some portion of the policy's face amount should the insured suffer from a Accounts Receivable Coverage: Covers loss of sums owed to the insured by its. Dictionary of Insurance Terms. -A-. • Absolute Liability: Liability for damages even though fault or negligence cannot be proven. • Accident: An event or. Agreed Value. (Usually associated with motor vehicle insurance) A car's agreed value is set at the beginning of each period of cover. It is based on the fair value.
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Actuary. A professional trained in the mathematics of insurance and risk management, including the . Rubin, Harvey W. (), Dictionary of Insurance Terms. The content of this dictionary is not intended to be comprehensive . The expenses incurred by an insurance or reinsurance company that. Accident Only - an insurance contract that provides coverage, singly or in combination Accumulation Period - period of time insured must incur eligible medical.
Common law- Common law comprises the body of principles and rules of action, relating to the government and security of persons and property, which derive their authority solely from usages and customs of immemorial antiquity, or from the judgments and decrees of the courts. Occurrence- An accident— including continuous or repeated exposure to substantially the same general, harmful conditions—that results into body injury or property damage during the period of an insurance policy. Contract reserves are in addition to claim and premium reserves. Policy Period - time period during which insurance coverage is in effect. Back to the Top T Tenants - homeowners insurance sold to tenants occupying the described property. Follow with us.
Collateral Loans - unconditional obligations for the payment of money secured by the pledge of an investment. Collateralized Bond Obligations CBOs - an investment-grade bond backed by a pool of low-grade debt securities, such as junk bonds, separated into tranches based on various levels of credit risk.
Collateralized Mortgage Obligations CMOs - a type of mortgage-backed security MBS with separate pools of pass-through security mortgages that contain varying classes of holders and maturities tranches with the advantage of predictable cash flow patterns.
Combinations - a special form of package policy composed of personal automobile and homeowners insurance. Combined Ratio - an indication of the profitability of an insurance company, calculated by adding the loss and expense ratios.
Same as "effective date" of coverage. Commercial Farm and Ranch - a commercial package policy for farming and ranching risks that includes both property and liability coverage. Coverage includes barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock. Commercial Mortgage-Backed Securities - a type of mortgage-backed security that is secured by the loan on a commercial property.
Commercial Multiple Peril - policy that packages two or more insurance coverages protecting an enterprise from various property and liability risk exposures. Frequently includes fire, allied lines, various other coverages e. Such coverages would be included in other annual statement lines, if written individually. Include under this type of insurance multi-peril policies other than farmowners, homeowners and automobile policies that include coverage for liability other than auto.
Commercial Package Policy - provides a broad package of property and liability coverages for commercial ventures other than those provided insurance through a business owners policy.
Commission - a percentage of premium paid to agents by insurance companies for the sale of policies. Community Rating - a rating system where standard rating is established and usually adjusted within specific guidelines for each group on the basis of anticipated utilization by the group's employees. Completed Operations Liability - policies covering the liability of contractors, plumbers, electricians, repair shops, and similar firms to persons who have incurred bodily injury or property damage from defective work or operations completed or abandoned by or for the insured, away from the insured's premises.
Comprehensive Hospital and Medical - line of business providing for medical coverages; includes hospital, surgical, major medical coverages; does not include Medicare Supplement, administrative services ASC contracts, administrative services only ASO contracts, federal employees health benefit plans FEHBP , medical only programs, Medicare and Medicaid programs, vision only and dental only business.
Comprehensive General Liability CGL - coverage of all business liabilities unless specifically excluded in the policy contract. Comprehensive Personal Liability - comprehensive liability coverage for exposures arising out of the residence premises and activities of individuals and family members. Non-business liability exposure protection for individuals.
Coverage excludes Short-Term Medical Insurance, the Federal Employees Health Benefit Program and non-comprehensive coverage such as basic hospital only, medical only, hospital confinement indemnity, surgical, outpatient indemnity, specified disease, intensive care, and organ and tissue transplant coverage. Concurrent Causation - property loss incurred from two or more perils in which only one loss is covered but both are paid by the insurer due to simultaneous incident.
Conditions - requirements specified in the insurance contract that must be upheld by the insured to qualify for indemnification. Condos - homeowners insurance sold to condominium owners occupying the described property. Construction and Alteration Liability - covering the liability of an insured to persons who have incurred bodily injury or property damage from alterations involving demolition, new construction or change in size of a structure on the insured's premises.
Contingency Reserves - required by some jurisdictions as a hedge against adverse experience from operations, particularly adverse claim experience. Contingent Liability - the liability of an insured to persons who have incurred bodily injury or property damage from work done by an independent contractor hired by the insured to perform work that was illegal, inherently dangerous, or directly supervised by the insured. Continuation of Care Requirement - statutory or contractual provision requiring providers to deliver care to an enrollee for some period following the date of a Health Plan Company's insolvency.
Continuing Care Retirement Communities - senior housing arrangements that in addition to housing include some provision for skilled nursing care.
Contract Reserves - reserves set up when, due to the gross premium structure, the future benefits exceed the future net premium. Contract reserves are in addition to claim and premium reserves. Contractual Liability - liability coverage of an insured who has assumed the legal liability of another party by written or oral contract. Includes a contractual liability policy providing coverage for all obligations and liabilities incurred by a service contract provider under the terms of service contracts issued by the provider.
Convertible Term Insurance Policy - an insurance policy that can be converted into permanent insurance without a medical assessment. The insurer is required to renew the policy regardless of the health of the insured subject to policy conditions. Copay - a cost sharing mechanism in group insurance plans where the insured pays a specified dollar amount of incurred medical expenses and the insurer pays the remainder.
Corrective Order - commissioner's directive of action to be completed by an insurer. Covered Lives - The total number of lives insured, including dependents, under individual policies and group certificates.
Credit - individual or group policies that provide benefits to a debtor for full or partial repayment of debt associated with a specific loan or other credit transaction upon disability or involuntary unemployment of debtor, except in connection with first mortgage loans.
Credit — Assumption Agreement - an insurance certificate issued on an existing insurance contract indicating that another insurer has assumed all of the risk under the contract from the ceding insurance company.
Credit - Credit Default - coverage purchased by manufacturers, merchants, educational institutions, or other providers of goods and services extending credit, for indemnification of losses or damages resulting from the nonpayment of debts owed to them for goods or services provided in the normal course of their business.
Credit Accident and Health group and individual - coverage provided to or offered to borrowers in connection with a consumer credit transaction where the proceeds are used to repay a debt or an installment loan in the event the consumer is disabled as the result of an accident, including business not exceeding months duration. Credit Health Insurance - policy assigning creditor as beneficiary for insurance on a debtor thereby remitting balance of payment to creditor should the debtor become disabled.
Credit Involuntary Unemployment - credit insurance that provides a monthly or lump sum benefit during an unpaid leave of absence from employment resulting from specified causes, such as layoff, business closure, strike, illness of a close relative and adoption or birth of a child.
This insurance is sometimes referred to as Credit Family Leave. Credit Life Insurance - policy assigning creditor as beneficiary for insurance on a debtor thereby remitting balance of payment to creditor upon death of debtor.
Credit Personal Property Insurance - insurance written in connection with a credit transaction where the collateral is not a motor vehicle, mobile home or real estate and that covers perils to the goods purchased through a credit transaction or used as collateral for a credit transaction and that concerns a creditor's interest in the purchased goods or pledged collateral, either in whole or in part; or covers perils to goods purchased in connection with an open-end transaction.
Credit Placed Insurance - insurance that is purchased unilaterally by the creditor, who is the named insured, subsequent to the date of the credit transaction, providing coverage against loss, expense or damage to property as a result of fire, theft, collision or other risks of loss that would either impair a creditor's interest or adversely affect the value of collateral. Credit Risk - part of the risk-based capital formula that addresses the collectability of a company's receivables and the risk of losing a provider or intermediary that has received advance capitation payments.
Creditor-Placed Auto - single interest or dual interest credit insurance that is purchased unilaterally by the creditor, who is the named insured, subsequent to the date of the credit transaction, providing coverage against loss to property that would either impair a creditor's interest or adversely affect the value of collateral on automobiles, boats, or other vehicles.
Creditor-Placed Home - single interest or dual interest credit insurance purchased unilaterally by the creditor, who is the named insured, subsequent to the date of the credit transaction, providing coverage against loss to property that would either impair a creditor's interest or adversely affect the value of collateral on homes, mobile homes, and other real estate.
Crop - coverage protecting the insured against loss or damage to crops from a variety of perils, including but not limited to fire, lightening, loss of revenue, tornado, windstorm, hail, flood, rain, or damage by insects.
Declarations - policy statements regarding the applicant and property covered such as demographic and occupational information, property specifications and expected mileage per year.
Deferred Annuity - annuity payment to be made as a single payment or a series of installments to begin at some future date, such as in a specified number of years or at a specified age. Demutualization - conversion of a mutual insurance company to a capital stock company. Dental Insurance - policies providing only dental treatment benefits such as routine dental examinations, preventive dental work, and dental procedures needed to treat tooth decay and diseases of the teeth and jaw.
Dental Only - line of business providing dental only coverage; coverage can be on a stand-alone basis or as a rider to a medical policy. If the coverage is as a rider, deductibles or out-of-pocket limits must be set separately from the medical coverage.
Derivative - securities priced according to the value of other financial instruments such as commodity prices, interest rates, stock market prices, foreign or exchange rates.
Difference In Conditions DIC Insurance - special form of open-peril coverage written in conjunction with basic fire coverage and designed to provide protection against losses not reimbursed under the standard fire forms.
Examples are flood and earthquake coverage. Direct Incurred Loss - loss whereby the proximate cause is equivalent to the insured peril. Direct Loss - Damage to covered real or personal property caused by a covered peril.
Direct Writer - an insurance company that sells policies to the insured through salaried representatives or exclusive agents only; reinsurance companies that deal directly with ceding companies instead of using brokers.
Direct Written Premium - total premiums received by an insurance company without any adjustments for the ceding of any portion of these premiums to the Reinsurer. Disability Income - a policy designed to compensate insured individuals for a portion of the income they lose because of a disabling injury or illness.
Dividend - a refund of a portion of the premium paid by the insured from insurer surplus. Domestic Insurer - an insurance company that is domiciled and licensed in the state in which it sells insurance.
Dual Interest - insurance that protects the creditor's and the debtor's interest in the collateral securing the debtor's credit transaction. Early warning system - a system designed by insurance industry regulators of identifying practices and risk-related trends that contribute to systemic risk by measuring insurer' financial stability.
Earned Premium - portion of insured's prepaid premium allocated to the insurance company's loss experience, expenses, and profit year- to -date. Earthquake - property coverages for losses resulting from a sudden trembling or shaking of the earth, including that caused by volcanic eruption. Excluded are losses resulting from fire, explosion, flood or tidal wave following the covered event. EBNR - Earned but not reported - premium amount insurer reasonably expects to receive for which contracts are not yet final and exact amounts are not definite.
EDP Policies - coverage to protect against losses arising out of damage to or destruction of electronic data processing equipment and its software. Elevators and Escalators Liability - liability coverage for bodily injury or property damage arising from the use of elevators or escalators operated, maintained or controlled by the insured. Employee Benefit Liability - liability protection for an employer for claims arising from provisions in an employee benefit insurance plan provided for the economic and social welfare of employees.
Examples of items covered are pension plans, group life insurance, group health insurance, group disability income insurance, and accidental death and dismemberment.
Employee Retirement Income Security Act of ERISA - a federal statute governing standards for private pension plans, including vesting requirements, funding mechanisms, and plan design.
Employers Liability - employers' liability coverage for the legal liability of employers arising out of injuries to employees. This code should be used when coverage is issued as an endorsement, or as part of a statutory workers' compensation policy. Employment Practices Liability Coverage - liability insurance for employers providing coverage for wrongful termination, discrimination, or sexual harassment of the insured's current or former employees.
Encumbrance - outstanding mortgages or other debt related to real estate and any unpaid accrued acquisition or construction costs. Endorsement - an amendment or rider to a policy adjusting the coverages and taking precedence over the general contract. Enrollment — The total number of plans, not the total number of covered lives, providing coverage to the enrollee and their dependents. Environmental Impairment Liability EIL - coverage for negligence or omission resulting in pollution or environmental contamination.
Environmental Pollution Liability - liability coverage of an insured to persons who have incurred bodily injury or property damage from acids, fumes, smoke, toxic chemicals, waste materials or other pollutants. Equity Indexed Annuity - a fixed annuity that earns interest or provides benefits that are linked to an external reference or equity index, subject to a minimum guarantee. Errors and Omissions Liability Professional Liability other than Medical - liability coverage of a professional or quasi professional insured to persons who have incurred bodily injury or property damage, or who have sustained any loss from omissions arising from the performance of services for others, errors in judgment, breaches of duty, or negligent or wrongful acts in business conduct.
Event Cancellation - coverage for financial loss because of the cancellation or postponement of a specific event due to weather or other unexpected cause beyond the control of the insured. Excess and Umbrella Liability - liability coverage of an insured above a specific amount set forth in a basic policy issued by the primary insurer; or a self insurer for losses over a stated amount; or an insured or self insurer for known or unknown gaps in basic coverages or self insured retentions.
Excess of Loss Reinsurance - loss sharing mechanism where an insurer pays all claims up to a specified amount and a reinsurance company pays any claims in excess of stated amount. Expense Ratio - percentage of premium income used to attain and service policies. Derived by subtracting related expenses from incurred losses and dividing by written premiums. Experience Rating - rating system where each group is rated entirely on the basis of its own expected claims in the coming period, with retrospective adjustments for prior periods.
This method is prohibited under the conditions for federal qualification. Extra Expense Insurance - a type of property insurance for extraordinary expenses related to business interruption such as a back-up generator in case of power failure. Facultative Reinsurance - reinsurance for a specific policy for which terms can be negotiated by the original insurer and reinsurer. FAIR Plan - Fair Access to Insurance Requirements - state pools designed to provide insurance to property owners who are unable to obtain property insurance through conventional means.
Fair Value - the amount at which an asset or liability could be bought or incurred or sold or settled in a current transaction between willing parties, that is, other than in a forced or liquidation sale. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available. If a quoted market price is available, the fair value is the product of the number of trading units times market price.
Farmowners Insurance - farmowners insurance sold for personal, family or household purposes. This package policy is similar to a homeowners policy, in that it has been developed for farms and ranches and includes both property and liability coverage for personal and business losses. Coverage includes farm dwellings and their contents, barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.
Federal Flood Insurance - coverage for qualifying residents and businesses in flood prone regions through the National Flood Insurance Act, a federally subsidized flood insurance program enacted in This includes the following products: FEMA - Federal Emergency Management Agency - an independent agency, tasked with responding to, planning for, mitigating and recovery efforts of natural disasters.
Fidelity - a bond or policy covering an employer's loss resulting from an employee's dishonest act e. Financial Guaranty - a surety bond, insurance policy, or an indemnity contract when issued by an insurer , or similar guaranty types under which loss is payable upon proof of occurrence of financial loss to an insured claimant, obligee or indemnitee as a result of failure to perform a financial obligation or any other permissible product that is defined as or determined to be financial guaranty insurance.
Financial Reporting - insurance companies are required to maintain records and file annual and quarterly financial statements with regulators in accordance with statutory accounting principles SAP. Statutory rules also govern how insurers should establish reserves for invested assets and claims and the conditions under which they can claim credit for reinsurance ceded. Financial Responsibility Law - a statute requiring motorists to show capacity to pay for automobile-related losses. Financial Statement - balance sheet and profit and loss statement of an insurance company.
This statement is used by the NAIC, and by State Insurance Commissioners to regulate an insurance company according to reserve requirements, assets, and other liabilities. Fire - coverage protecting the insured against the loss to real or personal property from damage caused by the peril of fire or lightning, including business interruption, loss of rents, etc.
An example is a tenant who, while occupying another party's property, through negligence causes fire damage to the property. Flood - coverage protecting the insured against loss or damage to real or personal property from flood. If coverage for flood is offered as an additional peril on a property insurance policy, file it under the applicable property insurance filing code.
Foreign Insurer - an insurance company selling policies in a state other than the state in which they are incorporated or domiciled. Foreign Investment - an investment in a foreign jurisdiction, or an investment in a person, real estate or asset domiciled in a foreign jurisdiction. An investment shall not be deemed to be foreign if the issuing person, qualified primary credits source or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction, unless: Foreign jurisdiction - a jurisdiction outside of the United States, Canada or any province or political subdivision of the foregoing.
Fraternal Insurance - a form of group coverage or disability insurance available to members of a fraternal organization. Fronting - an arrangement in which a primary insurer acts as the insurer of record by issuing a policy, but then passes the entire risk to a reinsurer in exchange for a commission.
Often, the fronting insurer is licensed to do business in a state or country where the risk is located, but the reinsurer is not. Generally Accepted Accounting Principles GAAP - an aggregate of the accounting standards, principles and best practices for the preparation of financial statements allowing for consistency in reporting.
Established a framework of responsibilities of federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.
Goodwill - the difference between the cost of acquiring the entity and the reporting entity's share of the book value of the acquired entity. Gross Paid-in and Contributed Surplus - amount of capital received in excess of the par value of the stock issued. Gross Premium - the net premium for insurance plus commissions, operating and miscellaneous commissions.
For life insurance, this is the premium including dividends. Group Accident and Health - coverage written on a group basis e. Excludes amounts attributable to uninsured accidents and health plans and the uninsured portion of partially insured accident and health plans. Group Annuities — Deferred Non- Variable and Variable - an annuity contract that provides an accumulation based on both 1 funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and 2 funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder.
The contract provides for the initiation of payments at some designated future date. Group Annuities — Deferred Variable - an annuity contract that provides an accumulation based fund where the accumulation varies in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. Must include at least one option to have the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder and may include at least one option to have the series of payments vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder.
This annuity contract provides for the initiation of payments at some designated future date. Group Annuities — Immediate Non-Variable and Variable - an annuity contract that provides an accumulation based on both 1 funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and 2 funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder.
The contract provides for the initiation of payments at some interval that may vary, however the annuity payouts must begin within 13 months. Group Annuities — Immediate Variable - an annuity contract that provides for the first payment of the annuity at the end of the fixed interval of payment after purchase. The amount varies with the value of equities separate account purchased as investments by the insurance companies.
Group Annuities — Unallocated - annuity contracts or portions thereof where the Insurer purchases an annuity for the retirees. Group Annuity - a contract providing income for a specified period of time, or duration of life for a person or persons established to benefit a group of employees.
Group Code - a unique three to five digit number assigned by the NAIC to identify those companies that are part of a larger group of insurance companies. Group Health Organizations — Health Maintenance HMO - a plan under which an enrollee pays a membership fixed fee in advance in return for a wide range of comprehensive health care services with the HMO's approved providers in a designated service area. Guaranty Fund - funding mechanism employed by states to provide funds to cover policyholder obligations of insolvent reporting entities.
Hazard - circumstance which tends to increase the probability or severity of a loss. Its purpose is to insure against the risk that any one claim will exceed a specific dollar amount or that an entire plan's losses will exceed a specific amount. Health Insurance - a generic term applying to all types of insurance indemnifying or reimbursing for losses caused by bodily injury or illness including related medical expenses.
Health Maintenance Organization HMO - a medical group plan that provides physician, hospital, and clinical services to participating members in exchange for a periodic flat fee. Health Plan - written promise of coverage given to an individual, family, or group of covered individuals, where a beneficiary is entitled to receive a defined set of health care benefits in exchange for a defined consideration, such as a premium.
Hold-Harmless Agreement - A risk transfer mechanism whereby one party assumes the liability of another party by contract.
Homeowners Insurance - a package policy combining real and personal property coverage with personal liability coverage. Coverage applicable to the dwelling, appurtenant structures, unscheduled personal property and additional living expense are typical.
Includes mobile homes at a fixed location. Hospital Indemnity Coverage - coverage that provides a pre-determined, fixed benefit or daily indemnity for contingencies based on a stay at a hospital or intensive care facility. Incontestability Provision - a life insurance and annuity provision limiting the time within which the insurer has the legal right to void the contract on grounds of material misrepresentation in the policy application.
Estimates are established to book these claims. May include losses that have been reported to the reporting entity but have not yet been entered into the claims system or bulk provisions. Bulk provisions are reserves included with other IBNR reserves to reflect deficiencies in known case reserves. Incurred Claims - paid claims plus amounts held in reserve for those that have been incurred but not yet paid. Incurred Losses - sustained losses, paid or not, during a specified time period.
Incurred losses are typically found by combining losses paid during the period plus unpaid losses sustained during the time period minus outstanding losses at the beginning of the period incurred in the previous period.
Indemnity, Principle of - a general legal principle related to insurance that holds that the individual recovering under an insurance policy should be restored to the approximate financial position he or she was in prior to the loss.
Legal principle limiting compensation for damages be equivalent to the losses incurred. Independent Adjuster - freelance contractor paid a fee for adjusting losses on behalf of companies. Independent Agent - a representative of multiple insurance companies who sells and services policies for records which they own and operate under the American Agency System.
Independent Contractor - an individual who is not employed for a company but instead works for themselves providing goods or services to clients for a fee. Individual Annuities — Deferred Variable - an annuity contract that provides an accumulation based fund where the accumulation varies in accordance with the rate of return of the underlying investment portfolio selected by the policyholder.
Individual Annuities — Immediate Variable - an annuity contract that provides for the first payment of the annuity at the end of the fixed interval of payment after purchase. Individual Annuities — Special - contracts with certain noteworthy attributes. Individual Annuities- Deferred Non-Variable and Variable - an annuity contract that provides an accumulation based on both 1 funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and 2 funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder.
Individual Annuities- Deferred Non-Variable - an annuity contract that provides an accumulation based on funds that accumulate based on a guaranteed crediting interest rate or additional interest rate. Individual Annuities- Immediate Non-Variable - an annuity contract that provides for the fixed payment of the annuity at the end of the first interval of payment after purchase.
Individual Annuities- Immediate Non-Variable and Variable - an annuity contract that provides an accumulation based on both 1 funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and 2 funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder.
This includes conversions from group policies. Industrial Life - Industrial life insurance, also called "debit" insurance, is insurance under which premiums are paid monthly or more often, the face amount of the policy does not exceed a stated amount, and the words "industrial policy" are printed in prominent type on the face of the policy.
Inland Marine - coverage for property that may be in transit, held by a bailee, at a fixed location, a movable good that is often at different locations e. This line also includes instrumentalities of transportation and communication, such as bridges, tunnels, piers, wharves, docks, pipelines, power and phone lines, and radio and television towers.
Insurable Interest - A right or relationship in regard to the subject matter of the insured contract such that the insured can suffer a financial loss from damage, loss or destruction to it. Bickelhaupt and Magee. Insurance - an economic device transferring risk from an individual to a company and reducing the uncertainty of risk via pooling. Insurance Holding Company System - consists of two or more affiliated persons, one or more of which is an insurer.
Insurance to Value - Amount of insurance purchased vs.
Intermediary - a person, corporation or other business entity not licensed as a medical provider that arranges, by contracts with physicians and other licensed medical providers, to deliver health services for a health insurer and its enrollees via a separate contract between the intermediary and the insurer.
International - includes all business transacted outside the U. Investment grade - the obligation has been determined to be in one of the top four generic lettered rating classifications by a securities rating agency acceptable to the commissioner, that the obligation has been identified in writing by such a rating agency to be of investment grade quality, or, if the obligation has not been submitted to any such rating agency, that the obligation has been determined to be investment grade Class 1 and Class 2 by the Securities Valuation Office of the National Association of Insurance Commissioners.
Investment Income Accrued - investment income earned as of the reporting date but not legally due to be paid to the reporting entity until subsequent to the reporting date. Investment Income Due - investment income earned and legally due to be paid to the reporting entity as of the reporting date. Investment Income Gross - shall be recorded as earned and shall include investment income collected during the period, the change in investment income due and accrued, the change in unearned investment income plus any amortization e.
Irrevocable Beneficiary - a life insurance policy beneficiary who has a vested interest in the policy proceeds even during the insured's lifetime because the policy owner has the right to change the beneficiary designation only after obtaining the beneficiary's consent.
Joint and Last Survivor Annuity - retirement plan that continues to payout so long as at least one, of two or more, annuitants is alive. Joint Underwriting Association JUA - a loss-sharing mechanism combining several insurance companies to provide extra capacity due to type or size of exposure. Joint-Life Annuity - an annuity contract that ceases upon the death of the first of two or more annuitants.
Key-Persons Insurance - a policy purchased by, for the benefit of, a business insuring the life or lives of personnel integral to the business operations. Lapse - termination of a policy due to failure to pay the required renewal premium. Level Premium Insurance - life insurance policy for which the cost is equally distributed over the term of the premium period, remaining constant throughout.
Liability - a certain or probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or to provide services to other entities in the future as a result of a past transactions s or event s.
Life — Endowment - insurance that pays the same benefit amount should the insured die during the term of the contract, or if the insured survives to the end of the specified coverage term or age. Life — Flexible Premium Adjustable Life - a group life insurance that provides a face amount that is adjustable to the certificate holder and allows the certificate holder to vary the modal premium that is paid or to skip a payment so long as the certificate value is sufficient to keep the certificate in force, and under which separately identified interest credits other than in connection with dividend accumulation, premium deposit funds or other supplementary accounts and mortality and expense charges are made to individual certificates while providing minimum guaranteed values.
Life Settlements - a contract or agreement in which a policyholder agrees to sell or transfer ownership in all or part of a life insurance policy to a third party for compensation that is less than the expected death benefit of a policy.
Lifetime Disability Benefit - a provision in some disability income policies to recoup lost wages for the term of disability or remainder of insured's life in case of permanent disability. Also include short-term care policies that provide coverage for less than one year for medical and other services provided in a setting other than an acute care unit of the hospital. Limited Payment Life Insurance - a form of whole-life insurance with a pre-defined number of premiums to be paid.
Limited Policies - health insurance coverage for a certain ailment, such as cancer. Liquor Liability - coverage for the liability of an entity involved in the retail or wholesale sales of alcoholic beverages, or the serving of alcoholic beverages, to persons who have incurred bodily injury or property damage arising from an intoxicated person.
Living benefits rider - a rider attached to a life insurance policy providing long term care for the terminally ill. Lloyd's of London - association offering membership in various syndicates of wealthy individuals organized for the purpose of writing insurance for a particular hazard. Long Duration Contracts - contracts, excluding financial guaranty contracts, mortgage guaranty contracts and surety contracts, that fulfill both of the following conditions: Long-Term Care - policies that provide coverage for not less than one year for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital, including policies that provide benefits for cognitive impairment or loss of functional capacity.
This includes policies providing only nursing home care, home health care, community based care, or any combination. Long-Term Disability Income Insurance - policy providing monthly income payments for insureds who become disabled for an extensive length of time, typically two years or longer.
Loss - physical damage to property or bodily injury, Including loss of use or loss of income. Loss Adjustment Expense LAE - expected payments for costs to be incurred in connection with the adjustment and recording of losses. Can be classified into two broad categories: Loss of Use Insurance - policy providing protection against loss of use due to damage or destruction of property.
Loss Payable Clause - coverage for third party mortgagee in case of default on insured property, secured by a loan, that has been lost or damaged. Loss Reserve - the amount that insurers set aside to cover claims incurred but not yet paid. Loss Reserves - an estimate of liability or provision in an insurer's financial statement, indicating the amount the insurer expects to pay for losses incurred but not yet reported or reported claims that haven't been paid.
Losses Incurred But Not Reported IBNR - An estimated amount set aside by the insurance company to pay claims that may have occurred, but for some reason have not yet been reported to the insurance company. Malpractice - alleged misconduct or negligence in a professional act resulting in loss or injury. Managed Care - system of health care delivery that attempts to influence the utilization, quality, and cost of services provided.
Manufacturers Output Policies - provides broad form coverage of personal property of an insured manufacturer including raw material, goods in process, finished goods and goods shipped to customers.
Margin Premium - a deposit that an organization is required to maintain with a broker with respect to the Futures Contracts purchased or sold. Market Value - fair value or the price that could be derived from current sale of an asset. Mechanical Breakdown Insurance - premiums attributable to policies covering repair or replacement service, or indemnification for that service, for the operational or structural failure of property due to defects in materials or workmanship, or normal wear and tear.
May cover motor vehicles, mobile equipment, boats, appliances, electronics, residual structures, etc. Medical Malpractice - insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured's misconduct, negligence, or incompetence, in rendering or failure to render professional services.
Medical Only - line of business that provides medical only benefits without hospital coverage. An example would be provider-sponsored organizations where there is no coverage for other than provider non-hospital services. Medical Professional Liability - insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured's misconduct, negligence, or incompetence in rendering professional services.
Medical Professional Liability is also known as Medical Malpractice. Medicare - a state assistance program, passed under Title XVIII of the Social Security Amendments of , to provide hospital and medical expense insurance to those over 65 years of age.
Medicare pays a fixed amount for insured's care every month to the companies offering Medicare Advantage plans. These contracts with CMS provide reimbursement through pre-determined monthly amount per member based on a total estimated budget. The beneficiary may use providers outside the provider network.
Does not include stand alone Medicare Part D Plans. Medicare Supplement - Insurance coverage sold on an individual or group basis to help fill the "gaps" in the protections granted by the federal Medicare program. This is strictly supplemental coverage and cannot duplicate any benefits provided by Medicare. It is structured to pay part or all of Medicare's deductibles and co-payments.
It may also cover some services and expenses not covered by Medicare. Also known as Medigap" insurance. Medigap - supplementary private health insurance products to Medicare insurance benefits. Minimum Premium Plan - an arrangement under which an insurance carrier will, for a fee, handle the administration of claims and insure against large claims for a self-insured group.
The employer self-funds a fixed percentage e. Mobile Homes - Homeowners - homeowners insurance sold to owners occupying the described mobile home. Mobile Homes under Transport - coverage for mobile homes while under transport for personal or commercial use. Modified Guaranteed - an annuity that contains a provision that adjusts the value of withdrawn funds based on a formula in the contract.
The formula reflects market value adjustments. Member - A person who has enrolled as a subscriber or an eligible dependent of a subscriber and for whom the health organization has accepted the responsibility for the provision of health services as may be contracted for.
Moral Hazard - personality characteristics that increase probability of losses. For example not taking proper care to protect insured property because the insured knows the insurance company will replace it if it is damaged or stolen. Morale Hazard - negligence or disregard on the part of the insured which could lead to probable loss. Morbidity - the frequency or severity of disease or illness within a subset of the population.
Morbidity Risk - the potential for a person to experience illness, injury, or other physical or psychological impairment, whether temporary or permanent.
Morbidity risk excludes the potential for an individual's death, but includes the potential for an illness or injury that results in death. Morbidity Table - a statistical record of the rate of illness among the defined age groups.
Mortality Table - chart that shows the death rates of a particular population at each age displayed as the number of deaths per thousand. Mortgage Guaranty - insurance that indemnifies a lender for loss upon foreclosure if a borrower fails to meet required mortgage payments. Mortgage-Backed Securities - a type of asset-backed security that is secured by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by an accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments.
Furthermore, the mortgage must have originated from a regulated and authorized financial institution. Multi-Peril Insurance - personal and business property coverage combining several types of property insurance in one policy. Municipal Bond Guarantee Insurance - coverage sold to municipalities to guarantee the principle payment on bonds issued. Municipal obligation bond - any security, or other instrument, including a state lease but not a lease of any other governmental entity, under which a payment obligation is created, issued by or on behalf of a governmental unit to finance a project servicing a substantial public purpose, and 1 Payable from tax revenues, but not tax allocations, within the jurisdiction of such governmental unit; 2 Payable or guaranteed by the United States of America or any agency, department or instrumentality thereof, or by a state housing agency; 3 Payable from rates or charges but not tolls levied or collected in respect of a non-nuclear utility project, public transportation facility other than an airport facility or public higher education facility; or 4 With respect to lease obligations, payable from future appropriations.
Mutual Insurance Company - a privately held insurer owned by its policyholders, operated as a non-profit that may or may not be incorporated. Mutual Insurance Holding Company - a company organized as a mutual and owning a capital stock insurer or insurers for the benefit of pooling risk for many people, typically those in the same industry. Named Peril Coverage - insurance for losses explicitly defined in the policy contract. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. Negligence - failure to exercise reasonable consideration resulting in loss or damage to oneself or others.
Net Admitted Assets - total of assets whose values are permitted by state law to be included in the annual statement of the insurer. Net Income - total revenues from an insurer's operations less total expenses and income taxes.
Encourages participation by private insurers through a flood insurance pool. Nonadmitted Assets - assets having economic value other than those which can be used to fulfill policyholder obligations, or those assets which are unavailable due to encumbrances or other third party interests and should not be recognized on the balance sheet.
Nonadmitted Insurer - insurance company not licensed to do business within a given state. Non-controlled stock insurers - insurers in which a parent company has: Non-proportional Reinsurance - reinsurance that is not secured on individual lives for specific individual amount of reinsurance, but rather reinsurance that protects the ceding company's overall experience on its entire portfolio of business, or at least a broad segment of it.
The most common forms of non-proportional reinsurance are stop loss and catastrophe. Notional Value - the principal value upon which future payments are based in a derivative transaction as at a specific period in time the "as of" reporting date in the reporting currency. Examples are: Moody's Investors Service, Inc.
Best Company A. Nuclear Energy Liability - coverage for bodily injury and property damage liability resulting from the nuclear energy material whether or not radioactive on the insured business's premises or in transit. Occurrence - an accident , including injurious exposure to conditions, which results, during the policy period in bodily injury or property damage neither expected or intended from the standpoint of the insured.
FOB f. Franchise- Deductible in which the insurer has no liability if the loss is under a certain amount, but once this amount is exceeded; the entire loss is paid in full.
Therefore, buyers are subject to credit-risk exposure to the insurance company, which is low but not zero. General Liability Insurance — Insurance designed to protect business owners and operators from a wide variety of liability exposures.
Grace Period — The length of time usually 31 days after a premium is due and unpaid during which the policy, including all riders, remains in force. Gross Leverage — The sum of net leverage and ceded reinsurance leverage. Guaranteed Insurability Option — This option allows the clients to increase their level of cover without disclosing any further medical, pastimes or occupation details. Guaranteed Renewable — A policy provision in many products which guarantees the policy-owner the right to renew coverage at every policy anniversary date.
Guaranty Association — An organization of life insurance companies within a state responsible for covering the financial obligations of a member company that becomes insolvent. Hazard- A condition that creates or increases the probability of a loss. Health insurance- A generic term applying to all types of insurance indemnifying or reimbursing for losses caused by bodily accident or sickness or for expenses of medical treatment, necessitated by sickness or accidental bodily injury.
House Breaking- When the theft is committed entering into or out of the premises stealthily. Housekeeping- the general care, cleanliness and maintenance of an insured property. Householders Policy- A package of insurance providing homeowners with a broad range of property and liability coverage.
Hull Insurance- Insurance of a vessel and its machinery; a policy is generally taken out during construction which covers the ship for the whole of its useful life.
Impaired Insurer — An insurer who is having financial difficulty to the point where its ability to meet financial obligations or regulatory requirements fall under the question. Insurable Interest — Interest in property such that loss or destruction of the property could cause a financial loss. Insurance Attorneys — An attorney who practices the law as it relates to insurance matters, working as a solo practitioner or work as a part of a law-firm.
Indemnity — Restoration to the victim of a loss by payment, renovate or replacement. Income Taxes — Incurred income taxes including income taxes on capital gains reported in each annual statement for that year.
Investment Income — The return received by insurers from their investment portfolios including interest, dividends and realized capital gains on stocks.
Investments in Affiliates — Bonds, stocks, short-term investments, collateral loans, in affiliated and real estate properties occupied by a company. Key person insurance- Insurance on the life or health of a person whose services are essential to the continuing success of a business and whose death or disability can cause the firm a substantial amount of financial loss.
Lapse- Termination of a policy due to failure by the insured to pay the premium as necessary. Lessee- The person to whom a lease has been granted; usually referred as the tenant. Licensing- The incorporation of a company in the jurisdiction or the approval given to a company to underwrite insurance in the jurisdiction. Line of Business- The general classification of business as utilized in the insurance industry, i. Legal liability- Any liability imposed on a person by a court of law.
Loss of Profits- A synonym for business interruption insurance. Loss Ratio- The proportionate relationship of incurred losses to earned premiums expressed as a percentage. Loss exposure- A potential loss that may be associated with a specific type of risk. Losses Incurred Pure Losses — Net paid losses during the current year in addition to the change in loss reserves since the prior year end. Manual- A book of rates, rules, and coverage, available for each kind of insurance.
Margin of Solvency- The total assets of an insurance company must exceed its liabilities other than share capital by a relevant amount, also known as the margin of solvency.
Marine- Pertaining to the sea or to transportation: Marine Insurance- A form of insurance primarily concerned with means of transportation and communication, and with goods in transit. Mortgage- A deposit or conditional transfer to secure the performance of some act: Normally applied to material damage risks where the total sum insured is not considered to be at risk from one loss event. Market Value- The price for which something would sell, especially the value of certain types of assets, such as stocks and bonds.
Material Damage Policy- The policy covering damage to property usually a commercial fire policy as the result of which damage a business interruption claim may result. Material Fact- Information about the subject of insurance that if known would change the underwriting basis of the insurance, and which would cause the insurer to refuse the application or charge a higher rate.
Misrepresentation- Act of issuing or circulating or causing to be issued or circulated an estimate, an illustration, a circular or a statement of any kind that does not represent the correct policy terms and so forth. Moral Hazard- Moral Hazard refers to increase in probability of loss that result from dishonesty in the character of the insured person. Named Perils Policy- Coverage in a property policy that provides protection against loss from only the perils specifically listed in the policy rather than protection from physical loss.
National Association of Insurance Commissioners NAIC — Association of state insurance commissioners whose purpose is to promote uniformity of insurance regulation, monitor insurance solvency and develop model laws for passage by state legislatures. Net Investment Income — This item represents investment income earned during the year less investment expenses and depreciation on real estate.
Net Liabilities to Policyholder Surplus — Net liabilities expressed as a ratio to policyholder surplus. Net liabilities equal total liabilities less conditional reserves, plus encumbrances on real estate, less the smaller of receivables from or payable to affiliates. Net Underwriting Income — Net premiums earned less incurred losses, loss-adjustment expenses, underwriting expenses incurred, and dividends to policyholders.
Nonstandard Auto High Risk Auto or Substandard Auto — Insurance for motorists who have poor driving records or have been canceled or refused insurance. Non-cancellable — Contract terms, including costs that can never be changed. Open cover- Gives to insured automatic insurance protection so that there is no risk of any shipments remaining uninsured through oversight.
Occupational Hazard- Occupations that expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged. Occurrence- An accident— including continuous or repeated exposure to substantially the same general, harmful conditions—that results into body injury or property damage during the period of an insurance policy.
Overriding Commission- In reinsurance, commission paid to the ceding company which is more than the acquisition cost to allow for additional expenses. Ombudsman- An authority established either by the company or the Government for the quick redressal of grievances.
Policy- The legal document issued by an insurance company to a policyholder, which outlines the conditions and terms of the insurance, also called the policy contract or the contract. Package Policy- A combination of two or more individual policies or coverage in a single policy e.
Peril- In insurance, any event that causes a loss and which may be included or excluded on an insurance policy, for example, an insured peril in a fire policy is fire; an excluded peril is war. Peril of Nature- a type of peril that includes earthquake, flood, hailstones, storm, thunderbolt and subsidence; such perils are usually covered by property insurance. Personal Lines- Those types of insurance such as auto or home insurance, for individuals or families rather than for business or organizations.
Premium- The sum paid by a policyholder to keep an insurance policy in force. Probate- The court supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations.
Product Liability- Legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of its product. Product Liability Insurance- Coverage designed to provide protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of covered product. Physical Damage- Damage to or loss of the auto that arises from some kind of collision, fire, theft etc.
Policyholder- A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance. Pollution Liability- Exposure to lawsuits for injury or cleanup costs that result from some pollution damage.
Portability- The right to transfer pension rights and credits when a worker changes jobs. Proposal- Form filled in by a person wanting to take out insurance.
Inaccuracies or omissions accidental or deliberate in a proposal may invalidate any insurance policy issued. Prudent Insurer- Hypothetical insurer, having in possession of all the relevant information material facts before issuing an insurance policy. Pure Risk- In insurance, a risk that can result in either a break-even situation, or a loss. Qualified High- Deductible Health Plan — A health plan with lower premiums that covers health-care expenses only after the insured has paid each year a large amount out of pocket or from another source.
Quick Assets — Assets that are quickly convertible into cash. Quick Liquidity Ratio — Quick assets divided by net liabilities plus ceded reinsurance balances payable. Re-Entry — Re-entry, which is the allowance for level-premium term policy-owners to qualify for another level-premium period, generally with new evidence of insurability. Renewal — The automatic re-establishment of in-force status effected by the payment of another premium.
Replacement Cost — The dollar amount needed to replace damaged personal property or dwelling property without deducting for depreciation but limited by the maximum dollar amount shown on the declarations page of the policy.
Reserve — An amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders.
A reserve is usually treated as a liability. Residual Benefit — In disability insurance, a benefit paid when you suffer a loss of income due to a covered disability or if loss of income persists. Reinsurance — Insurance placed by an underwriter in another company to cut down the amount of the risk assumed under the original insurance.
Reinsurance Ceded — The unit of insurance transferred to a reinsurer by a ceding company. Risk Class — Risk class, in insurance underwriting, is a grouping of insureds with a similar level of risk. Risk Management — Management of the pure risks to which a company might be subject. Risk Retention Groups — Liability insurance companies owned by their policyholders. Salvage- Rescuing people or property from a flood, fire, shipwreck or other disaster. A person who salvages goods may be paid compensation by their owners or insurers.
Sight Bill- Bill of exchange payable on presentation i. Sound Arrived value- It refers to the market value of the goods in sound condition. Subrogation- Right of an insurer, having indemnified the insured, to avail himself or herself of any rights and remedies of the insured, for example, salvage.
Surveyor- Person whose job is to examine buildings, etc. Term Life Insurance — Life insurance that provides protection for a specified period of time; i. Tort — A private wrong, independent of contract and committed against an individual, which gives rise to a legal liability and is adjudicated in a civil court. Total Annual Loan Cost — The projected annual average cost of a reverse mortgage including all itemized costs.
Total Loss — A loss of sufficient size that it can be said no value is left, in other words the complete destruction of the property. Third party- Someone other than the insured and insurance company. Third party claim- A demand made by a person against a policyholder and any payment that will be made by that company. Third Party Liability- Liability incurred by the insured to another party but excluding contractual liability. Underwriter- Person or institution that agrees to take up a proportion of the risk of something, for example, an underwriter may take up the shares of an issue that are not taken up by the public, in return for a commission known as an underwriting commission.