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Glossary
International programmes

Premium allocation

Also: Premium allocation

Distribution of the programme's total premium among the subsidiaries, based on their actual exposure to risk.

In practice

It must adhere to a defensible technical criterion —assets, turnover, claims history— because this is what an inspection reviews when checking transfer pricing. Allocating arbitrarily opens a fiscal front years later.

Where it is addressed

This term is covered in Gestión del programa and applies when taking out Programas Internacionales.

Related terms

Insurance Premium TaxTax levied on the premium in the country where the risk is located, with different rates and taxpayers in each jurisdiction.Master policyContract signed by the parent company that sets the group's cover standard and responds above or in default of the local policies.Programme complianceVerification that each policy in the programme complies with the insurance, tax, and sanctions regulations of the country where it is issued.Cash before coverRule in force in several countries whereby cover does not commence until the premium has been effectively paid.DIC clauseClause of the master policy that covers the guarantees not included in the local policy, elevating the subsidiary to the group's standard.DIC ClauseClause of the master policy that completes the indemnity when the limit of the local policy is exhausted before the group's standard.
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