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policy constant (in an insurance policy)

English translation: a component of a premium charged on a per policy basis

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GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
English term or phrase:policy constant (in an insurance policy)
English translation:a component of a premium charged on a per policy basis
Entered by: Robert Donahue
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06:26 Mar 1, 2000
English to English translations [PRO]
Law/Patents
English term or phrase: policy constant (in an insurance policy)
it is in the wording of a life insurance policy, about on what basis the premium will be calculated, excluding the "policy constant"
i'm a freelance translator
a component of a premium charged on a per policy basis
Explanation:
The JUAwas supposed to have been funded with a policy constant (a componentof premium that is charged on a per-policy basis) and an RMEC; the for-mer was a thinly veiled subsidization scheme. It was not broken out as aseparate charge on policyholder bills; hence many policyholders would notrealize that they were paying it. Since drivers in both the voluntary andresidual market had to pay this charge, bad drivers in the pool were receiv-ing transfers from good drivers. Rates in the pool were artificially low, andnearly half of New Jersey’s drivers ended up in the residual market.In a 1997 New Jersey Senate Commerce Committee hearing, StateSenator Raymond J. Lesniak characterized the JUA as “going on a cashflow basis and not reserving.”77He was referring to the consequences ofthe decision to ignore unfunded liabilities. In 1985, not long after forma-tion of the JUA, the commissioner did not allow an RMEC because theJUA was generating a positive cash flow. In discussing the incident, theInsurance Information Institute noted that the JUA began running uphuge deficits from its inception, and after the commissioner’s decision,they continued to increase in size.
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Robert Donahue
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Summary of answers provided
4 +2a component of a premium charged on a per policy basisRobert Donahue


  

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1997 days   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +2
a component of a premium charged on a per policy basis


Explanation:
The JUAwas supposed to have been funded with a policy constant (a componentof premium that is charged on a per-policy basis) and an RMEC; the for-mer was a thinly veiled subsidization scheme. It was not broken out as aseparate charge on policyholder bills; hence many policyholders would notrealize that they were paying it. Since drivers in both the voluntary andresidual market had to pay this charge, bad drivers in the pool were receiv-ing transfers from good drivers. Rates in the pool were artificially low, andnearly half of New Jersey’s drivers ended up in the residual market.In a 1997 New Jersey Senate Commerce Committee hearing, StateSenator Raymond J. Lesniak characterized the JUA as “going on a cashflow basis and not reserving.”77He was referring to the consequences ofthe decision to ignore unfunded liabilities. In 1985, not long after forma-tion of the JUA, the commissioner did not allow an RMEC because theJUA was generating a positive cash flow. In discussing the incident, theInsurance Information Institute noted that the JUA began running uphuge deficits from its inception, and after the commissioner’s decision,they continued to increase in size.



    Reference: http://www.aei-brookings.org/admin/authorpdfs/page.php?id=42
Robert Donahue
Native speaker of: Native in EnglishEnglish
PRO pts in pair: 538
Grading comment
Graded automatically based on peer agreement.

Peer comments on this answer (and responses from the answerer)
agree  jennifer newsome
3 days 9 hrs
  -> Thank you very much

agree  xxxgtreyger
3 days 20 hrs
  -> Thank you
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