

PURE LIFE ANNUITY
A form of annuity that ends payments when the annuitant dies. Payments may be fixed or variable.