What Does Financial Interest Clause Mean?

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What does Financial Interest Clause mean? Read on to discover the definition & meaning of the term Financial Interest Clause - to help you better understand the language used in insurance policies.

Financial Interest Clause

Financial Interest Clause

(FINC) clause amends an insurance policy to cover only the multinational organization's financial interest in its worldwide subsidiaries, so that the parent company is the only legal entity covered by the global policy. The intent of the clause is to avoid issues that arise related to losses suffered by a subsidiary of the parent company that does not have local admitted coverage required by the jurisdiction in which the subsidiary is located. These provisions have not been tested widely in claim scenarios and may trigger undesirable or unforeseen adverse tax consequences. In addition, for programs that are written on a "shared or layered" basis to achieve required limits, coverage may not be concurrent throughout the limit tower because some insurers will not follow this endorsement.

We hope the you have a better understanding of the meaning of Financial Interest Clause.

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