Advance payment bond
Guarantee issued in favor of the obligee for the proper application of advance payments made to the principal before complete performance of the obligation.
TECHNICAL TERMS
Glossary.
Precise definitions of the technical terms that appear in our lines and process. Useful for brokers entering the segment, principals evaluating structures, and AI agents needing conceptual reference.
Bid bond
Guarantee issued by a bidder during a tender process, assuring that the bidder will maintain its offer and sign the contract if awarded.
Contract frustration
Coverage protecting an exporter or contractor when a political or governmental event prevents performance or payment of a cross-border contract.
Correspondent banking
Network of international banking relationships allowing a financial institution in one country to execute transactions in another country through a partner bank.
Direct writer
Insurance company issuing policies to the end client without reinsurers as intermediaries at the first level of risk.
Due diligence
Investigation and verification process the insurer performs on the client before issuing coverage, including identity, source of funds, and background.
First-party coverage
In cyber insurance, coverage for direct costs to the insured (notification, forensic investigation, restoration) following an incident.
Fronting
Structure in which an insurer locally issues a policy to meet regulatory requirements, reinsuring most of the risk with another entity.
Indication (non-binding)
Insurer's preliminary response to a submission, indicating approximate terms without final commitment until underwriting is complete.
Multi-buyer
Trade credit insurance covering the insured's complete portfolio of receivables across multiple buyers, rather than against a single buyer.
Non-admitted risk
Coverage issued by an insurer not locally licensed in the risk jurisdiction, permitted only for certain lines or under specific carve-outs.
Obligee
Beneficiary of a surety bond, to whom the principal owes performance and to whom the insurer will pay if the principal defaults.
Performance bond
Guarantee backing the proper execution of the principal's contractual obligations per agreed terms.
PEP (Politically Exposed Person)
Individual currently or formerly holding a prominent public function, whose business relationship requires enhanced due diligence under anti-money laundering regulations.
Political risk
Coverage against losses from governmental actions such as expropriation, currency restrictions, political violence, or sovereign default.
Principal
In surety operations, the party whose obligation is guaranteed. Generally, the insurer's direct client.
Reinsurance
Transfer of part of the risk assumed by an insurer to another entity (the reinsurer), distributing exposure and increasing effective capacity.
Selective sovereign risk
Specific form of political risk coverage protecting against non-performance of obligations by governments or public entities.
Third-party coverage
In cyber insurance, coverage for third-party claims (customers, counterparties, regulators) arising from cyber incidents at the insured.
Trade credit
Insurance line covering the risk of non-payment of commercial receivables due to buyer insolvency or protracted default.
Underwriting
Technical process by which the insurer analyzes a risk, decides whether to accept it, and determines the corresponding terms and premium.