Glossary

Glossary

 

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  • Ab initio : A term used to describe avoidance of a contract from its inception or its beginning. The Insurance Contracts Act allows an insurer to avoid a policy ab initio in situations where an insured fraudulently non-disclosed or fraudulently misrepresented information when applying for insurance.
  • Absolute Assignment : Assignment by a policy owner of all control of and rights in the policy to a third party.
  • Absolute Liability : Liability for damages even though fault or negligence cannot be proven.
  • Accident : An event or occurrence which is unforeseen and unintended.
  • Accident and Health Insurance : A type of coverage that pays benefits, sometimes including reimbursement for loss of income, in case of sickness, accidental injury, or accidental death.
  • Accident cover : Provides benefits in the event of an accident occurring during the period of cover. Usually refers to insurance covering injury or death arising out of violent, accidental, external and visible means.
  • Accident Frequency : The rate of the occurrence of accidents, often expressed in terms of the number of accidents over a period of time. It is one method used for measuring the effectiveness of loss prevention services. Contrast with Accident Severity.
  • Accident Insurance : A form of health insurance against loss by accidental bodily injury.
  • Accident Severity : A measure of the severity or seriousness of losses, rather than the number of losses. It is measured in terms of time lost from work rather than the number of individual accidents. It is another way of measuring the effectiveness of loss prevention services. Contrast with Accident Frequency.
  • Accident Year Experience : Measures premiums and losses relating to accidents which occurred during a 12-month period.
  • Accidental Bodily Injury : Injury to the body as the result of an accident.
  • Accidental Death Benefit : A benefit in addition to the face amount of a life insurance policy, payable if the insured dies as the result of an accident. Sometimes referred to as "double indemnity."
  • Accidental Means : Unexpected or undesigned cause of an accidental bodily injury. Under a definition of accidental means, the mishap itself must be accidental, not just the resulting injury. An example would be an individual chopping wood : If the axe slipped out of his hand and cut his foot, it would have been accidental means. However, if his finger got in the way of the axe, it would not have been.
  • Accommodation Line : Business accepted from an agent or broker, which would normally be rejected according to strict underwriting standards but which is accepted because of the overall profitability of the agent's or customer's other business. As an example, an insurer might accept coverage on property that would not normally meet its underwriting standards, if the other lines of insurance which it carries for the customer were profitable.
  • Account Current : A monthly financial statement provided to an agent by an insurer showing premiums written, cancellations, endorsements, and commissions.
  • Accounting : The process of recording, summarizing, and allocating all items of income and expense of the company and analyzing, verifying, and reporting the results.
  • Accumulated Earnings Tax : A tax penalty which is imposed on corporate earnings which are retained by the corporation for non-business related needs.
  • Accumulation period : 1) The time between the first premium payment and the first benefit payout under a deferred annuity; 2) A specified period of time, such as 90 days, during which the insured person must incur eligible medical expenses at least equal to the deductible amount in order to establish a benefit period under a major medical expense or comprehensive medical expense policy.
  • Accumulation units : The mechanism used to account for your "deposits" in a variable annuity contract during the premium paying period. The number of units purchased depends upon the current valuation of a unit in dollars.
  • Acquisition Costs : The insurer's cost of putting new business in force, including the agent's commission, the cost of clerical work, fees for medical examinations and inspection reports, sales promotion expense, etc.
  • Act of God : An event or occurrence due to natural causes which occurs independently of human intervention and either could not be foreseen, or if foreseen, could not be reasonably guarded against. (e.g. storm, flood, earthquake, cyclone)
  • Activities of Daily Living : A list of activities, normally including mobility, dressing, bathing, toileting, transferring, and eating which are used to assess degree of impairment and determine eligibility for some types of insurance benefits.
  • Actual Cash Value (ACV) : 1) The cost of replacing or restoring property at prices prevailing at the time and place of the loss, less depreciation, however caused; 2) replacement cost minus.
  • Actual total loss : Where the property insured is completely destroyed or so badly damaged that it ceases to be a thing of the kind insured, or where the insured is irretrievably deprived of it. Also called “constructive total loss”.
  • Actuarial : Having to do with insurance mathematics.
  • Actuarial Cost Method : One of several systems for determining either the contributions to be made under a retirement plan, or level of benefits when the contributions are fixed. In addition to forecasts of mortality, interest and expenses, some of the methods involve estimates of future labor turnover, salary scales and retirement rates.
  • Actuarial Equivalent : If the present values of two series of payments are equal, taking into account a given interest rate and mortality according to a given table, the two series are said to be actuarially equivalent on this basis. For example, a lifetime monthly benefit of $67.60 beginning at age 60 (on a given set of actuarial assumptions) can be said to be the actuarial equivalent of $100 a month beginning at age 65. The actual benefit amounts are different but the present value of the two benefits, considering mortality and interest, is the same.
  • Actuarially Fair : The price for insurance which exactly represents the expected losses.
  • Actuary : A person professionally trained in the technical aspects of pensions, insurance and related fields. The actuary estimates how much money must be contributed to an insurance or pension fund in order to provide future.
  • Additional Insured : An assured party specifically named under an insurance policy.
  • Additional Interest Insured : A company or person who has been named as an additional interest insured on a policy can be liable for an accident that involves an insured person or vehicle. For example, a lienholder can be an additional interest insured.
  • Adhesion : This is a characteristic of a unilateral contract which is offered on a "take it or leave it" basis. Most insurance policies are contracts of "adhesion," because the terms are drawn up by the insurer and the insured simply "adheres."
  • Adjustable Life Insurance : A type of insurance that allows the policyholder to change the plan of insurance, raise or lower the face amount of the policy, increase or decrease the premium and lengthen or shorten the protection period.
  • Adjusted gross estate : Approximately the net worth of the deceased--the beginning point for the computation of estate taxes.
  • Adjuster : A person who investigates and settles losses for an insurance carrier.
  • Adjusting : The process of investigating and settling losses with or by an insurance carrier.
  • Adjustment Bureau : Organization for adjusting insurance claims that is supported by insurers using the bureau's services. 
  • Administrative Services : An arrangement under which an insurer or independent organisation will, for a fee, handle the administration of claims, benefits and other administrative duties for a group.
  • Administrative Services Only (AS0) : Plan An arrangement under which an insurance carrier or an independent organization will, for a fee, handle the administration of claims, benefits and other administrative functions for a self-insured group.
  • Admissible tier II debt Admissible supplementary capital.
  • Admitted (or Allowed) Assets : Assets whose values are permitted by law to be included in the annual statement of the insurer.
  • Admitted Reinsurance : "A company is “admitted” when it has been licensed and accepted by appropriate insurance regulatory authorities of a country. In determining its financial condition a ceding insurer is allowed to take credit for the unearned premiums and unpaid claims on the risks reinsured if the reinsurance is placed in an admitted reinsurance company."
  • Advance Funding :Pension-funding method in which the employer systematically and periodically sets aside funds prior to the employee's retirement.
  • Advance Payment : Premiums paid in advance of the current policy period, including the amount tendered with an application by an applicant for Life Insurance.
  • Advance Premium Mutual : Mutual insurance company owned by the policyowners that does not issue assessable policies but charges premiums expected to be sufficient to pay all claims and expenses.
  • Adverse Carrier : Term used to refer to the other party's insurance company.
  • Adverse Selection : The tendency of persons who present a poorer-than-average risk to apply for, or continue, insurance to a greater extent than do persons with average or better-than-average expectations of loss.
  • Adverse Underwriting Decision : Any decision involving individually underwriting insurance coverages resulting in termination of existing insurance, declination of an application, or writing the coverage only at higher rates. For property and casualty insurance, it also includes placing the coverage with a residual market mechanism or an unauthorized insurer.
  • Advice : "(in relation to Financial Services) A statement made which influences, or is intended to influence, a person to purchase a particular financial product or service. Advice can be personal or general : Personal advice is advice which takes one or more of a person’s individual circumstances into account. General advice is advice which is not personal—i.e. does not fulfil this individual circumstances test."
  • AFS : Annual Financial Statements.
  • Age Limits : Stipulated minimum and maximum ages below and above which the company will not accept applications or may not renew policies.
  • Agency : An insurance sales office which is directed by an agent, manager, independent agent, or company manager.
  • Agency Company : An insurance company that produces business through an agency network. Agency Contract (or Agreement) The document which establishes the legal relationship between an agent and an insurer.
  • Agency Plant : The total force of agents representing an insurer.
  • Agent : An insurance company representative licensed by the state who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.
  • Agent's Authority : The authority and power granted to an agent by the agency contract. The agent is also clothed with additional power under the legal concept of apparent agency.
  • Agent's Balance : "A periodic statement of the sums due and owed to an agent under the agent's contract with an insurer."
  • Agent's Commission : The method by which an agent is compensated for placing insurance with a company that he represents. The commission is usually a percentage of the premium for the policy.
  • Aggregate Deductible : Deductible in some property and health insurance contracts in which all covered losses during a year are added together and the insurer pays only when the aggregate deductible amount is exceeded.
  • Aggregate Indemnity : The maximum dollar amount that may be collected for any disability or period of disability under the policy.
  • Aggregate Limit : Usually refers to Liability Insurance and indicates the amount of coverage that the insured has under the contract for a specific period of time, usually the contract period, no matter how many separate accidents may occur.
  • Aggrieved party : A party who has been wronged. A person who is a victim is said to be aggrieved.
  • Agreed Price : The price or cost of repairs agreed to by the AD (auto damage) adjuster or independent appraiser and the body shop representative.
  • 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 given then for the cars make and model in the motor trade's most commonly accepted price handbook. The value doesn't change for the period of cover.
  • AIDS : Acquired immune deficiency syndrome. A fatal, incurable disease caused by a virus that can damage the brain and destroy the body's ability to fight off illness.
  • Aleatory Contract : A contract in which the number of dollars to be given up by each party is not equal. Insurance contracts are of this type, as the policyholder pays a premium and may collect nothing from the insurer or may collect substantially more than the amount of the premium if a loss occurs.
  • Alien Insurer : An insurance company domiciled in another country.
  • Alienated : In insurance, this term describes property that an insured no longer owns or holds title to. Generally a Public Liability policy will cover the insured's liability for premises alienated by him.
  • Allied Lines :- A term for forms of property insurance allied with fire insurance, covering such perils as windstorm, hail, explosion, and riot.
  • Allocated Benefits : Benefits for which the maximum amount payable for specific services is itemized in the contract.
  • All-Risks Insurance : The term "All-Risks Insurance" is used to mean insurance against loss of or damage to property arising from any fortuitous cause except those that are specifically excluded. An insurance contract which provides All-Risks Insurance is an All-Risks policy. Contrast with Named Perils.
  • All-risks Policy : Coverage by an insurance contract that promises to cover all losses except those losses specifically excluded in the policy. See also Risks of direct loss to property.
  • Alternate Delivery Systems : Health services provided in other than an in-patient, acute-care hospital. Examples include skilled and intermediary nursing facilities, hospice programs, and home health care. Alternate delivery systems are designed to provide needed services in a more cost-effective manner.
  • Ambiguity : "Terms or words in an insurance policy which make the meaning unclear or which can be interpreted in more than one way. The rule of law is that any ambiguity in the policy is construed against the insurer and in favour of the insured. This is because the contract is one of adhesion; that is, the insured must adhere to what the insurer has written. If the insurer does not make its contract clear, it is responsible."
  • Ambulatory Care : Medical services that are provided on an outpatient (nonhospitalized) basis. Services may include diagnosis, treatment, and rehabilitation.
  • Amendment : A formal document changing the provisions of an insurance policy signed jointly by the insurance company officer and the policy holder or his authorized representative.
  • Amortisation : Paying an interest-bearing liability by gradual reduction through a series of instalments, as opposed to single lump-sum redemption.
  • Amortised Value : The value of bonds purchased by an insurance company which are eligible for amortisation. For example, if a 10-year bond were purchased at R50 more than its face value, that R50 would be "amortised" or spread over the 10-year period. Each year the bonds would be valued at R5 less than the year before.
  • Amortization : Paying an interest-bearing liability by gradual reduction through a series of installments, as opposed to one lump-sum payment.
  • Amount covered : The current amount covered is shown on the most recent of the insurance schedule and the renewal notice. It is the most the insurer will pay, less any excess, for a claim that is covered by the policy. The amount covered includes GST.
  • Annual Return (or Statement ) : A report to the regulatory insurance department of the year's financial results. The insurer's income and expenses are stated in detail as well as its assets and liabilities.
  • Annual Statement : The annual report, as of December 31, of an insurer to a state insurance department, showing assets and liabilities, receipts and disbursements, and other financial data.
  • Annuitant : The person during whose life an annuity is payable, usually the person to receive the annuity.
  • Annuity : A contract that provides an income for a specified period of time, such as a number of years or for life.
  • Annuity Certain : A contract that provides an income for a specified number of years, regardless of life or death.
  • Annuity Consideration : The payment, or one of the regular periodic payments, an annuitant makes for an annuity.
  • Anti-lock Braking System (ABS) : A computer-controlled high pressure system that assists the vehicle's normal braking system. ABS allows all wheels to slow at the same rate, thereby preventing loss of control.
  • Antiselection : The tendency of persons who present a poorer-than-average risk to apply for, or continue, insurance to a greater extent than do persons with average or better-than-average expectations of loss.
  • Anti-Theft Device : A device that deters auto theft. Autos equipped with these devices may entitle you to a discount on your insurance premiums.
  • Apparent Authority : Authority of an agent that is created when the agent oversteps actual authority, and when inaction by the insurer does nothing to counter the public impression that such authority exists.
  • Application : A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.
  • Apportionment : "The method of dividing a loss among insurers in the same proportions as their participation when two of more companies cover the same loss."
  • Appraisal : Process that determines the value of property, or the extent of damage, usually performed by an impartial expert.
  • Approved : The condition which exists when the person or object to be insured meets the underwriting standards of the insurer.
  • Arbitration : A form of alternative dispute resolution where an unbiased person or panel renders an opinion as to reponsibility for or extent of a loss.
  • Arbitration Clause : Language providing a means of resolving differences between the reinsurer and the reinsured without litigation. Usually, each party appoints an arbiter. The two thus appointed select a third arbiter, or umpire, and a majority decision of the three becomes binding on the parties to the arbitration proceedings.
  • Arson : The willful and malicious burning of, or attempt to burn, any structure or other property, often with criminal or fraudulent intent.
  • Assessed Value : The value of real estate or personal property as determined by a governmental unit, such as a city, for the purpose of determining taxes.
  • Assessment Association : An insurer that does not charge a fixed premium for insurance, but rather assesses its members periodically to pay its losses. Assessment insurers usually collect an advance premium which is estimated to cover losses and expenses, but reserve the right to make additional assessments whenever the premium collected is insufficient.
  • Assessment Company, Society or Insurer : An insurer retaining the right to assess additional charges above initial premium when those premiums are shown to be inadequate to cover the costs of operation. This is usually a mutual or reciprocal type of insurer.
  • Assessment Mutual : Mutual insurance company that has the right to assess policyowners for losses and expenses. 
  • Assets : All funds, property, goods, securities, rights of action, or resources of any kind owned by an insurance company. Statutory accounting, however, excludes non-admitted assets, such as deferred or overdue premiums, that would be considered assets under generally accepted accounting principles (GAAP).
  • Assigned Risk : A risk which is not ordinarily acceptable to insurers and which is, therefore, assigned to insurers participating in an assigned risk pool or plan. Each participating company agrees to accept its share of These risks.
  • Assignment : The legal transfer of one person's interest in an insurance policy to another person. Association Captive Type of captive insurer owned by members of a sponsoring organization or group, such as a trade association.
  • Association Group : A group formed from members of a trade or a professional association for group insurance under one master health insurance contract.
  • Association Group Plan : Health insurance plans designed for members of a professional association or trade association. Members may be protected under a group health insurance policy or by individual franchise policies.
  • Assumption of Risk Doctrine : Defense against a negligence claim that bars recovery for damages if a person understands and recognizes the danger inherent in a particular activity or occupation.
  • Assumptions : Conditions and rules underlying the calculation of a pension benefit, including expected interest, mortality and turnover.
  • Assurance : Terminology used to describe life insurance. This is common practice in Great Britain, Canada and South Africa. Insurance is usually used for the description of short-term insurance. However, the term insurance is used indiscriminately to describe both life and short-term insurance in practice.
  • Assurance Insurance : These terms are today generally accepted as synonymous, although not originally so. The term "assurance" is used more commonly in Canada and Great Britain than in the United States.
  • Assured : Means the same as an insured, policyholder, or someone who has an insurance policy.
  • At-Fault : The party that is legally liable for the damages in an accident.
  • Attachment point : the dollar amount of loss where an insurance begins to provide coverage.
  • Attorney-In-Fact : The individual who manages a reciprocal insurance exchange and to whom each subscriber gives authority to exchange insurance for him with other subscribers.
  • Attractive Nuisance : Condition that can attract and injure children. Occupants of land on which such a condition exists are liable for injuries to children.
  • Australian Financial Services Licensee : A person who holds an Australian Financial Services licence.
  • Authorisation : The amount of insurance an underwriter says he will accept on a risk of a given class on specific property. It is given for the guidance and information of agents.
  • Authorised Insurer : An insurer authorised by the country to transact business in that country for specific types of insurance.
  • Auto Damage (AD) : Division of the claims department that handles auto claims.
  • Auto Damage Adjuster : The auto damage adjuster is responsible for writing the repair estimate for your vehicle. This adjuster will also answer your questions about the repair process, your rental vehicle, or your total loss settlement.
  • Auto Insurance : Auto Insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured's property and losses for which the insured is liable as a result of owning or operating an auto.
  • Auto Theft : The theft of an auto is a type of loss that is covered under comprehensive coverage.
  • Automatic Cover : Coverage given automatically by a policy, usually for a specified period and limited amount, to cover increasing values and newly acquired and changing interests.
  • Automatic Premium Load : Cash borrowed from a life insurance policy’s cash value to pay an overdue premium after the grace period for paying the premium has expired.
  • Automatic Premium Loan : Cash borrowed from a life insurance policy's cash value to pay an overdue premium after the grace period for paying the premium has expired.
  • Automatic Reinsurance : An agreement that the insurer must cede and the reinsurer must accept all risks within certain explicitly defined limits. The reinsurer undertakes in advance to grant reinsurance to the extent specified in the agreement in every case where the ceding company accepts the application and retains its own limit.
  • Automobile Insurance Plan : One of several types of "shared market" mechanisms where persons who are unable to obtain such insurance in the voluntary market are assigned to a particular company, usually at a higher rate than the voluntary market. Formerly called "Assigned Risk."
  • Automobile Liability Insurance : Protection for the insured against financial loss because of legal liability for car-related injuries to others or damage to their property.
  • Automobile Physical Damage Insurance : Coverage to pay for damage to or loss of an insured automobile resulting from collision, fire, theft, or other perils.
  • Automobile Reinsurance Facility : One of several types of "shared market" mechanisms used to make automobile insurance available to persons who are unable to obtain such insurance in the regular market.
  • Automobile Shared Market : A program in which all automobile insurers in each state and the District of Columbia participate to make coverage available to car owners who are unable to obtain auto insurance in the voluntary market. Except in Maryland, which operates a state-funded mechanism whose losses are subsidized by private insurers, each state uses one of three systems (an automobile insurance plan, a joint underwriting association, or a reinsurance facility) to guarantee the availability of automobile insurance.
  • Average Indexed Monthly Earnings (AIME) : Under the OASDI program, the person's actual earnings are indexed to determine his or her primary insurance amount (PIA).
  • Aviation Insurance : Aircraft insurance including coverage of aircraft or their contents, the owner's liability, and accident insurance on the passengers.
  • Avoidance of Risk : Taking steps to remove a hazard, engage in an alternative activity, or otherwise end a specific exposure. One of the four major risk management techniques.
  • Bad faith : the allegation that insurers have failed to act in good faith, i.e. that they have acted in a manner inconsistent with what a reasonable policyholder would have expected.
  • Bailees Customers Policy : Policy that covers the loss or damage to property of customers regardless of a bailee's legal liability.
  • Balance Sheet : An accounting term which refers to a listing of the assets, liabilities, and surplus of a company or individual as of a specific date.
  • Basic Limit : Usually refers to Liability policies and indicates the lowest amount for which a policy can be written. This amount is either prescribed by law or company policy.
  • Basic Premium : A fixed cost charged in a retrospective rating plan. It is a percentage of the standard premium and is designed to give the insurer the money needed for administrative expenses and the agent's commission plus an insurance charge. See also Retrospective Rating.
  • Basis : An amount attributed to an asset for income tax purposes; used to determine gain or loss on sale or transfer; used to determine the value of a gift.
  • Beneficiary : The person designated or provided for by the policy terms to receive any benefits provided by the policy or plan upon the death of the insured.
  • Benefits : The amount payable by the insurance company to a claimant, assignee or beneficiary under each coverage.
  • Binder : A written or oral contract issued temporarily to place insurance in force when it is not possible to issue a new policy or endorse the existing policy immediately. A binder is subject to the premium and all the terms of the policy to be issued.
  • Binding Receipt : A receipt given for a premium payment accompanying the application for insurance. If the policy is approved, this binds the company to make the policy effective from the date of the receipt.
  • Blackout Period : The period during which Social Security benefits are not paid to a surviving spouse- between the time the youngest child reaches age sixteen and the widow's sixtieth birthday.
  • Blanket Contract : A contract of health insurance affording benefits, such as accidental death and dismemberment, for all of a class of persons not individually identified. It is used for such groups as athletic teams, campers, travel policy for employees, etc.
  • Blanket Medical Expense : A provision which entitles the insured person to collect up to a maximum established in the policy for all hospital and medical expenses incurred, without any limitations on individual types of medical expenses.
  • Blue Cross : An independent, nonprofit membership corporation providing protection on a service basis against the cost of hospital care in a limited geographical area.
  • Blue Shield : An independent, non-profit membership corporation providing protection on a service basis against the cost of surgical and medical care in a limited geographical area.
  • Boat Owners Package Policy : A special package policy for boat owners that combines physical damage insurance, medical expense insurance, liability insurance, and other coverages in one contract.
  • Bodily Injury : An injury sustained by a person.
  • Bodily Injury Liability Coverage : Pays damages for bodily injury or death resulting from an accident for which you are at fault and in most cases provides you with a legal defense. This coverage is subject to the terms, limits and conditions of your policy contract.
  • Boiler and Machinery Insurance : Coverage for loss arising out of the operation of pressure, mechanical, and electrical equipment. It covers loss of the boiler and machinery itself, damage to other property, and business interruption losses.
  • Bond : A certificate issued by a government or corporation as evidence of a debt. The issuer of the bond promises to pay the bondholder a specified amount of interest for a specified period and to repay the loan on the expiration (maturity) date.
  • Book of Business : the number, size and type of accounts (policyholders) that an agent "owns."
  • Book Value : the purchase price minus accounting depreciation.
  • Bordereau : An itemized statement of transactions, today resembling a spreadsheet format, commonly used in reinsurance.
  • Borderline Risk : An insurance prospect of doubtful quality from an underwriting point of view. Boycott An unfair trade practice which occurs whereby refuses to have business dealings with another until he or she complies with certain conditions or concessions.
  • Branch Office System Type of life insurance marketing system under which branch offices are established in various areas. Salaried branch managers, who are employees of the company, are responsible for hiring and training new agents.
  • Broadform : "A form of liability wording that extends the cover for personal injury beyond physical injury, disease or death to include other causes including mental injury or anguish, fright, false arrest, malicious prosecution, libel, slander, defamation, wrongful entry, eviction or other invasion of the right of private property, assault and battery which occurs during the period of the policy."
  • Broker : A marketing specialist who represents buyers of property and liability insurance and who deals with either agents or companies in arranging for the coverage required by the customer.
  • Broker of Record : A broker who has been designated to handle certain insurance contracts for the policyholder.
  • Brokerage : (1) The fee or commission received by a broker. (2) Insurance placed by brokers contrasted with that placed by agents.
  • Brokerage Business : Business offered to an insurer by a broker. This is sometimes called excess or surplus business.
  • Brokerage Department : A department of an insurer whose purpose is to deal with brokers in the placing of insurance.
  • Broker-Agent : One acting as an agent of one or more insurers and as a broker in dealing with one or more other insurers.
  • BSCR : Basic Solvency Capital Requirement.
  • Building Code : This refers to municipal or other governmental ordinances regulating the type of construction of buildings within its jurisdiction.
  • Burglary : Breaking and entering into another person's property with felonious intent.
  • Burglary and Theft Insurance : Coverage against property losses due to burglary, robbery, or larceny.
  • Burning Cost : A term most frequently used in spread loss property reinsurance to express pure loss cost or more specifically the ratio of incurred losses within a specified amount in excess of the ceding company’s retention to its gross premiums over a stipulated number of years.
  • Burning Ratio The ratio of losses suffered to the amount of insurance in effect.
  • Business In Property, Liability, and Health lines, it usually refers to the volume of premiums.
  • Business income exposure lost profits resulting from damage to property that halts the business.
  • Business Insurance A policy which primarily provides coverage of benefits to a business as contrasted to an individual. It is issued to indemnify a business for the loss of services of a key employee or a partner who becomes disabled.
  • Business Interruption Insurance Protection for a business owner against losses resulting from a temporary shutdown because of fire or other insured peril. The insurance provides reimbursement for lost net profits and necessary continuing expenses.
  • Business Life Insurance Life insurance purchased by a business enterprise on the life of a member of the firm. It is often bought by partnerships to protect the surviving partners against loss caused by the death of a partner, or by a corporation to reimburse it for loss caused by the death of a key employee.
  • Business pack A number of policies typically required by a business are combined into one policy or package—e.g. fire damage to property, burglary, liability, etc. Business packs are sometimes tailored to cover the risks of a particular industry or business—e.g. motor dealers, builders, etc.
  • Buy-Back Deductible "A deductible which may be eliminated for an additional premium in order to provide ""first-dollar"" coverage."
  • Buy-Sell Agreement : An agreement made by the owners of a business to purchase the share of a disabled or deceased owner. The value of each owner's share of the business and the exact terms of the buying-and-selling process are established before death or the beginning of disability.
  • Cafeteria Plan Generic term for an employee benefit plan that allows employees to select among the various group life, medical expense, disability, dental, and other plans that best meet their specific needs. Also called flexible benefit plans.
  • CAGR : Compound annual growth rate.
  • Calendar Year Experience : This measures the premiums and losses entered on accounting records during the 12-month calendar.
  • Calendar-year Deductible : Amount payable by an insured during a calendar year before a group or individual health insurance policy begins to pay for medical expenses.
  • Cancelable : A contract of health insurance that may be canceled during the policy term by the insurer or insured.
  • Cancellable : A contract of insurance that may be terminated by the insurer or insured at any time. Practically every form of insurance is cancellable, except Life Insurance and those Health Insurance policies designated as "guaranteed renewable" or "non-cancellable and guaranteed renewable."
  • Cancellation : The discontinuance of an insurance policy before its normal expiration date, either by the insured or the company.
  • Capacity : The amount of capital available to an insurance company or to the industry as a whole for underwriting general insurance coverage or coverage for specific perils.
  • Capital Gain : Profit realized on the sale of securities. An unrealized capital gain is an increase in the value of securities that have not been sold.
  • Capital Retention Approach : A method used to estimate the amount of life insurance to own. Under this method, the insurance proceeds are retained and are not liquidated.
  • Capital Stock : The shares of ownership in a corporation.
  • Capital : Sum The maximum lump sum payable in the event of accidental death or dismemberment.
  • Capital Transaction : The sale of a capital asset, such as stock, which results in the transaction being taxed as ordinary income and not as a dividend.
  • Capitation : A method of payment for health services in which a physician or hospital is paid a fixed, per capita amount for each person served regardless of the actual number of services provided to each person.
  • Captive Agent : One who sells insurance for only one company as opposed to an agent who represents several companies.
  • Captive Insurance Company : A company owned solely or in large part by one or more non- insurance entities for the primary purpose of providing insurance coverage to the owner or owners.
  • Captive Insurer : Insurance company established and owned by a parent firm in order to insure its loss exposures while reducing premium costs, providing easier access to a reinsurer, and perhaps easing tax burdens. See also Association captive; Pure captive.
  • CAR : Capital Adequacy Ratio.
  • Career average formula : A pension plan formula that bases retirement benefits on earnings during all years of service to the employer.
  • Cargo Insurance : Type of ocean marine insurance that protects the shipper of the goods against financial loss if the goods are damaged or lost.
  • Carrier : The insurance company or insurer.
  • Cash Flow Plans : Premium payment schemes which allow the insured to retain a large part of the premium and pay it out over a time period such as a year.
  • Cash Flow Underwriting : The use of rating and premium collection techniques by insurance companies to maximize interest earnings on premiums.
  • Cash Surrender Value : The amount available in cash upon voluntary termination of a policy by its owner before it becomes payable by death or maturity.
  • Casualty Insurance : Insurance concerned with the insured's legal liability for injuries to others or damage to other persons' property; also encompasses such forms of insurance as plate glass, burglary, robbery and workers' compensation.
  • CAT : Catastrophic.
  • Catastrophe Event : which causes a loss of extraordinary magnitude, such as a hurricane or tornado.
  • Catastrophe Hazard The hazard of large loss by reason of occurrence of a peril to which a very large number of insured’s are subject. An example would be widespread loss due to a hurricane or tornado.
  • Catastrophe reinsurance : A form of reinsurance whereby the reinsured is protected against an accumulation of losses from the same event—e.g. a cyclone.
  • Causes-of-loss Form : Form added to commercial property insurance policy that indicates the causes of loss that are covered. There are four causes-of-loss forms basic, broad, special, and earthquake.
  • Caveat emptor : Let the buyer beware. Insurance contracts are NOT Caveat emptor (buyer beware) contracts. They are Uberrima Fidei Utmost Good Faith) contracts.
  • Cedant : An insurer who transfers all or part of a risk to a reinsurer.
  • Cede : To transfer all or part of a risk written by an insurer (the ceding, or primary company) to a reinsurer.
  • Ceding Commission : The cedant’s acquisition costs and overhead expenses, taxes, licenses and fees, plus a fee representing a share of expected profits - sometimes expressed as a percentage of the gross reinsurance premium.
  • Ceding Company : The original or primary insurer; the insurance company, which purchases reinsurance.
  • Ceding insurer : The original insurer. It is the company which deals with the client, and reinsures part or all of the risk.
  • Certificate of Authority : (1) A certificate showing the powers that an insurer grants to its agents. (2) A certificate issued by a regulator of insurance showing the power of an insurer to write contracts of insurance in that country.
  • Certificate of Insurance A statement of coverage issued to an individual insured under a group insurance contract, outlining the insurance benefits and principal provisions applicable to the member.
  • Certificate of Satisfaction : A form signed by the insured when he or she takes delivery of the car from the repairer. It certifies that he or she is satisfied with the vehicle operations, appearance, and visible quality of the repairs.
  • Certified Financial Planner (CFP) : Professional who has attained a high degree of technical competency in financial planning and has passed a series of professional examinations by the College of Financial Planning.
  • Certified Insurance Counselor (CIC) : Professional in property and liability insurance who has passed a series of examinations by the Society of Certified Insurance Counselors.
  • Cession : Amount of the insurance ceded to a reinsurer by the original insuring company in a reinsurance operation.
  • Chartered Financial Consultant (ChFC) : An individual who has attained a high degree of technical competency in the fields of financial planning, investments, and life and health insurance and has passed ten professional examinations administered by The American College.
  • Chartered Life Underwriter (CLU) : An individual who has attained a high degree of technical competency in the fields of life and health insurance and who is expected to abide by a code of ethics. Must have minimum of three years of experience in life or health insurance sales and have passed ten professional examinations administered by The American College.
  • Chartered Property and Casualty Underwriter (CPCU) : Professional who has attained a high degree of technical competency in property and liability insurance and has passed ten professional examinations administered by the American Institute for Property and Liability Underwriters.
  • Chattel Mortgage : A type of mortgage where the collateral is personal property, rather than land or buildings.
  • Choice No-Fault : Allows auto insureds the choice of remaining under the tort system or choosing no-fault at a reduced premium.
  • Civil law : the portion of law that deals with interactions between individual. The two branches of civil law are contract law and tort law.
  • Claim : A request for payment of a loss which may come under the terms of an insurance contract.
  • Claim Examiner : A person responsible for investigating and settling a claim.
  • Claim Expense : The expense of adjusting a claim, such as investigation and attorneys' fees. It does not include the cost of the claim itself.
  • Claim Report : A report filed by an agent setting forth the facts of a claim. Same as Loss Report.
  • Claimant : The party asserting a right of recovery under a contract of insurance.
  • Claim-made policy : A liability insurance policy under which coverage applies to claims filed during the policy period.
  • Claims Adjustor : Person who settles claims an agent, company adjustor, independent adjustor, adjustment bureau, or public adjustor.
  • Claims history : The history of losses suffered by an insured which have been covered by insurance. Some claims histories also record events notified to the insurer which did not result in actual claims pay-outs—e.g. events below the policy excess.
  • Claims : incurred Claims that have occurred, irrespective of whether or not they have been reported to the insurer.
  • Claims Ratio : The ratio of the cost of claims to earned premiums.
  • Claims Reserve : Amounts set aside to meet costs of claims incurred but not yet finally settled. An example might be a Workers Compensation case where benefits are payable for several years. At any given point in time, the reserve would be the funds kept based on the estimate of what the claim will cost when finally settled.
  • Claims-Made Basis : A form of reinsurance under which the date of the claim report is deemed to be the date of the loss event. Claims reported during the term of the reinsurance agreement are therefore covered, regardless of when they occurred. A claims made agreement is said to “cut off the tail” on liability business by not covering claims reported after the term of the reinsurance agreement - unless extended by special agreement.
  • Class (or Classification) : A group of insureds having the same characteristics and who are, therefore, grouped together for rating purposes. Class rates apply to dwellings and apartments, since they usually have the same characteristics and are exposed to the same perils.
  • Class Rating : Rate-making method in which similar insureds are placed in the same underwriting class and each is charged the same rate. Also called manual rating.
  • Clause A section of a policy contract or endorsement dealing with a particular subject. For instance, a Subrogation Clause deals with the rights of the insurer in the event of payment of a loss under the contract.
  • Cliff vesting a pension design in which an employee becomes entitled to full retirement benefits after participating in the plan for the specified period, e.g., five years.
  • Close Corporation : "A corporate form of business controlled and operated by a small, close group of persons such as family members. The corporation's stock is not sold to outsiders."
  • Closing : The document sent by a broker to an insurer confirming and finalising an insurance cover arranged by the broker.
  • CLUE® Report : Comprehensive Loss Underwriting Exchange (CLUE) report; provides claim history information.
  • Coding : A method of putting information into a numerical form for statistical use. Most information on policies is coded and then put into reports.
  • Coercion : An unfair trade practice which occurs when someone in the insurance business applies a physical or mental force to persuade another to transact insurance.
  • Coinsurance : 1) A provision under which an insured who carries less than the stipulated percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required; 2) a policy provision frequently found in medical insurance, by which the insured person and the insurer share the covered losses under a policy in a specified ratio, i.e., 80 percent by the insurer and 20 percent by the insured.
  • Co-insurance (average) : An insured who has a sum insured which does not represent the full value of the insured property may be their own co-insurer and, therefore, sharing in the risk with the insurer. This can result in a reduced claim.
  • Collateral Source Rule : Under this rule, the defendant cannot introduce any evidence that shows the injured party has received compensation from other collateral sources.
  • Collection or Set : A group of items of sufficiently common type, appearance or nature that they reasonably belong together and that is devalued if one or more of the group is lost or damaged.
  • Collision Insurance : Protection against loss resulting from any damage to the policyholder's car caused by collision with another vehicle or object, or by upset of the insured car, whether it was the insured's fault or not.
  • Collusion : An agreement, usually secret, between two or more persons to defraud or deprive another or others of their property or rights.
  • Combined Ratio : Basically, a measure of the relationship between dollars spent for claims and expenses and premium dollars taken in; more specifically, the sum of the ratio of losses incurred to premiums earned and the ratio of commissions and expenses incurred to premiums written. A ratio above 100 means that for every premium dollar taken in, more than a dollar went for losses, expenses, and commissions.
  • COMM : Commission.
  • Commercial General Liability Policy (CGL) : Commercial liability policy drafted by the Insurance Services Office containing two coverage forms-an occurrence form and a claims-made form.
  • Commercial Lines : Insurance for businesses, organizations, institutions, governmental agencies, and other commercial establishments.
  • Commercial Multiple Peril Policy : A package of insurance that includes a wide range of essential coverages for the commercial establishment.
  • Commercial Package Policy (CPP) : A commercial policy that can be designed to meet the specific insurance needs of business firms. Property and liability coverage forms are combined to form a single policy.
  • Commingling : "An illegal practice which occurs when an agent mixes personal funds with the insured's or insurer's funds.
  • Commission : The part of an insurance premium paid by the insurer to an agent or broker for his services in procuring and servicing the insurance.
  • Commission of Authority : A document outlining the powers delegated to an agent by an insurer.
  • Commissioner : A state officer who administers the state's insurance laws and regulations. In some states, this regulator is called the director or superintendent of insurance.
  • Common law : the law that has evolved over time as a result of previous court decisions, rather than having been enacted by a legislative body.
  • Common Law Liability : Responsibility based on common law for injury or damage to another's person or property which rests on an individual because of his actions or negligence. This is opposed to liability based on statutory law.
  • Common Stock : Securities that represent an ownership interest in a corporation.
  • Community Property : A special ownership form requiring that one-half of all property earned by a husband or wife during marriage belongs to each. Community property laws do not generally apply to property acquired by gift, by will, or by descent.
  • Commutation Clause : A clause in a reinsurance agreement, which provides for estimation, payment and complete discharge of all future obligations for reinsurance losses incurred regardless of the continuing nature of certain losses such as unlimited medical and lifetime benefits for Workers’ Compensation.
  • Company Adjustor : Claims adjustor who is a salaried employee representing only one company.
  • Comparative Negligence : Under this concept a plaintiff (the person bringing suit) may recover damages even though guilty of some negligence. His or her recovery, however, is reduced by the amount or percent of that negligence.
  • Competitive Estimate : A term used when an insurance company requests that you submit multiple repair estimates for consideration.
  • Completed Operations : Liability arising out of faulty work performed away from the premises after the work or operations are completed. Applicable to contractors, plumbers, electricians, repair shops, and similar firms.
  • Comprehensive Automobile Insurance : Protection against loss resulting from damage to the insured auto, other than loss by collision or upset.
  • Comprehensive Insurance : (Usually associated with motor vehicle insurance) Provides specified cover for damage to insured car as well as damage the insured car may cause to the property of others.
  • Comprehensive Major Medical Insurance : A policy designed to give the protection offered by both a basic and a major medical health insurance policy. It is characterized by a low deductible amount, a coinsurance feature, and high maximum benefits.
  • Comprehensive Medical Expense Insurance : A form of health insurance which provides, in one policy, protection for both basic hospital expense and major medical expense coverages. The major medical part of a comprehensive policy is characterized by a deductible amount, coinsurance, and high maximum benefits.
  • Comprehensive Personal Liability Insurance : Protection against loss arising out of legal liability to pay money for damage or injury to others for which the insured is responsible. It does not include automobile or business operation liabilities.
  • Comprehensive Physical Damage Coverage : Pays for damage to your car from theft, vandalism, flood, fire or other covered perils. This coverage is subject to the terms, limits and conditions of your policy contract.
  • Compulsory Auto Liability Insurance : Insurance laws in some states required motorists to carry at least certain minimum auto coverages. This is called "compulsory" insurance.
  • Compulsory Insurance : Any form of insurance which is required by law.
  • Compulsory Insurance Law : Law protecting accident victims against irresponsible motorists by requiring owners and operators of automobiles to carry certain amounts of liability insurance in order to license the vehicle and drive legally within the state.
  • Concealment : Deliberate failure of an applicant for insurance to reveal a material fact to the insurer.
  • Concomitant : Occurring or existing concurrently
  • Concurrent Causation : Legal doctrine that states when a property loss is due to two causes, one that is excluded and one that is covered, the policy provides coverage.
  • Condition : The portion of the insurance contract which outlines the duties and responsibilities of both the insured and the insurance company.
  • Condition precedent to liability : Conditions which must be fulfilled if the insured’s claim is to be accepted. For example, a claims co-operation condition may require an insured to make its books of account available for inspection should a loss occur.
  • Conditional Receipt : A receipt given for premium payments accompanying an application for insurance. If the application is approved as applied for, the coverage is effective as of the date of the prepayment or the date on which the last of the underwriting requirements, such as a medical examination, has been fulfilled.
  • Conditionally Renewable : Continuance provision of a health insurance policy under which the company cannot cancel the policy during its term but can refuse to renew under certain conditions stated in the contract.
  • Conditions : Provisions inserted in an insurance contract that qualify or place limitations on the insurer's promise to perform.
  • Conditions precedent to policy : "Conditions which must be fulfilled in order for a policy to be valid— e.g. the Duty of Disclosure.
  • Conditions subsequent to policy : Conditions which must be fulfilled in order for a policy to continue. An insured may be required to meet certain conditions while the policy is in force—e.g. pay the premium, maintain the premises, have the burglar alarm regularly serviced, etc.
  • Condo Insurance : A type of homeowners insurance that meets the special needs of condominium owners.
  • Confirming Sickness : An illness that confines an insured person to his home or to a hospital.
  • Consequential Loss : Financial loss occurring as the consequence of some other loss. Often called an indirect loss.
  • Conservation : The attempt by the insurer to prevent the lapse of a policy.
  • Consideration : One of the elements for a binding contract. Consideration is acceptance by the insurance company of the payment of the premium and the statement made by the prospective policyholder in the application.
  • Consideration Clause : The clause that stipulates the basis on which the company issues the insurance contract. In health policies, the consideration is usually the statements in the application and the payment of premium.
  • Contingent Annuity Option : An option under which an employee may elect to receive, under certain conditions, a reduced amount of annuity with the same income, or a specified fraction, to be paid after his death to another person designated as his contingent annuitant, for that person's lifetime. The contingent annuitant is usually the husband or the wife. (See Joint and Survivor Annuity).
  • Contingent Beneficiary : The person or persons designated to receive the benefits of a policy or plan if the primary beneficiary dies while the insured is living.
  • Contingent Commissions (or Profit Commission) : An allowance payable to the ceding company in addition to the normal ceding commission allowance, It is a pre-determined percentage of the reinsurer’s net profits after a charge for the reinsurer’s overhead, derived from the subject treaty.
  • Contingent Employers Liability Insurance : provides payment on behalf of the employer for bodily injury to an employee if that person is ineligible to receive workers compensation benefits, e.g., an "occasional" employee.
  • Contingent Fund : A reserve to cover possible liabilities resulting from an unusual happening.
  • Contingent Liability : Liability arising out of work done by independent contractors for a firm. A firm may be liable for the work done by an independent contractor if the activity is illegal, the situation does not permit delegation of authority, or the work is inherently dangerous.
  • Contingent Owner : The person to succeed as owner of a life insurance policy if the original owner dies.
  • Continuously Insured : Being continuously insured means your insurance coverage from an insurer or more than one insurer was in effect at all times, without a break or lapse in coverage for any reason.
  • Contra Proferentum Rule : The legal rule by which the words of an author are to be construed against the author. Therefore, any ambiguity in an insurer’s proposal form or policy wording will be construed against the insurer. Note that this rule will only be applied where there is a real ambiguity.
  • Contract : A binding agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is embodied in a written document called the policy.
  • Contract Holder : The group, entity or person to whom a group annuity contract is issued.
  • Contract law : the portion of civil law that interprets written agreements between parties and resolves disputes between them.
  • Contract of adhesion : occurs when one party to the contract writes it and offers other parties only the option of acceptance or rejection. In such a circumstance the law interprets any ambiguities in the contract against the party writing it.
  • Contractual Liability : Legal liability of another party that the business firm agrees to assume by a written or oral contract.
  • Contractual risk transfer : a major method of loss financing through which a legal agreement is used to transfer risk to another party.
  • Contribution : "Where an insured has two or more insurance policies which are covering the same interest against the same peril, the insured can make his/her claim in full against one or other of the insurers. The chosen insurer can then require the other insurers to make a proportional contribution towards that loss. (Given that the insurance policies are subject to the rule of indemnity, the insured is prevented from recovering from all the insurers and therefore making a profit from his/her claims).
  • Contribution by Equal Shares : Type of other-insurance provision often found in liability insurance contracts that requires each company to share equally in the loss until the share of each insurer equals the lowest limit of liability under any policy or until the full amount of loss is paid.
  • Contributory : A group insurance plan issued to an employer under which both the employer and employee contribute to the cost of the plan. Seventy-five percent of the eligible employees must be insured. (See Noncontributory.)
  • Contributory Negligence : Negligence of the damaged person that helped to cause the accident. Some states bar recovery to the plaintiff if the plaintiff was contributorily negligent to any extent. Others apply comparative negligence.
  • Convention : "A gathering of persons, such as personnel of an insurer or members of a trade association, for the purpose of conducting business and/or receiving instruction and sales ideas.
  • Conversion : "(1) Wrongful use of property by one in lawful possession of it. (2) Change of one policy form to another, usually without evidence of insurability. This usually refers to Life or Health Insurance contracts.
  • Conversion Privilege : A privilege granted in an insurance policy to convert to a different plan of insurance without providing evidence of insurability. The privilege granted by a group policy is to convert to an individual policy upon termination of group coverage.
  • Convertible Bond : A bond that offers the holder the privilege of converting the bond into a specified number of shares of stock.
  • Convertible Term Insurance : Term insurance which can be exchanged, at the option of the policyholder and without evidence of insurability, for another plan of insurance. Credit life insurance. Term life insurance issued through a lender or lending agency to cover payment of a loan, installment purchase, or other obligation, in case of death.
  • Cooling off period : A period of not less than 14 days which must be provided to Retail Clients on Retail products. During this period a client may return the policy and receive a full refund of premium unless a claim has been made.
  • Cooperative Insurance : Insurance issued by a mutual association such as a fraternal society, an employee association, an industrial association, or a trade union.
  • Coordination of Benefits (COB) : The mechanism used in group health insurance to designate the order in which the multiple carriers are to pay benefits and to prevent duplicate payments.
  • Corridor Deductible : Major medical plan deductible that excludes benefits provided by a basic plan if both a basic and a supplemental group major medical expense policy are in force.
  • Cost Basis : An amount attributed to an asset for income tax purposes; used to determine gain or loss on sale or transfer; used to determine the value of a gift.
  • Cost Containment : The controller reduction of inefficiencies in the consumption, allocation, or production of health care services that contribute to higher than necessary costs.
  • Cost of pure risk : all costs related to pure risk which includes, from the perspective of shareholders, retained risk, loss prevention costs, insurance costs, and more.
  • Cost of risk : the reduction in business value that arises as a result of risk.
  • Cost-of-Living Rider : Benefit that can be added to a life insurance policy under which the policyowner can purchase one-year term insurance equal to the percentage change in the consumer price index with no evidence of insurability.
  • Countersignature : The signature of a licensed agent or representative on a policy.
  • Cover and covers : Means the protection provided by the policy.
  • Cover note : A contract of insurance intended by the insurer to provide temporary insurance cover and which is to be replaced by another contract of insurance. Cover notes are usually issued where further particulars are to be ascertained or where the insured has been requested to comply with additional risk acceptance conditions before a more permanent insurance contract is entered into. Also called an Interim Contract of Insurance under Section 38 of the Insurance Contracts Act.
  • Coverage : The scope of protection provided under a contract of insurance; any of several risks covered by a policy.
  • Coverage for Damage to Your Auto : That part of the personal auto policy insuring payment for damage or theft of the insured automobile. This optional coverage can be used to insure both collision and other-than-collision losses.
  • Coverage Part : Any one of the individual commercial coverage parts that may be attached to a commercial policy. Under the latest commercial lines programme, a coverage part may be issued as a monoline policy or may be combined with others as part of a package policy.
  • Covered : A person covered by a pension plan is one who has fulfilled the eligibility requirements in the plan, for whom benefits have accrued, or are accruing, or who is receiving benefits under the plan.
  • Covered Expenses : Hospital, medical, and miscellaneous health care expenses incurred by the insured that entitle him/her to a payment of benefits under a health insurance policy. Found most often in connection with major medical plans, the term defines, by either description, reasonableness, or necessity to specify the type and amount of expense which will be considered in the calculation of benefits.
  • Covered Loss : Illness, injury, death, property loss, legal liability, or any other situation or loss for which an insurance company will pay benefits under a policy when such event occurs.
  • Covered Participant : A person covered by a pension plan is one who has fulfilled the eligibility requirements in the plan, for whom benefits have accrued, or are accruing, or who is receiving benefits under the plan.
  • CPA : Claims Paying Ability.
  • Credibility : A statistical measure of the degree to which past results make good forecasts of future results.
  • Credibility Factor : The weight given to an individual insured's past experience in computing premiums for future coverage.
  • Credit Health Insurance : A form of health insurance on a borrower, usually under an installment purchase agreement. The benefits cover the obligations of the borrower and are payable to the creditor.
  • Credit Insurance : A guarantee to manufacturers, wholesalers, and service organizations that they will be paid for goods shipped or services rendered. Applies to that part of working capital which is represented by accounts receivable.
  • Credit Report : A confidential report made by an independent individual or organization that has investigated the reputation and record of an applicant for insurance.
  • Crop-hail Insurance : Protection against damage to growing crops as a result of hail or certain other named perils.
  • Cross-subsidy Liability : Refers to the shortfall between contributions and claims that are not compensated for by any previous excess in the two elements.
  • CSR : Customer service representatives support the work of insurance agents with a variety of tasks that must be done within a company or agency to deliver services to and handle requests from clients.
  • CTP Insurance : Compulsory Third Party insurance (CTP Green slip in NSW) is the insurance that is needed when registering a vehicle. CTP insurance is intended for the situation where another person is injured or killed in an accident, which is caused by the driver of the insured vehicle. Loss or injury suffered by a person, normally calculated in monetary terms.
  • Current Assumption Whole Life Insurance : Non-participating whole life policy in which the cash values are based on the insurer's current mortality, investment, and expense experience. An accumulation account is credited with a current interest rate that changes over time. Also called interest-sensitive whole life insurance.
  • Currently Insured : Status of a covered person under the Old-age, survivors, and Disability Insurance (OASDI) program who has at least six quarters of coverage out of the last thirteen quarters, ending with the quarter of death, disability, or entitlement to retirement benefits.
  • Customized Vehicle : A vehicle that has been altered or has equipment or accessories not typically found in a personal vehicle.
  • Cut Rate : This term generally applies to insurance companies who charge premiums below a normal or average rate.
  • Daily Report : "An abbreviated statement of pertinent policy information with copies for the insurer, the agent, and others. It is usually the top page of a policy.
  • Damage : Loss or harm to a person or property.
  • Damages : Money that one party becomes legally obligated to pay to another party.
  • Date of Issue : The date stated in a policy as the date on which the contract was issued by the insurer. This is not necessarily the effective date of the policy.
  • Death Benefit : A payment made to a designated beneficiary upon the death of the employee annuitant.
  • Debenture : A bond that is backed only by the general credit of the issuing corporation. No specific property is pledged as security behind the loan.
  • Decedent : Same as deceased.
  • Declarations : The part of your policy that includes your name and address; the property that is being insured, its location and description; the policy period; the amount of insurance coverageand the applicable premiums.
  • Declination : Rejection of an application for insurance by the insurer.
  • Decline : To refuse. For example, the insurer may decide not to accept a proposal for insurance or perhaps decline to accept a claim.
  • Deductible : The amount of loss that is to be born by the insured prior to being able to claim under a policy. Sometimes called an “excess”.
  • Defendant : Person or entity being sued by the plaintiff.
  • Defensive Driver Discount : Certain drivers (usually over age 50) who have voluntarily taken a defensive driving course may qualify for this discount on their auto insurance premiums.
  • Deferred Annuity : An annuity providing for the income payments to begin at some specified future date.
  • Deferred Compensation : Arrangements by which compensation to employees for past or current services is postponed until some future date.
  • Deferred Group Annuity : "A type of group annuity providing for the purchase each year of a paid- up deferred annuity for each member of the group, the total amount received by the member at retirement being the sum of these deferred annuities.
  • Deficit : Any excess of debits over credits at the end of a given accounting period.
  • Deficit Carried Forward : The transfer of a debit balance from one accounting period to another.
  • Defined Benefit Plan : A pension plan stating either (1) the benefits to be received by employees after retirement or (2) the method of determining such benefits. The employer’s contributions under such a plan are actuarially determined.
  • Defined Contribution Plan : A plan under which the contribution rate is fixed and benefits to be received by employees after retirement depend to some extent upon the contributions and their earnings.
  • Deflation : An economic period characterized by falling prices, high unemployment and a generally sluggish or slow economy.
  • Degree of Risk : The amount of uncertainty that exists in a given situation. For instance, if you've chosen heads in the flip of a coin, the degree of risk present is 50%, since there is a 50% chance any flip of the coin will come up tails.
  • Delivery costs : The sum of management expenses and net commission expenses.
  • Demutualisation : The process of changing the legal structure of an insurance company from a mutual form of ownership to a stock form of ownership.
  • Dental Insurance : Individual or group plan that helps pay costs of normal dental care as well as damage to teeth from an accident.
  • Dependant : An individual who depends on another for support and maintenance.
  • Dependant Benefits : Social Security benefits available to the spouse or children of a Social Security beneficiary.
  • Dependency Period : Period of time following the readjustment period during which the surviving spouse’s children are under eighteen and therefore dependent of the parent.
  • Deposit (or Provisional) Premium : "The premium paid at the inception of a contract which provides for future premium adjustments. It is based on an estimate of what the final premium will be. See also Basic Premium.
  • Deposit Administration Group Annuity : "A type of group annuity providing for the accumulation of contributions in an undivided fund out of which annuities are purchased as the individual members of the group retire.
  • Deposit premium : "Amount paid by a client as an initial premium under a policy. The deposit premium is subject to adjustment at the end of the policy period based on, for example, claims experience. After adjustment, the insured receives a refund or is required to pay extra premium, as the case may be.
  • Deposit Term Insurance : A form of term insurance, not really involving a “deposit,” in which the first-year premium is larger than subsequent premiums. Typically, a partial endowment is paid at the end of the term period. In many cases the partial endowment can be applied toward the purchase of a new term policy, or, perhaps, a whole life policy.
  • Depreciation : The decrease in value of any property due to wear, tear, and/or time. Generally, depreciation is not an insurable loss.
  • Difference in Conditions Insurance (DIC) : “All-risks” policy that covers other perils not insured by basic property insurance contracts, supplementary to and excluding the coverage provided by underlying contracts.
  • Direct insurer : Is an insurer which deals direct with the consumer rather than through an intermediary or agent.
  • Direct Loss : Financial loss that results directly from an insured peril.
  • Direct Placement : Sale of an entire issue of bonds or stock by the issuer to one or a few large institution customers such as an insurance company without trying to market the issue publicly.
  • Direct policy : The parties to a direct insurance contract are the insurer and the original insured. The term is used to differentiate the direct policy contract from any reinsurance contract that may be arranged as a result of the direct policy contract.
  • Direct Premiums Written : The total amount of an insurer's written premiums without any allowance for premiums ceded to reinsurers.
  • Direct Response System : A marketing method where insurance is sold without the services of an agent. Potential customers are solicited by advertising in the mail, newspapers, magazines, television, radio, and other media.
  • Direct Selling System : A distribution system within the insurance industry through which insurance policies and coverages are marketed by employees of the insurer rather than independent agents.
  • Direct Writer : The industry term for a company, which uses its own sales employees to write its policies. Sometimes refers to companies, which contract with exclusive agents.
  • Disability : A condition that curtails to some degree a person's ability to carry on his normal pursuits. A disability may be partial or total, and temporary or permanent.
  • Disability Benefit : "A feature added to some life insurance policies providing for waiver of premium, and sometimes payment of monthly income, if the policy holder becomes totally and permanently disabled.
  • Disability Income Insurance : A form of health insurance that provides periodic payments to replace income when an insured person is unable to work as a result of illness, injury, or disease.
  • Disappearing Deductible : Deductible in an insurance contract that provides for a decreasing deductible amount as the size of the loss increases, so that small claims are not paid but large losses are paid in full.
  • Disaster : A disaster is said to have occurred when the normal community and organisational arrangements cannot cope with a hazard impact.
  • Disclaimer : A person may make a statement to the effect that they will not accept any responsibility for certain things which may (or may not) happen. For example, disclaimers are used to try and avoid or limit a person’s liability for breach of duty of care.
  • Disclosure Authorization Form : A form authorizing the disclosure of personal information obtained in connection with an insurance transaction. Insurers are required to give applicants advance notice of their information practices. Among other things, the form must state the kind of information collected and to whom information may be disclosed.
  • Discount : A reduction in your premium if you or your car meet certain conditions that are likely to reduce the insurer's losses or expenses. For example, auto insurance discounts are given for cars with auto theft devices and for drivers and passengers who use seat belts.
  • Discrimination : Refusal of an insurer to provide comparable insurance or use comparable rates for certain individuals or groups with basic characteristics the same as those to whom the coverage or rates are offered. Unfair discrimination is prohibited by law.
  • Dismemberment : Loss of body members (limbs), or use thereof, or loss of sight due to injury.
  • Dismemberment Insurance : A form of health insurance that provides payment in case of loss by bodily injury of one or more body members (such as hands or feet) or the sight of one or both eyes.
  • Disposable Personal Income : The personal income less personal tax and non-tax payments. It is the income available to people for spending and saving.
  • Dispute Resolution Process : A system for resolving complaints which an AFS Licence holder is required to have in place as part of their compliance with the Financial Services Reform Act (FSRA)—the FSRA is now part of the Corporations Act. The process consists of an Internal Dispute Resolution system and an External Dispute Resolution system.
  • Divided Cover : The placing of insurance on a given subject or object with more than one insurer.
  • Dividend Addition : An amount of paid-up insurance purchased with a policy dividend and added to the face amount of the policy.
  • Dividends in respect of financial year : A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  • Doctrine Of Precedent : Reliance by judges on previous judicial decisions when deciding similar cases before them.
  • Domestic Insurer : An insurance company is a domestic company in the state in which it is incorporated.
  • Domestic Insurer (or Company) : An insurer formed under the laws of the state in which the insurance is written.
  • Donor : The person making a gift.
  • Double Indemnity : A policy provision usually associated with death, which doubles payment of a designated benefit when certain kinds of accidents occur.
  • Dread Disease Insurance : Insurance providing an unallocated benefit, subject to a maximum amount, for expenses incurred in connection with the treatment of specified diseases, such as cancer, poliomyelitis, encephalitis and spinal meningitis.
  • Drive-In Claim Service : A facility maintained by an Automobile insurer in which the extent of damage to a claimant's automobile can be determined and, in many cases, a settlement made.
  • Dual Life Stock Company : A stock life insurer issuing both participating and nonparticipating policy contracts.
  • Due date : The date a policy is in force to and by when a renewal premium must be paid.
  • Duplication of Benefits : Overlapping or identical coverage of the same insured under two or more health plans, usually the result of contracts of different insurance companies, service organisations, or pre-payment plans also known as multiple coverage.
  • Duty of disclosure : A requirement under Section 21 of the Insurance Contract Act. The insured has a duty to disclose every matter known to be relevant to the insurer, or that a reasonable person in the circumstances could be expected to know to be relevant to the insurer. The duty applies up until a contract is entered into, and when it is renewed, varied, reinstated or extended. An intending insured must be advised of their duty to disclose material facts.
  • Early Retirement : Retirement of a participant prior to the normal retirement date, usually with a reduced amount of annuity. Early retirement is generally allowed at any time during a period of 5 to 10 years preceding the normal retirement date.
  • Earned Income : Employment income derived from salary, wages, commissions, or fees.
  • Earned Premium : That portion of a policy's premium payment for which the protection of the policy has already been given. For example, an insurance company is considered to have earned 75 percent of an annual premium after a period of nine months of an annual term has elapsed.
  • Earnings Test (retirement test) : Determination of the amount of Social Security benefits payable to a beneficiary after adjusting for earnings. The amount of earnings allowed before his or her benefits is indexed annually; benefits are reduced by $1 for every $3 of earnings (beginning in 1990) above the earnings test threshold.
  • EBIT : Earnings Before Interest and Tax.
  • Economic Loss : The estimated total cost, both insured and uninsured, of mishaps (such as motor vehicle accidents, work accidents, and fires); includes such factors as property damage, funeral expenses, wage loss, insurance administration costs, and medical, hospital and legal costs.
  • Economic Policy : Special type of participating whole life insurance in which the dividends are used to buy term insurance or paid-up additions equal to the difference between the face amount of the policy and some guaranteed amount.
  • Effective Date : The date on which the insurance under a policy begins.
  • Efficient level of risk : the amount of risk remaining after an individual or business pursues activities such as loss control, loss financing, and internal risk reduction, to the point where marginal benefit equals marginal cost.
  • Eighths system : A method of calculating unearned premium, usually under a proportional reinsurance treaty where premium details are provided quarterly. Risks are assumed to attach on average on the middle day of each quarter. Therefore, at the end of a calendar year, 7/8ths of premiums on policies accepted in the first quarter are assumed to be earned, with 1/8th unearned, and so on.
  • Electronic Funds Transfer (EFT) : EFT is an electronic payment method that lets you pay your premiums with automatic deductions from your checking account.
  • Elements of a Negligent Act : Four elements an injured person must show to prove negligence existence of a legal duty to use reasonable care, failure to perform that duty, damages or injury to the claimant, and proximate cause relationship between the negligent act and the infliction of damages.
  • Eligibility Date : The date on which an individual member of a specified group becomes eligible to apply for insurance under the (group life or health) insurance plan.
  • Eligibility Period : A specified length of time, frequently 31 days, following the eligibility date during which an individual member of a particular group will remain eligible to apply for insurance under a group life or health insurance policy without evidence of insurability.
  • Eligibility Requirements : This term refers to (1) the conditions which an employee must satisfy to participate in a retirement plan, one such condition begin the completion from 1 to 3 years of service with the employer, another the attainment of a specified age, such as 25, or (2) conditions which an employee must satisfy to obtain a retirement benefit, such as the completion of 15 years of service and the attainment of age 65.
  • Eligible Employees : Those members of a group who have met the eligibility requirements under a group life or health insurance plan.
  • Elimination Period : A specified number of days at the beginning of each period of disability during which no disability income benefits are paid. The elimination period may be as short as a few days or as long as one year or more.
  • Embezzlement : Fraudulent use or taking of another's property or money which has been entrusted to one's care.
  • Employee Dishonesty Coverage Form : Commercial crime insurance form drafted by the Insurance Services Office that covers the loss of money, securities, and other covered property because of any dishonest act of a covered employee or employees.
  • Employee Retirement Income Security Act (ERISA) : Legislation passed in 1974 applying to most private pension and welfare plans that requires certain minimum standards to protect participating employees.
  • Employment Stock Ownership Plan (ESOP) : A defined contribution pension plan which is designed to invest primarily in employer securities.
  • Endorsement : An amendment of the policy usually by means of a rubber stamp or rider.
  • Endorsements : An additional piece of paper, not a part of the original contract, which cites certain terms and which, when attached to the original contract, becomes a legal part of that contract.
  • Endowment : Life insurance payable to the policyholder if living, on the maturity date stated in the policy, or to a beneficiary if the insured dies prior to that date.
  • Enrolled Actuary : A person who performs actuarial service for a plan and who is enrolled with the Federal Joint Board for the Enrollment of Actuaries.
  • Enrolment Card : A document signed by an employee as notice of his/her desire to participate in the benefits of a group insurance plan.
  • Entire Contract Clause : Provision in life insurance policies stating that the life insurance policy and attached application constitute the entire contract between the parties. Entity Purchase Agreement specifies the terms for the business to buy back a deceased's share of the business's ownership.
  • Environmental Impairment Liability Insurance : A form of insurance designed to cover losses and liabilities arising from damage to property by pollution.
  • Equities : Investments in the form of ownership of property, usually common stocks, as distinguished from fixed income bearing securities, such as bonds or mortgages.
  • Equity : The money value of an insurance company that is over and above its liabilities. Liabilities include almost all of its reserves.
  • Equity in the Unearned Premium Reserve : Amount by which an unearned premium reserve is overstated because it is established on the basis of gross primium rather than net premium.
  • ERM : Enterprise Risk Management.
  • Errors and Omissions Clause : A provision in reinsurance agreements which is intended to neutralise any change in liability or benefits as a result of an inadvertent error by either party.
  • Errors and Omissions Insurance : A form of insurance that indemnifies the insured for any loss sustained because of an error or oversight on his or her part.
  • Estate : The assets and liabilities of a person left at death.
  • Estate Planning : Developing a plan to transfer all of your property from one generation to the next or within a generation.
  • Estimate : An assessment of the cost to repair your damaged property.
  • Estimated Premium : A provisional premium which is adjusted at the end of the year. For example, in Workers Compensation Insurance an estimated premium is based on estimated payrolls for the coming year. At the end of the year, final payrolls are determined and the final premium is computed.
  • Estoppel : Legal doctrine that prevents a person from denyng the truth of a previous representation of fact, especially when such representation has been relied on by the one to whom the statement was made.
  • Event : An incident or situation, which occurs in a particular place during a particular interval of time.
  • Evidence Clause : A clause in a policy which requires the insured to cooperate in the investigation of a claim by producing records and submitting to examinations. This is required to help an adjuster establish the validity of a claim. An Evidence Clause in a Health policy requires the insured to submit to physical examinations.
  • Evidence of Insurability : Any statement of proof of a person's physical condition and/or other factual information affecting his/her acceptance for insurance.
  • EWRM : Enterprise Wide Risk Management.
  • Ex gratia payment : A payment made by an insurer to a claimant as an act of grace, where no contractual entitlement to the claim exists. The insurer will make an ex gratia payment in order to maintain good will, public relations, or as a matter of social justice or some other non- contractual reason.
  • Excess : An excess on a policy is the first amount that must be contributed by the insured towards each claim. When one or more excesses apply to a policy, they will be shown on the insurance schedule.
  • Excess and Surplus Insurance : (1) Insurance to cover losses above a certain amount, with losses below that amount usually covered by a regular policy. (2) Insurance to cover an unusual or one-time risk, e.g., damage to a musician's hands or the multiple perils of a convention, for which coverage is unavailable in the normal market. (See also "Umbrella liability" and "surplus lines.")
  • Excess Insurance : Coverage designed to be in excess over one or more primary coverages, and which does not pay a loss until the loss amount exceeds a certain sum.
  • Exclusion : Restriction in your insurance policy that limits and may exclude coverage for certain perils, persons, property, or locations.
  • Exclusion or Exception : Specified conditions or circumstances, listed in the policy, for which the policy will not provide benefits.
  • Exclusion ratio : The portion of an annuity payment, considered by the tax law to be a return of your initial investment, that is not subject to income tax when received.
  • Exclusions : Specific conditions or circumstances listed in the policy for which the policy will not provide benefit payments.
  • Exclusive Agency System : An insurance distribution system within which agents sell and service insurance contracts that limit representation to one insurer and which reserve to the insurer the ownership, use, and control of policy records and expiration date. See also Captive Agent and Direct Writer, and contrast with Independent Agency System.
  • Exclusive Agent : An agent who is employed by one and only one insurance company and who solicits business exclusively for that company.
  • Exclusive Provider Organization (EPO) : People who belong to an EPO must receive their care from affiliated providers; services rendered by unaffiliated providers are not reimbursed.
  • Exclusive Remedy : A component of workers compensation statutes that bars employees injured on the job from making a tort liability claim against their employers. The benefits provided under workers compensation are the sole remedy available to injured employees. There are exceptions to this rule varying from state to state that do provide the employee with a legal venue. The failure to obtain and maintain insurance as well as wilful negligence on the part of the employer are two types of such deviations.
  • Exclusive Remedy Doctrine : Doctrine in workers compensation insurance which states that workers compensation benefits should be the exclusive or sole source of recovery for workers who have a job-related accident or disease; doctrine has been eroded by legal decisions.
  • Executor, Executrix : A fiduciary named in a will to settle an estate. An executrix is a female executor.
  • Expected claim cost : the expected value of the loss distribution for a particular group of insurance contracts 
  • Expected value : The sum of losses divided by the number of exposures; the average.
  • Expense Allowance : Compensation paid to an insurance agent in excess of prescribed commissions.
  • Expense Ratio : The ratio of a company's operating expenses to premiums.
  • Experience : A term used to describe the relationship, usually expressed as a percent or ratio, of premium to claims for a plan, coverage, or benefits for a stated time period.
  • Experience Modification Factor : Used in workers compensation rating to reflect the degree to which a particular employer has experience that is better or worse that expected for that industry. Weighted by employer's credibility factor.
  • Experience Rating : The process of determining the premium rate for a group risk, wholly or partially on the basis of that group's experience.
  • Experience Refund : A provision in most group policies for the return of premium to the policyholder because of lower than anticipated claims. 
  • Expiration Date : This date, found on your declarations page, indicates when your policy coverage runs out. Your renewal policy will start on this date.
  • Expiry date : The date upon which a policy ends. Conventionally, 23 :59 is the normal time of expiry, although this varies by type of policy and by insurer.
  • Exposure Unit : Unit of measurement used in insurance pricing.
  • Extended Coverage Insurance : Protection for the insured against property damage caused by windstorm, hail, smoke, explosion, riot, riot attending a strike, civil commotion, vehicle and aircraft. This is provided in conjunction with the fire insurance policy and the various “package” policies.
  • Extended Nonowned Coverage : Endorsement that can be added to an automobile liability insurance policy that covers the insured while driving any nonowned automobile on a regular basis.
  • Extended Reporting Period : An additional period of time after policy expiration during which valid claims will be paid under a claims-made policy of liability insurance.
  • Extended Reporting Period Endorsement : Added to a claims-made policy of liability insurance to provide additional period of time during which valid claims will be paid.
  • Extended Term Insurance : A form of insurance available as a nonforfeiture option. It provides the original amount of insurance for a limited period of time.
  • Extended Unemployment Insurance Benefit : Additional cash benefits paid by federal-state unemployment insurance programs to workers who are involuntarily unemployed and who have exhausted their regular weekly cash benefits during periods oh high unemployent.
  • Extortion : Surrender of property away from the premises as a result of a threat to do bodily harm to the named insured, relative, or invitee who is being held captive.
  • Extra Contractual Obligations (ECO) : A generic term that, when used in reinsurance agreements, refers to damages awarded by a court against an insurer which are outside the provisions of the insurance policy, due to the insurer’s bad faith, fraud, or gross negligence in the handling of a claim. Examples are punitive damages and losses in excess of policy limits.
  • Extra Expense Insurance : Type of business income insurance that covers the extra expenses incurred to continue operations after a loss has occurred.
  • Face Amount : The amount stated on the face of the policy that will be paid in case of death or at the maturity of the policy. It does not include additional amounts payable under accidental death or other special provisions, or acquired through the application of policy dividends.
  • Facility : A pooling mechanism for insureds not able to obtain insurance in the voluntary market. Insurers write and issue policies but cede premium and losses on those policies to a central pool in which all insurers share.
  • Facility of Payment : A contractual provision that allows the insurer, under stated conditions, to pay insurance benefits of up to $1,000 to a person or persons other than the insured, the designated beneficiary, or the insured's estate.
  • Factory Mutual : Mutual insurance company insuring only properties that meet high underwriting standards. Emphasizes loss prevention.
  • Facultative : Facultative reinsurance means reinsurance of individual risks by offer and acceptance wherein the reinsurer retains the “faculty” to accept or reject each risk offered.
  • Facultative Reinsurance : A type of reinsurance in which the reinsurer can accept or reject any risk presented by an insurance company seeking reinsurance. 
  • FAIR Plan : A facility, operating under a government-insurance industry cooperative program, to make fire insurance and other forms of property insurance readily available to persons who have difficulty obtaining such coverage.
  • Fair premium : the premium level that is just sufficient to fund an insurer's expected costs and provide insurance company owners with a fair return on their invested capital.
  • Fair Rental Value : Amount payable to an insured homeowner for loss of rental income due to damage that makes the premises uninhabitable.
  • Family Expense Policy : A policy which insures both the policyholder and his/her immediate dependents (usually spouse and children ).
  • Family Income Policy : Special life insurance policy combining decreasing term and whole life insurance that pays a monthly income of $10 for each $1000 of life insurance if the insured dies within the specified period. The monthly income is paid to the end of the period, at which time the face amount of insurance is paid.
  • Family Policy : A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children , including those born after the policy is issued.
  • Family Purpose Doctrine : Concept that imputes negligence committed by immediate family members while operating a family car to the owner of the car.
  • Farm Mutual : Local mutual insurance company that insures farm property in a limited geographical area primarily through assessable policies.
  • Farm owners Policy : A package policy for a farm, providing property and liability coverages against personal and business losses.
  • Farmowners-Ranchowners Policy : A package policy for a farm or a ranch, providing property and liability coverages against personal and business losses.
  • Federal Crime Insurance : Insurance against burglary, larceny, and robbery losses offered by the federal government where the Federal Insurance Administration has determined that an insurance availability problem exists.
  • Federal Crop Insurance : Comprehensive coverage at rates subsidized by the federal government for unavoidable crop losses, including those that result from hail, wind, excessive rain, drought, freezes, plant disease, snow, floods, and earthquake.
  • Federal Flood Insurance : Insurance sold by private insurers with rates subsidized by the federal government to persons who reside in flood zones and whose community joins the program and agrees to establish and enforce flood control and land-use measures.
  • Federal Surety Bond : Type of surety bond required by federal agencies that regulates the actions of business firms. It guarantees that the bonded party will comply with federal standards, pay all taxes or duties accrued, or pay any penalty if the bondholder fails to pay.
  • Federal-servant Doctrine : Common law defense blocking an injured employee from collecting workers compensation benefits if he or she sustained an injury caused in any way by the negligence of a fellow worker.
  • Fidelity Bond : General Agency System
  • Fidelity insurance : An insurance policy which covers the misappropriation of goods or money by employees.
  • Fiduciary : A person who holds something in trust for another.
  • Field : A type or line of insurance as "in the Life Insurance field."
  • Field Adjuster : An insurance adjuster who works primarily outside of an office and often meets personally with the public. Field adjusters can conduct face-to-face meetings, negotiations with claimants, scene investigations, and damage inspections.
  • Field Force : The agents and supervisory personnel of insurers who operate away from the home office in the branch offices and agencies of the company.
  • Final average formula : A pension plan formula that bases retirement benefits on earnings during recent years of employment.
  • Financed Car : A vehicle financed by a loan. The lender retains a lien on the auto until it has been paid off.
  • Financial Ombudsman Service : Any policyholder who is dissatisfied with the outcome of his or her dealings with the insurer can contact the Insurance Ombudsman Service on 1300 780 808.
  • Financial Reinsurance : "A form of reinsurance, which considers the time value of money and has loss containment provisions. One of its objectives is the enhancement of the cedant’s financial statements or operating ratios, e.g., the combined ratio, loss portfolio transfers and financial quota shares are examples.
  • Financial Services Guide (FSG) : This is a statement that must be given to a Retail Client when, or before, a Financial Service or Financial Product is provided. It contains information about the service provider, who he/she is working on behalf of, remuneration, dispute resolution and other information required by the Financial Services Reform Act (FSRA)— now in the Corporations Act.
  • Financial Statement : "The disclosure of the financial results of a firm's operations. It involves the balance sheet, profit and loss statement, and associated information.
  • Fire Insurance : Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water.
  • Fire Legal Liability : Liability of a firm or person for fire damage caused by negligence of and damage to property of others.
  • First Loss Insurance : (1) Popularly used, an insurance policy which is called upon to pay a loss before others covering the same risk. (2) A contract written in such an amount as to cover only an insured's expected loss during the policy period with no other insurance in existence.
  • First Named Insured : The first named insured appearing on a commercial policy. The latest forms permit the insurer to satisfy contractual duties by giving notice to the "first" named insured rather than requiring notice to all named insureds.
  • First Party : The first and second parties are simply the parties to an insurance contract. A third party is not a party to the contract but a party who seeks to be compensated for some injury or loss caused by the insured. A first party policy may also refer to insurance for the policyholder’s own property or person.
  • First Party Claims : A claim for damage, loss or injury made by an insured.
  • First Party Coverage : "An insurance coverage under which the policyholder collects compensation for losses from the insured’s own insurer rather than from the insurer of the person who caused the accident.
  • First Party Insurance : Insurance which applies to coverage for the insured's own property or person.
  • First Year : The term used to refer to various matters during the first year a policy is in force, such as first year premiums and first year claims.
  • First Year Commission : The commission paid on the first year's premium.
  • Fixed Amount Option : Life insurance settlement option in which the policy proceeds are paid out in fixed amounts.
  • Fixed Annuity : Annuity whose periodic payment is a guaranteed fixed amount.
  • Fixed Period Option : Life insurance settlement option in which the policy proceeds are paid out in fixed amounts.
  • Flat : Without interest or service charges. See also Flat Cancellation.
  • Flat Cancellation : A policy which is cancelled upon its effective date. Usually under a flat cancellation no premium charge is made.
  • Flat Commission : A standard scale commission paid to an agent regardless of the type of exposure or the type of policy. Contrast with Graded Commission.
  • Flat Rate : "In reinsurance, a percentage rate applied to a ceding company’s premium writings for the classes of business reinsured to determine the reinsurance premiums to be paid the reinsurer.
  • Flat Schedule : A type of schedule in group insurance under which everyone is insured for the same benefits regardless of salary, position, or other circumstances.
  • Flexible Premium Policy or Annuity : A life accident policy or annuity under which the policyholder or contract holder may vary the amounts or timing of premium payments.
  • Flexible Premium Variable Life Insurance : A life insurance policy that combines the premium flexibility feature of universal life insurance with the equity-based benefit feature of variable life insurance.
  • Flex-rating Law : Type of rating law in which prior approval of the rates is required only if the rates exceed a certain percentage above and below the rates previously filed.
  • Floaters : Insurance policies that cover property that can be moved from one location to another for both transportation perils and perils affecting property at a fixed location.
  • Flood : Means the inundation or covering of normally dry land by water which : escapes or overflows from, or cannot enter, because it is full or has overflowed, or is prevented from entering, because other water has already escaped or been released from it, the normal confines of any watercourse or lake, including any that may have been modified by human intervention, or reservoir, canal, dam or storm water channel. Flood does not mean storm water run off from areas surrounding the site or water escaping from any water main, pipe, street gutter, guttering or surface.
  • Flood Insurance : Coverage against loss resulting from the flood peril, widely available at low cost under a program developed by the private industry and the federal government.
  • Forfeitures : Amounts contributed on behalf of terminated, non-vested participants. In a pension plan, such amounts must be applied to reducing future employer contributions. In a profit-sharing plan, such amounts may be allocated to the accounts of remaining participants.
  • Form : (1) An insurance document which, when attached to a policy, makes it complete. For example, a Standard Fire policy would have to have a Business Interruption form attached to it to make up a Business Interruption policy. (2) Any rider or endorsement, such as a Deductible Endorsement "form."
  • Fortuitous loss : An unforseen loss is termed a fortuitous loss. Insurers will only insure fortuitous losses. Whilst an insurer knows that there will be motor accidents, it cannot predict which insureds will suffer a loss.
  • Franchise : A type of excess whereby claims under a certain amount are not paid. However, claims over the franchise amount are paid in full.
  • Franchise Deductible : Deductible commonly found in marine insurance contracts 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.
  • Franchise Insurance : "Insurance under individual contracts issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premiums and remit them to the insurer. The insurer usually agrees to waive its right to discontinue or modify any individual policy, unless it’s simultaneously discontinues or modifies all other policies in the same group.
  • Fraternal Insurance : A co-operative type of insurance provided by social organisations for their members.
  • Fraternal Life Insurance : "Life insurance provided by fraternal orders or societies to their members.
  • Fraternal Society : A social organisation that provides insurance for its members.
  • Fraud : The term "fraud or dishonesty" encompasses all those risks of loss that might arise through dishonest acts or omissions.
  • Fronting Arrangement : The issuance of a policy by one insurer on behalf of a second insurer because the second insurer is not licensed or admitted in the state of jurisdiction for the line of business being written. The first insurer actually issues the policy to the insured and retains legal responsibility for meeting claim payments under it, but is reinsures 100% of its exposure to the second insurer.
  • Fronting Company : A domestic insurance company that provides claims or administrative services to a captive.
  • Full Coverage : "Full coverage" is a common term that people use to describe how much auto insurance coverage they have. Though there is no such thing as "full coverage," it often implies that the policy has more than just Liability coverage.
  • Funded Retirement Plan : A plan under which funds are set aside in advance to provide for expected benefits.
  • Funding Agency : A financial institution or individual that provides for the accumulation or administration of the pension contributions that will be used to pay pension benefits.
  • Funding Instrument : An insurance contract or trust agreement that states the terms under which the funding agency will accumulate, administer, and disburse the pension funds.
  • Future Increase Option : A provision found in some policies that allows the insured to purchase additional disability income insurance at specified future dates regardless of the insured’s physical condition.
  • Future Service Benefits : Benefits accruing for service after the effective date of coverage under the plan.
  • FYE : Financial Year End.
  • Gain and Loss Exhibit : The portion of the convention blank which represents an analysis of gains, losses, and surplus during an accounting period.
  • Garaging Location : A garaging location is the place you primarily park your vehicle when you're not using it. Generally, this is your primary residence.
  • GDP : Gross Domestic Product.
  • General Average : In ocean marine insurance, a loss incurred for the common good that is shared by all parties to the venture.
  • General Damages : Damages awarded to an injured person for intangible loss which cannot be measured directly by dollars. Popularly known as "pain and suffering." General damages are distinguished from special damages which are awarded for actual economic loss, such as medical costs, loss of income, etc.
  • General Liability Insurance : Coverage that pertains, for the most part, to claims arising out of the insured's liability for injuries or damage caused by ownership of property, manufacturing operations, contracting operations, sale or distribution of products, and the operation of machinery, as well as professional services.
  • Generally Accepted Accounting Principles : These principles have substantial authoritative support for use in the insurance business. They are intended to produce financial results consistent with those of other industries and to assure consistency in financial reporting.
  • Generation skipping tax : a transfer tax imposed on gift or inheritance to those at least two generations younger than the person making the transfer
  • Glass Insurance : Protection for loss of or damage to glass and its appurtenances.
  • Good Student Discount : Reduction of automobile premium for a young driver at least sixteen who ranks in the upper 20 percent of his or her class, has a B or 3.0 average, or is on the Dean's list or honor roll. It is based on the premise that good students are better drivers.
  • Goodwill : An intangible business asset. It refers to the value of a business which has been built up through the reputation of the business concern and its owners.
  • Grace Period : A specified period after a premium payment is due, in which the policyholder may make such payment, and during which the protection of the policy continues.
  • Graded Commission : A compensation scale for agents which provides for varying commission rates depending upon the class, type, or volume of insurance written. Contrast to Flat Commission.
  • Graded Commission Scale : A commission scale providing for payment of a high first-year commission and lower renewal commissions.
  • Grantee : The buyer of property.
  • Grantor : The seller of property.
  • Gross estate : All of the assets and liabilities owned at death.
  • Gross incurred loss : The total Gross amount of paid claims and loss reserves associated with a particular time period, usually a policy year
  • Gross Line : The total limit accepted by an insurer on an individual risk, including the amount to be reinsured.
  • Gross Negligence : the intentional failure to perform a manifest duty in reckless disregard of the consequences as affecting the life or property of another.
  • Gross Premium : The premium paid by the policyholder.
  • Gross Rate : The sum of the pure premium and a loading element.
  • Gross written premium (GWP) : The total premium written and assumed by an insurer before deductions for reinsurance and ceding commissions.
  • Group Annuity : A pension plan providing annuities at retirement to a group of people under a master contract. It is usually issued to an employer for the benefit of employees. The individual members of the group hold certificates as evidence of their annuities.
  • Group Annuity Contract : A contract issued by a life insurance company that may be used as the funding instrument for benefits to be made in accordance with a pension plan. A single master contract provides that the group of persons participating in the plan will receive annuities during retirement. Individual certificates stating coverage may be issued to members of the group.
  • Group Contract : A contract of insurance made with an employer or other entity that covers a group of persons identified as individuals by reference to their relationship to the entity.
  • Group Creditor Life Insurance : Life insurance provided to debtors by a lending institution to provide for the cancellation of any outstanding debt should the borrower die. Normally term insurance limited to the amount of the loan.
  • Group Insurance : Insurance written on a number of people under a single master policy, issued to their employer or to an association with which they are affiliated.
  • Group Life Insurance : Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance.
  • Group Ordinary Life Insurance : Group insurance plan providing life insurance for employees. Traditional whole life policy is split into decreasing insurance protection and increasing cash values.
  • Group Paid-Up Life Insurance : Accumulating units of single premium whole life insurance and decreasing term insurance, which together equal the face amount of the policy. Provided through a group life insurance plan.
  • Group Permanent Plan : Type of pension plan in which cash value life insurance is issued on a group basis and cash values in each policy are used to pay retirement benefits when a worker retires.
  • Group Term Life Insurance : Most common form of group life insurance. Yearly renewable term insurance on employees during their working careers.
  • Group Universal Life Products (GULP) : Universal life insurance plans sold to members of a group, such as individual employees of an employer. There are some differences between GULP plans and individual universal life plans; for instance, GULP expense charges generally are lower than those assessed against individual policies.
  • Guaranteed Investment Contract : An investment contract with an insurer in which the insurer guarantees both principal and interest on a pension contribution.
  • Guaranteed Purchase Option : Benefit that can be added to a life insurance policy permitting the issured to purchase additional amounts of life insurance at specified times in the future without requiring evidence of insurability.
  • Guaranteed Renewable : A contract that the insured has the right to continue in force by the timely payment of premiums (1) until at least age 50 or (2) in the case of a policy issued after age 44 for at least five years from its date of issue, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force, except that the insurer may make changes in premium rate by classes.
  • Guaranteed Renewable Contract : A health policy which the company guarantees to renew for life or until the insured reaches a specified age, usually 65.
  • Guaranty Fund : A fund, derived from assessments against solvent insurance companies, to absorb losses of claimants against insolvent insurance companies.
  • GWP : Gross Written Premium.
  • Hard Market : That part of the insurance sales cycle in which competitive pricing is at a minimum as companies charge the premiums necessary to meet their underwriting losses in order to avoid insolvency and boost capacity; usually associated with a sharp decline in capacity (see "Soft market").
  • Hazard : Condition that creates or increases the chance of loss.
  • Health Insurance : Insurance providing for the payment of benefits as a result of sickness or injury. Includes various types of insurance such as accident insurance, disability income insurance, medical expense insurance, accidental death insurance, and dismemberment insurance.
  • Health Maintenance Organization (HMO) : An organization that provides a wide range of comprehensive health care services for a specified group at a fixed periodic payment. The HMO can be sponsored by the government, medical schools, hospitals, employers, labor unions, consumer groups, insurance companies, and hospital-medical plans.
  • Hedging : Technique for transferring the risk of unfavorable price fluctuations to a speculator by purchasing and selling options and futures contracts on an organized exchange.
  • High-Risk Automobile Insurer : Company that specializes in insuring motorists who have poor driving records or have been canceled or refused insurance.
  • Hold-Harmless Clause : Clause written into a contract by which one party agrees to release another party from all legal liability, such as a retailer who agrees to release the manufacturer from legal liability if the product injures someone.
  • Home Service Life Insurance : Industrial life insurance and monthly debit ordinary life insurance contracts that are serviced by agents who call on the policyowners at their homes to collect the premiums. The amount of life insurance per policy generally is larger than $1000.
  • Homeowners Insurance : Protects homeowners from losses to their homes, personal property, and some types of damage or injury to others for which the homeowner is liable. Homeowners insurance is subject to the terms, limits and conditions of your policy contract.
  • Hospice : Health care facility providing medical care and support services such as counseling to terminally ill persons.
  • Hospital Admissions Programme : An arrangement to facilitate admission of persons covered by health insurance to hospitals and to assure the prompt payment of applicable insurance benefits to hospitals.
  • Hospital Expense Insurance : A form of health insurance that provides specific benefits for daily hospital room and board and hospital services during hospital confinement. Generally the policy also provides benefits for surgical operations and for in- hospital doctor's visits, in which case the policy is referred to as a hospital and Surgical Expense Policy.
  • Hospital Indemnity : A form of health insurance which provides a stipulated daily, weekly, or monthly indemnity during hospital confinement. The indemnity is payable on an unallocated basis without regard to the actual expense of hospital confinement.
  • Hospital Medical Insurance : A term used to indicate protection which provides benefits for the cost of any or all of the numerous health care services normally covered under various health care plans.
  • Hospital Miscellaneous Services : Services other than room and board and general nursing services provided by a hospital during hospital confinement. Included are such items as x- ray examinations, laboratory tests, medicines, surgical dressings, anesthetics (including the administration thereof), and use of operating room.
  • Housekeeping : An important risk assessment issue for underwriters, housekeeping concerns an objective assessment of the extent to which an insured maintains the general cleanliness, appearance, utility and up-keep of premises. Poor housekeeping would be evidenced by excessive rubbish, congestion in work areas, deferred maintenance of machines, and general untidiness.
  • Hull Insurance : (1) Class of ocean marine insurance that covers prysical damage to the ship or vessel insured. Typically written on an "all-risks" basis. (2) Physical damage insurance on aircraft- similar to collision insurance in an automobile policy.
  • Human Life Value : For purposes of life insurance, the present value of the family's share of the deceased breadwinner's future earnings.
  • Hurricane : A tropical storm marked by extremely low barometric pressure and circular winds with a velocity of 75 miles an hour or more.
  • IBNR : Incurred but not reported the liability that an insurer has for losses that have happened but not yet reported as claims.
  • ICA : International Claims Association.
  • Immediate Annuity : An annuity providing for payment to begin immediately.
  • Immediate Participation Guarantee Plan  (IPG) : Type of pension plan in which all pension contributions are deposited in an unallocated fund and used directly to pay benefits to retirees.
  • Impaired Insurer : An insurer which is in financial difficulty to the point where its ability to meet financial obligations or regulatory requirements is in question.
  • Impairment of Capital : A condition in which the surplus account of a stock insurer has been exhausted so that it must invade the capital account (amounts contributed by stockholders) to meet liabilities.
  • Implied Authority : Authority of an agent that the public may reasonably believe the agent to have. If the authority to collect and remit premiums is not expressly granted in the agency contract, but the agent does so on a regular basis and the insurer accepts, the agent has implied authority to do so.
  • Implied condition : This is a condition that the law reads into a contract but which does not appear in the policy document—e.g. it is implied that the subject matter of the insurance does exist. The duty of utmost good faith is an implied term in all contracts of insurance.
  • Import : Goods or services purchased from another country and brought into one's own country.
  • Imputed Negligence : Case in which responsibility for damage can be transferred from the negligent party to another person, such as an employer.
  • Incontestability : Life policies provide that, except for non-payment of premiums and certain other circumstances, the policy shall be incontestable after the policy has been in force for two years during the lifetime of the insured.
  • Incontestable Clause : An optional clause which may be used in noncancelable or guaranteed renewable health insurance contracts providing that the insurer may not contest the validity of the contract after it has been in force for two (sometimes three) years.
  • Increase / Decrease in insurance funds : Change in unearned premium reserve.
  • Incurred But Not Reported : This refers to losses which have occurred during a stated period, usually a calendar year, but have not yet been reported to the insurer as of the date under consideration. For instance, insurance company statements prepared after the end of the calendar year would have to include an estimate of losses that occurred during that year but have not yet been reported.
  • Incurred Claims : Incurred claims equal the claims paid during the policy year plus the claim reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred claims.
  • Incurred Expense : Expenses not yet paid. Can also include paid expenses in some accounting systems.
  • Incurred loss : The total amount of paid claims and loss reserves associated with a particular time period, usually a policy year
  • Incurred Loss Ratio : The percentage of losses incurred to premiums earned.
  • Incurred Losses : The losses occurring within a fixed period, whether or not adjusted or paid during the same period. As an example, in Workers Compensation claims losses occur during a given policy period, but benefits may continue to be paid for many years. The estimated value of the total claim would be an "incurred loss" for the policy period during which the loss occurred.
  • Incurred-but-not- reported(IBNR) Claims : A term used for claims that are assumed to have occurred but of which the insurer has not been made aware of. These usually refer to claims that occur at the end of the financial year of the insurer and which will only be made known to the insurer in the following financial year. However, the insurer will need to account and reserve for these claims in the current financial year.
  • Incurred-but-not-reported (IBNR) reserves : liability account on an insurer's balance sheet reflecting claims that are expected based upon statistical projections but which have not yet been reported to the insurer.
  • Indemnification : Compensation to the victim of a loss, in whole or in part, by payment, repair, or replacement.
  • Indemnify : To restore the victim of a loss to the same position as before the loss occurred.
  • Indemnity : Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss. Independent Adjustor Claims adjustor who offers his or her services to insurance companies and is compensated by a fee.
  • Indemnity insurance : Type of insurance that restores the individual as close as possible to the financial position that they enjoyed before the loss.
  • Indemnity period : (applies to Business Interruption Insurance) A term used in Business Interruption insurance. It means the period beginning with the occurrence of damage and ending not later than the number of months specified in the policy schedule during which the results of the business are affected in sequence of the damage. For example, assume damage has occurred on the very last day of the period of insurance. The indemnity period starts from that date and runs until the business is no longer affected, subject of course to the number of months the client selected. If the client selects too short an indemnity period, then the consequences are similar to under-insuring a building. If the business continues to be adversely affected after the nominated indemnity period, the insured will have to carry the losses, as the policy cover has ceased.
  • Independent Adjuster : An individual who estimates losses on behalf of an insurance company, but is not an employee of that company.
  • Independent Agency System : Type of property and liability insurance marketing system, sometimes called the American agency system, in which the agent is an independent businessperson representing several companies. The agency owns the expirations or renewal rights to the business, and the agent is copensated by commissions that vary by line of insurance.
  • Independent Agent : an independent business person who usually represents two or more insurance companies in a sales and service capacity and who is paid on a commission basis.
  • Independent Contractor : One who agrees to perform according to a contract and who is not an employee.
  • Indeterminate Premium Whole Life Insurance : Nonparticipating whole life policy that permits the insurer to adjust premiums based on anticipated future experience. Initial premiums are guaranteed for a certain preriod. After the initial guaranteed period expires, the insurer can increase premiums up to some maximum limit.
  • Indexing : Adjusting of values over time to reflect the impact of inflation.
  • Individual Contract : A contract of health insurance made with an individual called the policy holder or the insured, which normally covers such individual and, in certain instances, members of his family.
  • Individual Deductible : Amount that an insured and each person of his or her family covered by the policy must pay before the group or individual medical insurance policy begins to pay for medical expenses.
  • Individual Insurance : Policies which provide protection to the policyholder and/or his/her family. Sometimes called Personal Insurance as distinct from group and blanket insurance.
  • Individual Policy Pension Trust : A type of pension plan, frequently used for small groups, administered by trustees who are authorized to purchase individual level premium policies or annuity contracts for each member of the plan. The polices usually provide both life insurance and retirement benefits.
  • Individual Retirement Account (IRA) : An account to which an individual can make save for retirement on a tax-favored basis. Contributions to a standard IRA are tax deductible for many workers; contributions to a Roth IRA are made with after-tax dollars but can be withdrawn tax-free at retirement.
  • Individual Risk Premium Modification Rating Plan : A plan which modifies the premium on large package policies by considering such factors as reduced expenses for handling costs (Expense Modification) and special characteristics of the risk not contemplated by the basic rate (Risk Modification).
  • Industrial Life Insurance : A class of life insurance that is usually issued with protection amount of less than $1,000 and premiums usually payable weekly or at most, monthly.
  • Industrial Risk Insurers : A consortium of major stock property and casualty insurers formed to write large, highly protected risks. The organization was formed in 1975 by the merger of the Factory Insurance Association and the Oil Insurance Association.
  • Inflation Factor : A loading to provide for increased medical costs and loss payments in the future due to inflation.
  • Inflation-Guard Endorsement : Endorsement added at the insured's request to a homeowners policy to increase periodically the face amount of insurance of the dwelling and other policy coverages by a specified percentage.
  • Inheritance tax : A tax on the right of an heir to receive property at the death of another.
  • Initial Past Service Liability : The actuarial value (single sum) of the past service benefits as of the effective date of the establishment of the plan, or at the date of the latest liberalization. The maximum annual past service contribution allowable for tax deduction is the amount necessary to amortize past service liabilities and other supplementary pension or annuity credits over 10 years. Funding of the past service liability over a period of 30 years (40 in some cases) is required by the Internal Revenue Service under ERISA.
  • Initial Premium : An amount paid at the inception of an insurance contract, usually subject to adjustment at the end of the policy period.
  • Initial Reserve : In life insurance, the reserve at the beginning of any policy year.
  • Injury Independent of All Other Means : An injury resulting from an accident, provided that the accident was not caused by an illness.
  • Inland Marine Insurance : A broad type of insurance, generally covering articles that may be transported from one place to another as well as bridges, tunnels and other instrumentalities of transportation. It includes goods in transit (generally excepting trans-ocean) as well as numerous "floater" polices such as personal effects, personal property, jewelry, furs, fine art and others.
  • In-Patient : A patient admitted to a hospital or other similar medical facility as a resident patient.
  • Insolvency : A situation where a person is unable to pay debts as and when they fall due for payment.
  • Insolvent : Having insufficient financial resources (assets) to meet financial obligations (liabilities).
  • Insolvent Insurer : An insurer which is unable to meet its financial obligations.
  • Inspection : Verification of a vehicle's physical condition.
  • Inspection Report : A report (usually written) of an investigation of an applicant, conducted by an independent agency that specializes in insurance investigations. The report covers such matters as occupation, financial status, health history, and moral problems.
  • Insurability : Acceptability to the company of an applicant for insurance.
  • Insurable Interest : In order to make a claim under a general insurance contract the claimant must demonstrate that at the time of loss the claimant suffered a pecuniary or economic loss. ‘Pecuniary’ means money. ‘Economic’ is a broader term and includes loss of use. This is what we now mean by an insurable interest. The claimant stands, in relation to the subject matter of insurance, to benefit by its safety or suffer some prejudice by its loss. The interest the claimant has does not need to be an interest recognised in law or in equity.
  • Insurable Risk : The conditions that make a risk insurable are (a) the peril insured against must produce a definite loss not under the control of the insured, (b) there must be a large number of homogeneous exposures subject to the same perils, (c) the loss must be calculable and the cost of insuring it must be economically feasible, (d) the peril must be unlikely to affect all insureds simultaneously, and (e) the loss produced by a risk must be definite and have a potential to be financially serious.
  • Insurance : Protection by written contract against the financial hazards (in whole or in part) of the happenings of specified fortuitous events.
  • Insurance Commissioner : The top insurance regulatory official in a state.
  • Insurance Company : Any corporation primarily engaged in the business of furnishing insurance protection to the public.
  • Insurance Examiner : The representative of a state insurance department assigned to participate in the official audit and examination of the affairs of an insurance company.
  • Insurance Exchange : Term used to describe a facility that exists in a few states to provide a market for reinsurance and for the insurance of large and unusual domistic and foreign risks that are difficult ot insure in the normal markets. Examples are the New York Insurance Exchange, the Insurance Exchange of the Americas, and the Illinois Inurance Exchange.
  • Insurance Fraud : The act of falsifying or exaggerating the facts of an accident to an insurance company to obtain payment that would not otherwise be made. Common types of insurance fraud are staged accidents, exaggerated injuries, and inflated medical bills.
  • Insurance Guaranty Funds : State Funds that provide for the payment of unpaid claims of insolvent insurers.
  • Insurance ID Card : Also known as an Insurance Card, this card is issued by your insurer and contains basic information about your insurance policy. Some states require you to keep an insurance ID card in your vehicle.
  • Insurance schedule : Sets out the information given to an insurer upon which the decision to offer cover is made. It also displays the individual details of a policy.
  • Insurance Score : Used in the underwriting process in some states. An individual's insurance score is frequently based, in part, on a person's credit history.
  • Insurance Services Offices (ISO) : Major rating organization in property and liability insurance that drafts policy forms for personal and commercial lines of insurance and provides rate data on loss costs for property and liability insurance lines.
  • Insurance to Value : Insurance written in an amount approximating the value of the property insured.
  • Insured : A person or organization covered by an insurance policy, including the "named insured" and any other parties for whom protection is provided under the policy terms.
  • Insured event : Occurrences which cause loss and damage which are listed in the relevant policy.
  • Insured or Insured Life : The person on whose life the policy is issued.
  • Insurer : The party to the insurance contract who promises to pay losses or benefits. Also, any corporation engaged primarily in the business of furnishing insurance to the public.
  • Insuring Agreement : That part of an insurance contract that states the promises of the insurer.
  • Insuring Agreement (or Clause) : That portion of an insurance contract which states the perils insured against, the persons and/or property covered their locations, and the period of the contract.
  • Insuring Clause : The clause which sets forth the type of loss being covered by the policy and the parties to the insurance contract.
  • Int : International.
  • Integration : A coordination of pension, disability or other benefit with the other sources of income, such as Social Security benefit, through a specific formula designed to ensure reasonable income replacement.. Qualified plans must integrate so that total benefits are non-discriminatory between rank and file employees and owners, officers or highly compensated employees.
  • Inter vivos Trust : A trust created while the creator of the trust is living. Also known as a living trust.
  • Interest : Money paid for the use of money.
  • Interest Option : Life insurance settlement option in which the principal is retained by teh insurer and interest is paid periodically.
  • Interest Rate Risk : A risk faced by investors who invest in bonds characterized by an individual being locked into a lower interest rate when interest rates are generally increasing in the economy.
  • Interest-Adjusted Method : Method of determining cost to an insured of a life insurance policy that considers the time cost of money by applying an interest factor to each element of cost. See Also Net payment cost index; surrender cost index.
  • Interim cover : A temporary contract of insurance (usually issued for 14–30 days) to be replaced by a Contract of Insurance (a policy) Refer to section 38 of the Insurance Contracts Act.
  • Interline Endorsement : Commercial endorsements that apply, or could apply, to more than one coverage part of a package policy.
  • Intermediary : An agent or broker who assists the public in proposing for insurance.
  • Intermediary Clause : A provision in reinsurance agreements, which identifies the intermediary, negotiating the agreement. Most intermediary clauses shift all credit risk to reinsures by providing that the cedant’s payments to the intermediary are deemed payments to the reinsurer and the reinsurer’s payments to the intermediary are not payments to the cedant’s until actually received by the cedant’s.
  • Intestate : Without a will.
  • Investment Income : The portion of a company's income which is derived from its investments, including interest and dividends on stocks and bonds.
  • Investment income (incl realised gains) : The income of a company derived from its investments as opposed to its operations.
  • Investment Only Contract : Type of funding instrument that uses only the investment services of an insurer.
  • Investment Reserve : An item in the balance sheet of an insurance company which represents a setting aside of assets to compensate for a possible reduction in the market value of securities owned by the company.
  • Involuntary Costs : insurance company costs incurred as a result of participating in insurance pools (e.g., workers compensation). Insurance companies must participate in these pools as a condition of doing business.
  • IRIS : Insurance Regulatory Information System.
  • Irrevocable Beneficiary : Beneficiary designation allowing no change to be made in the beneficiary of an insurance policy without the beneficiary's consent.
  • Irrevocable Trust : A trust in which the creator does not reserve the right to reacquire the trust property.
  • IS : International Scale or Income Statement depending on the context.
  • Joint Tenants : A form of joint property ownership with right of survivorship, i.e., in which the survivors automatically own the share of a deceased co-owner.
  • Joint Underwriting Association : A device used to provide insurance to those who cannot obtain insurance in the voluntary market. Certain companies (called carriers) issue policies at one rate level and handle claims, but the ultimate costs are borne by all companies writing insurance in that state.
  • Joint Venture : This expression is applied most often to construction ventures where several contractors agrees to combine together on a construction project rather than to act as separate contractors. Under the joint venture agreement, they share profits and losses in some agreed- upon proportion.
  • Joint-and-Several Liability : A legal principle that permits the injured party in a tort action to recover the entire amount of compensation due for injuries from any tort feasor who is able to pay, regardless of the degree of that party's negligence.
  • Joint-and-Survivor Annuity : A contract that provides income periodically, payable during the longer lifetime of two persons. The amount payable may decrease at the death of one or the other. (See Contingent Annuity Option)
  • Judgment Rates : Rates that are not backed up by loss experience statistics, but rather based on the judgment of the underwriter on an individual risk basis.
  • Judgment Rating : Rate-making method for which each exposure is individually evaluated and the rate is determined largely by the underwriter's judgment.
  • Judicial Bond : Type of surety bond used for court proceedings and guaranteeing that the party bonded willl fulfill certain obligations specified by law, for example, fiduciary responsibilities.
  • Jumbo Risk : A risk involving exceptionally high benefits.
  • Jumping Juvenile Insurance Policy : Life insurance purchased by parents for children under a specified age. Provides permanent life insurance that increases in face value five times at age twenty-one with no increase in premium.
  • Jurisdiction : The power given to courts, either by statute or constitutionally, to hear particular matters.
  • Jurisdiction Clause : A clause in a treaty wording defining the laws under which any dispute shall be resolved.
  • Kenney Rule : Concept permitting a property liability insurer to write $2 of new net premiums for each $1 of policyowners surplus.
  • Keogh (HR 10) Account : An account to which a self-employed person can make annual tax deductible contribution of the lesser of 25% of income or $30,000.
  • Key-Person Insurance : Insurance designed to protect a business firm against the loss of income resulting from the death or disability of a key employee.
  • Kidnap-Ransom Insurance : This insurance is written primarily for financial institutions and covers named employees for individual or aggregate amounts paid as ransom, with deductible requiring the insured to participate in about 10% of any loss. There are few markets for this coverage and no standardization of rates.
  • Knock-for-knock agreement :" An arrangement between motor insurers whereby each agrees to pay for its own repair costs and will forego subrogation recovery action against the other signatories, irrespective of questions of fault.
  • Labor-Management Relations Act of 1947 (Taft-Hartley Act) : This law controls conditions under which an employer may pay any money to a representative of employees.
  • Land Contract : A type of instrument used in connection with the sale of real estate. It differs from a mortgage in that title to the land remains with the seller until the buyer has completed the payments, though possession rests with the buyer. Specifically, a land contract is the instrument that conveys the deed of land from one person to another upon full payment of the stated purchase price.
  • Lapse : The termination or discontinuance of an insurance policy due to non-payment of a premium.
  • Lapsed Policy : A policy terminated for non-payment of premiums. The term is sometimes limited to a termination occurring before the policy has a cash or other surrender value.
  • Lapsed policy : A policy which has been allowed to expire because of non payment of premiums.
  • Larceny-theft : The unlawful taking, carrying, leading or riding away of another person's property.
  • Last Clear Chance Rule : Statutory modification of the contributory negligence law allowing the claimant endangered by his or her own negligence to recover damages from a defendant if the defendant has a last clear chance to avoid the accident but fails to do so.
  • Latent Defect : A defect which is not immediately apparent.
  • Law of Large Numbers : Concept that the greater the number of exposures, the more closely will actual results approach the probable results expected from an infinite number of exposures.
  • Lead Reinsurer : The reinsurer who negotiates the terms, conditions, and premium rates and first signs on to the slip. Reinsurers who subsequently sign on to the slip under those terms and conditions are considered following reinsurers.
  • Leading underwriter : The insurer who determines the terms and rating applicable to large insurance placements involving participation by several insurers. The lead usually takes the largest share of a risk, with other insurers following the lead.
  • Leased Vehicle : A vehicle rented under a long-term contract (lease). The leasing company retains ownership of the vehicle and must be shown on your insurance policy as an insured.
  • Leasehold : An agreement which gives a person the right to use and occupy property.
  • Legal Liability : Liability imposed by law, as opposed to liability arising from an agreement or contract.
  • Legal Reserve : The minimum reserve which a company must keep to meet future claims and obligations as they are calculated under the state insurance code.
  • Legal Reserve Life Insurance Company : A life insurance company operating under state insurance laws specifying the minimum basis for the reserves the company must maintain on its policies.
  • Legislative Risk : A risk faced by investors whereby changes in tax laws can result in adverse effects on the individual's investment results.
  • Letter of Credit : A financial instrument obtained from a bank guaranteeing the availability of funds to be collected in the future under a reinsurance contract. Often required in overseas markets where currency restrictions or concerns about reinsurer solvency exist.
  • Level Commission Scale : A commission scale providing for payment of commissions at the same rate every year the policy is in force.
  • Level Commission System : A system of commissions in which the first year and all renewal commissions are the same percentage of the premium.
  • Level Premium : A premium which remains unchanged throughout the life of a policy.
  • Level Premium Life Insurance : Life insurance for which the premium remains the same from year to year.The premium is more than the actual cost of protection during the earlier years of the policy and less than the actual cost in the later years. The building of a reserve is a natural result of level premiums. The overpayments in the early years, together with the interest that is to a earned, serve to balance out the underpayments of the later years.
  • Liabilities : Money owed or expected to be owed. Insurance company financial statements, for instance, show assets and liabilities.
  • Liability : Any legally enforceable obligation.
  • Liability Examiner : The liability examiner handles the investigation of the accident. These examiners' responsibilities can include collision payments, property damage payments, and bodily injury settlements. In some states, these examiners may also handle the medical portion of your claim.
  • Liability Insurance : Provides protection for the insured against loss arising out of legal liability to third parties.
  • Liability Investigation : The process of gathering information to determine the cause of an accident.
  • Liability Limits : The stipulated sum or sums beyond which an insurance company is not liable to protect the insured.
  • Liability Without Fault : Principle on which workers compensation is based, holding the employer absolutely liable for occupational injuries or disease suffered by workers, regardless of who is at fault.
  • License : A certification of authority for an agent or insurer to operate, given by the appropriate jurisdiction.
  • License and Permit Bond : Type of surety bond guaranteeing that the person bonded will comply with all laws and regulations that govern his or her activities.
  • Lien : A claim, charge, or encumbrance on property as a security for the payment of a debt.
  • Lienholder : A person or organization with a financial interest in property up to the amount of money borrowed or still owed on the property.
  • Life Annuity : A contract that provides an income for life.
  • Life Annuity With 10 Years Certain : An annuity which pays an income to the annuitant for as long as he or she lives, but if death occurs within 10 years after the annuity payments begin, payments are continued to a named beneficiary for the remainder of the 10 years.
  • Life Expectancy : The average number of years of life remaining for a group of persons of a given age according to a particular mortality table.
  • Life Income Option : Life insurance settlement option in which the policy proceeds are paid during the lifetime of the beneficiary. A certain number of guaranteed payments may also be payable.
  • Life Insurance : Insurance providing for payment of a specified amount on the insured's death, either to his or her estate or to a designated beneficiary; or in the case of an endowment policy, to the policy holder at a specified date.
  • Life Insurance (or Assurance) : "Insurance providing for payment of a specified amount on the insured’s death, either to his or her estate or to a designated beneficiary or in the case of an endowment policy, to the policy holder at a specified date.
  • Life Insurance in Force : The sum of the face amounts, plus dividend additions, of life insurance polices outstanding at a given time. Additional amounts payable under accidental death or other special provisions are not included.
  • Life Insurance Programming : Systematic method of determining the insured's financial goals, which are translated into specific amounts of life insurance, then periodically reviewed for possible changes.
  • Lifetime Disability Benefit : Disability income payable for the life of the insured as long as he is totally disabled.
  • LIFO : Last in, first out. Refers to a method of keeping inventory records for accounting purposes where the last item purchased for inventory is the first item used.
  • Limit : The maximum amount of protection purchased by the insured for a specific coverage.
  • Limitations : "Exceptions to coverage and limitations of coverage as contained in an insurance contract. For instance, a limit of liability would be one limitation on an Automobile policy. Another example would be policies written to cover only certain described automobiles, or, in the case of Liability Insurance, certain described premises.
  • Limited liability companies :" "Companies that are owned by their shareholders. The liability of its shareholders is limited to the fully paid up value of the shares.
  • Limited Partnership : "An association of two or more persons who operate and manage a business for profit; at least one the partners does not work in the business but does have some management voice and financial investment. The limited partner has limited liability.
  • Limited Payment Life Insurance : Whole life insurance on which premiums are payable for a specified number of years or until death if death occurs before the end of the specified period.
  • Limited Policy : One that covers only specified accidents or sicknesses.
  • Limits : (1) Ages below or above which the insurer will not issue a policy or above which it will not continue a policy presently in force. (2) The maximum amount of benefits payable for a given situation or occurrence, e.g. a limit of R50,000 on the contents of a home, or a R40,000 per accident limit for Property Damage
  • Limits of Liability : The amount specified in your policy up to which the insurance company will protect you.
  • Line : A colloquial term with several meanings. It may be used to mean a particular type of insurance, such as the Liability "line." It may be used to describe all the various types of insurance written for a property owner, e.g., carrying all "lines" of the XYZ Company. It is also used to describe the amount of insurance on a given property, e.g. a R250,000 "line" on buildings of the XYZ Company.
  • Line of Business : The classification of business as utilized in the insurance industry, e.g., Fire, Allied Lines and Homeowners.
  • Line Sheet : A schedule showing the limits of liability to be written by an insurer for different classes of risks. This kind of guide is also used by a ceding company to define the limits of liability it will assume on various types of exposures.
  • Liquidation : Dissolving a company by selling its assets for cash.
  • Liquidation of Insurer : "Action undertaken by a regulator to dissolve an impaired or insolvent insurer which cannot be restored to sound financial standing. Contrast with Rehabilitation of Insurer.
  • Liquidity : The ability of an insurer to convert its assets into cash to pay claims if necessary.
  • Living Benefits Rider : A rider that allows insureds who are terminally ill or who suffer from certain catastrophic diseases to collect part of their life insurance benefits before they die, primarily to pay for the care they require.
  • Living Trust : A trust created while the creator of the trust is living. Also known as an inter vivos trust.
  • Lloyd's : Generally refers to Lloyd's of London, England, an institution within which individual underwriters accept or reject the risks offered to them. The Lloyd's Corporation provides the support facility for their activities.
  • Lloyd's Association : A group of individuals who band together to assume risks are sometimes called a Lloyd's association. They are organized along the same lines as, though not connected with, Lloyd's of London. Each person is responsible only for the share of the risk that he assumes.
  • Lloyd's Broker : A person who has the authority to negotiate insurance contracts with the underwriters on the floor at Lloyd's.
  • LLoyd's of London : insurance marketplace where brokers, representing clients with insurable risks, deal with Lloyd's underwriters, who in turn represent investors. The investors are grouped together into syndicates that provide capital to insure the risks.
  • Lloyd's Syndicate : "A consortium of individual Lloyd's of London underwriters. Usually one person acts for the syndicate in accepting risks or rejecting them.
  • Lloyd's Underwriter : An individual who underwrites risks through the facility of Lloyd's. These individuals are liable only for their own assumptions of risk and not those assumed by others in the same syndicate or in the overall Lloyd's organization.
  • Loading : The amount that must be added to the pure premium for expenses, profit, and a margin for contingencies. See Expense Loading
  • Local Agent : An agent representing companies in a sales and service capacity as an independent contractor on a commission basis. A local agent usually has a small territory, and his powers are limited by contract.
  • Local insurer : Transacts business only within the country where it is registered.
  • London Market : "This refers to the international insurance and reinsurance business written in London. It consists of the following segments : international reinsurance; marine and aviation; US excess and surplus lines business; and direct overseas business written in the UK
  • Long tail business : "A term used to describe a risk or class of business that may have claims notified or settled long after risks have expired. The financial outcome for these classes will not be known with certainty for several years. Liability insurance is long tail.
  • Long-Term Care : The continuum of broad-ranged maintenance and health services to the chronically ill, disabled, or retarded. Services may be provided on an inpatient (rehabilitation facility, nursing home, mental hospital), outpatient, or at-home basis.
  • Long-Term Disability Income Insurance : Insurance issued to an employer (group) or individual to provide a reasonable replacement of a portion of an employee's earned income lost through serious and prolonged illness or injury during the normal work career. (See also Integration.)
  • Loss : Generally refers to the amount of reduction in the value of an insured's property caused by an insured peril. In an insurance sense it usually does not mean "misplacing" an item.
  • Loss Adjustment Expense : expenses incurred in the process of evaluating, defending and paying claims.
  • Loss Avoidance : A risk management technique whereby a situation or activity that may result in a loss for a firm is avoided or abandoned.
  • Loss Constant : "A flat amount included in the premium for small Workers Compensation policies, for dwellings in some jurisdictions, and for some prescribed Inland Marine Insurance lines. The purpose of the Loss Constant is to offset the greater-than-average loss experience which most small risks have when compared to all other risks in a given classification.
  • Loss control : any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.
  • Loss Development : The difference between the amount of losses initially estimated by the insurer and the amount reported in an evaluation on a later date.
  • Loss Event : The total losses to the ceding company or to the reinsurer resulting from a single cause such as a windstorm.
  • Loss Expectancy : An underwriter's estimate of the probable maximum loss to be suffered on an exposure being considered, with attention given to the expected level of loss prevention activities on the part of the insured.
  • Loss Expense - Allocated : Handling expenses, such as legal or independent adjuster fees, paid by an insurance company in settling a claim which can be definitely charged to that particular claim.
  • Loss Expense (Unallocated) : Salaries and other expenses incurred in connection with the operation of a claim department of an insurance carrier, which cannot be charged to individual claims.
  • Loss Frequency : The number of times a loss occurs over a specific period of time.
  • Loss history : The history of losses suffered by an insured or intending insured. This includes losses which were not covered by insurance.
  • Loss Occurrence : Insurance arranged on a “per occurrence” basis permits all losses arising out of one event to be aggregated together. In casualty business, the term “occurrence” is broadly defined as a sudden happening resulting in bodily injury or damage and which is neither expected nor intended. In property reinsurance, the term ‘occurrence’ is usually defined as all losses from a single event arising during a specified period of time.
  • Loss of Use : Compensation to a third-party claimant for financial consequences resulting from the inability to use property as the result of accident-related damage.
  • Loss Payable Clause : Means of protecting a mortgagee's interest in property by directing the insurer to make a loss payment to the mortgagee in the event of a loss.
  • Loss Payee : The party to whom money or insurance proceeds is to be paid in the event of loss, such as the lienholder on an automobile or the mortgagee on real property.
  • Loss Prevention : Any measure which reduces the probability or frequency of a particular loss but does not eliminate completely all possibility of that loss.
  • Loss Prevention Service : Engineering and inspection work done by an insurance company or independent organization with the aim of removing or reducing dangerous conditions in order to prevent losses.
  • Loss Ratio : A ratio calculated by divinding claims into premiums. It may be calculated in several different ways, using paid premiums or earned premiums, and using paid claims with or without changes in claim reserves and with or without changes in active reserves.
  • Loss Reserve : The amount set up as the estimated cost of a claim. (See IBNR Reserve)
  • Loss Reserve Development : how the latest estimate of an insurance company's claim obligations compares to an earlier projection.
  • Loss Severity : The amount of a loss expressed in financial terms.
  • Losses Incurred : The total losses, whether paid or not, sustained by an insurer during a given period, e.g., 12 months.
  • Losses Outstanding : A summary statement prepared by Property, Life, and Liability insurers showing claims not yet settled.
  • Losses Paid : A summary of claims paid.
  • Lost Policy Release : A statement signed by an insured releasing the insurer from all liability for a lost or mislaid contract of insurance. It is usually signed after the company has issued a replacement policy.
  • Lump-Sum Distribution : Payment within one taxable year of the entire balance payable to an employee from a trust which forms part of a qualified pension or employee annuity plan on account of that person's death, separation from service or attainment of age 59.
  • Mail Order Insurer : Type of insurance company that sells policies through the mail or other mass media, eliminating need for agents.
  • Major Medical Expense Insurance : A form of health insurance that provides benefits for most types of medical expense up to a high maximum benefit, such as $250,000 or higher after a substantial deductible, such as $500 or more. Such contracts may contain internal limits and are normally subject to coinsurance.
  • Major Medical Insurance : Health insurance to finance the expense of major illness and injury. Characterized by large benefit maximums ranging up to $250,000 or no limit, the insurance, above an initial deductible, reimburses the major part of all charges for hospital, doctor, private nurses, medical appliances, prescribed out-of-hospital treatment, drugs, and medicines. The insured person as coinsurer pays the remainder.
  • Malicious Mischief : Intentional damage of personal property with malice of forethought.
  • Malinger : To feign a disability for the purpose of continuing to collect benefits longer than actually necessary.
  • Malingering : The practice of feigning illness or inability to work in order to collect insurance benefits.
  • Malpractice : Improper care or treatment by a physician, hospital, or other provider of health care.
  • Malpractice Insurance : Coverage for a professional practitioner, such as a doctor or a lawyer, against liability claims resulting from alleged malpractice in the performance of professional services.
  • Managed Care : Health care systems that integrate the financing and delivery of appropriate health care services to covered individuals by arrangements with selected providers to furnish a comprehensive set of health care services, explicit standards for selection of health care providers, formal programs for ongoing quality assurance and utilization review, and significant financial incentives for members to use providers and procedures associated with the plan. 
  • Management expenses : "Expenses linked to managements efforts to run the day to day business. This includes amongst other things marketing & administrative expenses
  • Mandatory Valuation Reserve : A reserve required by a state law to offset any declines in the valuation of securities listed as admitted assets.
  • Manual : A book giving rates, classifications, and underwriting rules for some line of insurance. An example would be the Automobile Manual which gives such information for Automobile Insurance.
  • Manual Rate : The premium rate developed for a group insurance coverage from the company's standard rate tables normally referred to as its rate manual or underwriting manual.
  • Manuscript Policy : Policy designed for a firm's specific needs and requirements.
  • Marine Insurance : A form of insurance primarily concerned with means of transportation and communication, and with goods in transit (see "Inland Marine Insurance" and "Ocean Marine Insurance").
  • Marital deduction : A reduction of an estate for estate tax purposes, which is available if the decedent is survived by his or her spouse, can be as large as the administrator or executor elects so long as it does not exceed the value of qualifying property passing to the surviving spouse.
  • Market Price (or Market Value) : The price at which a security can be bought or sold at any particular time.
  • Market Risk : A risk experienced by those who invest in securities which is the risk of possible loss of investment since there are no guarantees associated with such investments.
  • Market value : The fair price for which something can be sold in its current condition.
  • Mass Merchandising : Plan for insuring individual members of a group, such as employees of firms or members of labor unions, under a single program of insurance at reduced premiums. Property and liability insurance is sold to individual members using group insurance marketing methods.
  • Master Policy : A policy that is issued to an employer or trustee, establishing a group insurance plan for designated members of an eligible group.
  • Master Policy (or Master Contract) : The policy issued to a group policyholder setting forth the provisions of the group insurance plan. The individuals insure under the policy are then issued certificates of insurance.
  • Material Damage : Insurance against damage to a vehicle itself. It includes automobile comprehensive, collision, fire and theft. Material damage and physical damage are terms that often are used inter- changeably.
  • Material facts : Facts which are relevant to the situation. For example, speeding fines would be relevant to a motor vehicle proposal but probably would not be relevant to a house insurance application. The Insurance Contracts Act requires a proposer to reveal facts which a "reasonable person" would think are relevant.
  • Maximum family benefit : The largest amount in Social Security benefits that will be paid to any family unit.
  • Maximum probable loss (MPL) : A term used in property insurance. It represents an estimate of the likely loss to be experienced in a “worst case” scenario, excluding catastrophe events. Some definitions assume that all fire fighting equipment, structural fire protection (e.g. fire doors) and alarms for a particular risk will fail. Other definitions assume that these items will function normally. Insurers use MPL definitions in order to arrange their reinsurance and decide how much of a risk they can retain. It also applies in reinsurance. Companies calculate estimates of the maximum probable loss they could get out of a disaster—e.g. bushfire, storm, earthquake—and buy an appropriate amount of reinsurance.
  • McCarran-Ferguson Act : Federal law passed in 1945 stating that continued regulation of the insurance industry by the states is in the public interest and that federal antitrust laws apply to insurance only to the extent that the industry is not regulated by state law.
  • MCR : Minimum Capital Requirement – Solvency.
  • Mechanical Breakdown Insurance : Covers repairs to all mechanical parts of the car, protecting you from expensive repair bills.
  • Medicaid : State programs of public assistance to persons whose income and resources are insufficient to pay for health care. Title XIX of the federal Social Security Act provides matching federal funds for financing state Medicaid programs, effective January 1, 1966.
  • Medical Claim Examiner : The medical claim examiner is responsible for reviewing all medical bills, replacement/essential services, and lost wages submitted to the company for injuries sustained by you and/or the passengers in your vehicle (depending upon the state in which you live and the coverage on your policy).
  • Medical Examination : The examination given by a qualified physician to determine to the insurability of an applicant. A medical examination may also be used to determine whether an insured claiming disability is actually disabled.
  • Medical Expense Insurance : A form of health insurance that provides benefits for expenses incurred for medical care. This form of health insurance provides benefits for expenses of physicians, hospital, nursing, and related health services, and supplies. These benefits may be related to actual expense, specified sums, or services rendered. Such insurance sometimes includes benefits for prevention and diagnosis as well as treatment.
  • Medical malpractice : Improper care or treatment by a physician, hospital, or other provider of health care.
  • Medical Payments Coverage : Pays medical expenses related to an automobile accident. This coverage is subject to the terms, limits and conditions of your policy contract.
  • Medical Payments Insurance : A coverage, available in various liability insurance policies, in which their insurer agrees to reimburse the insured and others, without regard for the insured's liability, for medical or funeral expenses incurred as the result of bodily injury or death by accident under specified conditions.
  • Medicare : A program of Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B) protection provided under the Social Security Act.
  • Medigap : A term sometimes applied to private insurance products that supplement Medicare insurance benefits.
  • Merit Rating : A type of rating plan used in several forms of insurance but most commonly in Personal Auto. It is a method whereby the insured's premium will vary up or down depending on his own past loss record.
  • Mgmt : Management.
  • Minimum Benefits : A provision that a minimum amount of annuity will be paid if the regular benefit formula produces less. This minimum is usually payable only if certain service requirements are met at retirement.
  • Minimum Group : The least number of employees permitted under a state law to effect a group for insurance purposes; the purpose is to maintain some sort of proper division between individual policy insurance and the group forms.
  • Minimum Premium : The smallest amount of premium for which an insurer will issue coverage under a given policy.
  • Minimum Premium Plan (MPP) : 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.
  • Miscellaneous Expenses : Expenses in connection with hospital insurance, hospital charges other than room and board, such as X-rays, drugs, laboratory fees, and other ancillary charges. (Sometimes referred to as ancillary charges.)
  • Miscellaneous Hospital Expense Benefit : A provision in a hospital expense policy providing for the payment of a benefit for expenses for necessary hospital services and supplies during a period of hospital confinement. Expenses commonly covered under this benefit include those for x-ray examinations, laboratory tests, medicines, surgical dressings, anesthetics (including administration thereof), and use of operating room.
  • Misrepresentation : A false, incorrect, improper, or incomplete statement of a material fact, made in the application for a policy.
  • Mixed Insurer (or Company) : An insurance company in which the ownership is split among stockholders and policy owners. The term can also be used to indicate an insurer issuing both Life and Health Insurance policies. It is often erroneously used to describe an insurer offering both participating (dividend paying) and nonparticipating plans.
  • Mode of Premium Payment : The frequency with which premiums are paidþmonthly, quarterly, semiannually, or annually.
  • Money purchase plan : a pension plan design in which a plan sponsor’s obligation is defined in terms of the contribution it makes on behalf of the employee.
  • Monoline Policy : Any insurance coverage written as a single line policy. Contrast with Multiple Line or Package policy.
  • Moral Hazard : Hazard arising from any nonphysical, personal characteristic of a risk that increases the possibility of loss or may intensify the severity of loss for instance, bad habits, low integrity, poor financial standing.
  • Morbidity : The incidence and severity of sicknesses and accidents in a well-defined class or classes or persons.
  • Morbidity Tables : Actuarial statistics showing the frequency and duration of disability.
  • Mortality Table : A statistical table showing the death rate at each age, usually expressed as so many per thousand.
  • Motor Vehicle Report (MVR) : A report from the agency that issues your driver's license, listing accidents and violations that appear on your driving record. This report is used to verify information provided by insurance applicants and policyholders.
  • Multi-Employer Plan : A plan maintained according to a collective bargaining agreement, to which more than one employer contributes. Under ERISA, at the beginning of the plan, no single employer may contribute as much as 50% of the total, and thereafter as much as 75%. An employee may change employers within the group without losing retirement benefits unless a break in service (under the plan) cancels credits earned before the break.
  • Multi-Peril Policies : Policies which cover a number of perils, such as fire, burglary, and liability, in a single contract.
  • Multi-Peril Policy : A package policy which provides protection against a number of separate perils. Multi-peril policies are not necessarily multiple line policies, since the combined perils may be all within one insurance line. 
  • Multiple Employer Trust (MET) : A legal trust established by a plan sponsor that brings together a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or self-funded basis.
  • Multiple Line Policy : "A policy that includes several different coverages such as Property, Liability, and Crime. Any personal or commercial package policy.
  • Mutual Benefit Association : An organization offering benefits to members on a plan under which no fixed premiums are paid in advance but assessments are levied on members to meet specific losses as they occur.
  • Mutual Fund : An investment company that raises money by selling its own stock to the public. It then invests the proceeds in other securities and the value of its own stock fluctuates with its experience with the securities in its portfolio. Mutual funds are of two types : (1) Open- end, in which capitalization is not fixed and more shares may be sold at any time. (2) Closed-end, in which capitalization is fixed and only the number of shares originally authorized may be sold.
  • Mutual Insurance Company : An insurance company in which the ownership and control is vested in the policyholders and a portion of surplus earnings may return to policyholders in the form of dividends. No capital stock exists.
  • Mutual Insurer : An incorporated insurer without incorporated capital owned by its policyholders. Although mutual insurers do distribute their earnings to their policyholders in the form of dividends, the term should not be used in a sense that makes it synonymous with participating. In most jurisdictions, a mutual insurer is free to issue nonparticipating insurance if it chooses and a stock insurer is free to issue participating insurance.
  • Mutual Insurer Policy : Insurance issued by a mutual insurer.
  • Mutualisation : The process of converting a stock insurer to a mutual insurer accomplished by having the insurer buy stock and retires it.
  • Named Insured : The person or entity listed on the policy declarations page.
  • Named Perils : 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. Examples of named perils are fire, windstorm, theft, smoke, etc.
  • National Association of Insurance Commissioners (NAIC) : The association of insurance commissioners of various states formed to promote national uniformity in the regulation of insurance.
  • National Insurance Crime Bureau (NICB) : A not-for-profit organization that partners with insurers and law enforcement agencies to facilitate the identification, detection, and prosecution of insurance criminals. The NICB receives support from over 1,000 property/casualty insurance companies.
  • Natural Death : Death by means other than accident or homicide.
  • NAV : Net Asset Value.
  • Negligence : Failure to use the care that a reasonable and prudent person would have used under the same or similar circumstances.
  • Net income after tax : The insurer's total earnings (or profit).
  • Net incurred loss : The total amount of paid claims and loss reserves associated with a particular time period, less the reinsurance portion.
  • Net Interest Earned : The average interest earned by an insurer on its investments after investment expense but before federal income taxes.
  • Net Loss : The amount of loss sustained by an insurer after giving effect to all applicable reinsurance, salvage, and subrogation recoveries.
  • Net Premium : The portion of the premium rate which is designed to cover benefits of the policy, but not expenses, contingencies, or profit. The term is also used to describe the portion of the premium remitted to the home office by an agent after deduction of the agent's commission.
  • Net premiums earned : That portion of a policy's premium that applies to the expired portion of the policy, net of reinsurance premiums.
  • Net Retention : The amount of insurance that a ceding company keeps for its own account and does not reinsure.
  • Net written premium (NWP) : Written premium less deductions for commissions and ceded reinsurance.
  • Net written premiums : premium income retained by insurance companies, directly or through reinsurance, after payments made for reinsurance.
  • New for old : (usually referred to as replacement and reinstatement) - Replacing your existing old damaged items or equipment with new ones.
  • No claim bonus : The amount by which a renewal premium is reduced as a result of no claims being made during the preceding period of insurance.
  • No-Fault : A type of auto insurance mechanism whereby the right to sue another party for damages caused by negligence is limited and, in exchange, expanded first party benefits are offered.
  • No-fault Automobile Insurance : A form of insurance by which a person's financial losses resulting from an automobile accident are paid by his or her own insurer regardless of who was at fault.
  • No-fault Insurance : May pay for your medical treatment, lost wages, or other accident-related expenses regardless of who caused the accident. This coverage is subject to the terms, limits and conditions of your policy contract and is not available in all states.
  • Non-admitted Assets : Assets that do not qualify under law for insurance statement purposes. Examples would be furniture, fixtures, agents' debit balances, and accounts receivable which are over ninety days old.
  • Non-admitted Insurance Company : An insurance company not licensed to do business in a particular state; such a company, however, may sell excess and surplus insurance in that state if admitted insurers lack the capacity or expertise.
  • Non-Admitted Reinsurance : A Company is “non-admitted” when it has not been licensed and thereby recognised by appropriate insurance governmental authority of a country. Reinsurance is “non-admitted” when placed in a nonadmitted company and therefore may not be treated as an asset against reinsured losses or unearned premium reserves for insurance company accounting and statement purposes.
  • Non-assessable Policy : A policy for which the policy owner pays a set premium. No additional premiums or amounts can be assessed. These are issued primarily by stock insurers, but can also be issued by mutual insurers who qualify to do so by meeting certain standards under state laws.
  • Non-assignable : A policy that the owner cannot assign to a third party. Most policies are nonassignable unless approval is given by the insurer.
  • Non-cancellable : A contract that the insured has the right to continue in force by the timely payments of premiums set forth in the contract (1) until at least age 50 or (2) in the case of a policy issued after age 44 for at least five years from its date of issue, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force.
  • Non-cancellable Guaranteed Renewable Policy : An individual policy which the insured person has the right to continue to force until a specified age, such as to age 65, by the timely payment of premiums. During this period, the insurer has no right to unilaterally make any changes in any provision of the policy while it is in force.
  • Non-confining Sickness : A sickness that disables the insured person but does not confine him to his home or a hospital.
  • Non-contributory : A term applied to employee benefit plans under which the employer bears the full cost of the benefits for the employees. One hundred percent of the eligible employees must be insured.
  • Non-disabling Injury : An injury, which may require medical care, but does not result in loss of working time or income.
  • Non-disabling Injury Benefit : A benefit in some disability income policies providing payment for medical expense due to injury when medical care is necessary but the insured is not totally disabled.
  • Non-disclosure : "This must be distinguished from misrepresentation. Misrepresentation is the provision of information which is subsequently found to be incorrect. Whereas, non-disclosure is the withholding of information from an insurer. If there has been non-disclosure prior to inception then the insurer is able to cancel the contract and may also reduce its liability to the insured. If the non-disclosure was fraudulent then the insurer has the right to avoid the contract from its inception. If the insured's non-disclosure was innocent, then in order to reduce its liability under the policy the insurer must prove that, had it known the true situation at the time, the policy terms and/or premium would have been different. Liability is reduced to an amount that puts the insurer in the same position they would have been in had the non- disclosure not occurred. Where an insured fails to answer a question, or gives an obviously incomplete or irrelevant answer to a question, the insurer is deemed to have waived compliance with the duty of disclosure unless the insurer makes enquiry and follows up the defective information.
  • Non-forfeiture Option : One of the choices available if the policyholder discontinues premium payments on a policy with a cash value. This, if any, may be taken in cash, as extended term insurance or as reduced paid-up insurance.
  • Non-insurable Risk : A risk that cannot be measured actuarially or in which the chance of loss is so high that insurance cannot be written against it.
  • Non-medical Limit : The maximum face value of a policy that a given company will issue without the applicant taking a medical examination.
  • Non-occupational Policy : "One that provides off-the-job coverage only it does not cover loss resulting from accidents or sickness arising out of or in the course of employment or covered under any workers' Compensation law.
  • Non-participating Insurance : Plan of insurance under which the policy-holder is not entitled to share in the dividend distribution of the company.
  • Non-participating Policy : A life insurance policy in which the company does not distribute to policyholders any part of its surplus. Note should be taken that premiums for nonparticipating polices are usually lower than for comparable participating polices. Note should also be taken that some nonparticipating polices have both a maximum premium and a current lower premium. The current premium reflects anticipated experience that is more favourable than the company is willing to guarantee, and it may be changed from time to time for the entire block of business to which the policy belongs.
  • Non-profit Insurers : Persons organised under special laws to provide hospital, medical, or dental insurance on a non-profit basis. The laws exempt them from certain types of taxes.
  • Non-Renewal : When an insurer decides not to renew a policy at the end of its policy period.
  • Non-resident Agent : An agent licensed in a state in which he does not live.
  • Non-valued Policy : A policy that is not valued; that is, when the policy is written, the amount to be paid in the event of a loss is not stated. Most property policies are nonvalued.
  • Not Taken : Policies applied for and issued but rejected by the proposed owner and not paid for.
  • Notice of Cancellation : Written notice by an insurer of intent to cancel insurance, or written notice by an insured requesting cancellation.
  • Notice of Loss : Notice to an insurer that a loss has occurred. Notice of loss is a condition of most policies, and it is frequently required within a given time and in a particular manner.
  • Notice To Company : Written notice to an insurer of the occurrence of an event on which a claim is to be based.
  • Nuisance Value : "An amount that an insurance company will pay to settle a claim not because it is a valid claim but because the company considers it worth that amount to dispose of it.
  • Occasional Driver : A person who is not the primary or principal driver of the insured vehicle is an occasional driver.
  • Occupational Accident : "An accident arising out of or occurring in the course of one's employment and caused by hazards inherent in or related to it.
  • Occupational Hazards : Occupations which expose the insured to greater than normal physical danger by the very nature of the work in which the insured is engaged, and the varying periods of absence from the occupation, due to the disability, that can be expected.
  • Occurrence : An accident, including continuous or repeated exposure to substantially the same general, harmful conditions, that results in bodily injury or property damage during the period of an insurance policy.
  • Occurrence policy : A liability insurance policy that covers claims arising out of occurrences that take place during the policy period, regardless of when the claim is filed.
  • Occurrence wording : A term used in liability insurance. It refers to a policy under which the circumstances giving rise to a claim must occur during the period of insurance. Claims under such a contract may arise many years after the occurrence of an event and this created problems for insurers both in terms of rating adequacy and claims reserving. These problems gave rise to the development of “claims made” wordings, under which claims must be made against the insured during the period of insurance in order for the insurer to provide an indemnity.
  • Ocean Marine Insurance : Coverage on all types of vessels, including liabilities connected with them, and on their cargoes.
  • Odds : The probable frequency of incidence of a given occurrence in a statistical sample. It is expressed as a ratio to the probable number of nonoccurrences or as a decimal fraction of the total occurrences.
  • Offer : The terms of a contract proposed by one party to another. In Property and Casualty Insurance, submitting an application to the company is usually considered an offer. In Life Insurance, the application plus the initial premium constitutes an offer.
  • Offset Clause : A provision in reinsurance agreements that permits each party to net amounts due against those payable before making payment. This is especially important in the event of insolvency of one party that ceases to remit amounts due to the other.
  • Omnibus Clause : "An agreement in most Automobile Liability policies and some others that, by its definition of insured, extends the protection of the policy to others within the definition without the necessity of specifically naming them in the policy. An example would be a policy which covers the named insured and ""those residing with him.""
  • Op cash flow : Operating cash flow.
  • Open policy : "Provides cover for all risks of a certain type during a set period of time. The sum insured is then adjusted for the actual total sum insured. Commonly used for marine cargo policies and construction policies.
  • Open Rating : A system whereby a state allows an insurer to use rates without prior approval.
  • Operating Ratio : The sum of expenses and losses expressed as a percent of earned premium.
  • Operating result : The sum of underwriting result and investment income.
  • Operating statements : Details of revenues, expenses and profits for a specific accounting period.
  • Operative clause : The insuring clause of a policy document which sets out the cover provided under the policy.
  • Optionally Renewable Contract : A contract of health insurance in which the insurer reserves the right to terminate the coverage at any anniversary or, in some cases, at any premium due date, but does not have the right to terminate coverage between such dates.
  • Ordinary Life : Synonymous With Whole Life and Straight Life The three terms are applied to the type of policy which continues during the whole of the insured's life and provides for the payment of amount insured at this death.
  • Ordinary Life Insurance : Life insurance usually issued in amounts of $1,000 or more with premiums payable on an annual, semi-annual, quarterly or monthly basis.
  • Original Equipment Manufacturer Parts : Auto parts obtained from the original manufacturer of the car or the supplier of the original part.
  • Other Insurance Clause : A provision found in almost every insurance policy except Life and sometimes Health stating what is to be done in case any other contract of insurance embraces the same property and/or hazards. See also Nonduplication of Benefits and Apportionment.
  • Outstanding claims : The aggregate liabilities (total case reserves less amounts paid) faced by an insurer under lodged claims that at any point in time have not been finalised.
  • Outstanding Premiums : Premiums due but not yet collected.
  • Overhead Expense Insurance : A special form of health insurance designed to help offset overhead expenses such as office rent, utilities, employees' wages, and auditors' fees, incurred during total disability. The monthly payments during disability is not a fixed amount of indemnity as on regular disability polices, but the amount of overhead expense actually incurred, or a percentage thereof, up to the limit specified in the policy.
  • Overhead Insurance : A type of short-term disability income contract that reimburses the insured person for specified, fixed monthly expenses, normal and customary in the operation and conduct of his/her business or office.
  • Overinsured : A term used to describe the condition that exists when an insured has purchased coverage for more than the actual value or replacement cost of a subject of insurance. It is also used to describe a situation where so much insurance has been obtained it constitutes a moral hazard.
  • Overlapping Insurance : Coverage from two or more policies or insurers which duplicates coverage of certain risks. See also Concurrent Insurance.
  • Overline : (1) The amount of insurance or reinsurance exceeding an insurer's or reinsurer's normal capacity inclusive of automatic reinsurance facilities.
    (2) A commitment by an insurer or reinsurer above and beyond normal facilities or capacities.
  • Overriding Commission : (1) A commission which an agent or broker may receive on any business sold in his exclusive territory by subagents. Also sometimes called "overwriting" or "overriding."
    (2) An allowance paid to a ceding company over and above the acquisition cost to allow for overhead expenses, often including a margin for profit.
  • Over-the Counter Market : A means of buying and selling securities that are not listed on a stock exchange. Negotiations are carried out by telephone or computer network.
  • Ownership of Expirations : An agreement by an insurer that certain information regarding the details of a policy, usually a Property or Liability form, will be revealed to no agent or broker other than the originating agent.
  • Package Policy : A combination of two or more individual polices or coverages into a single policy. A homeowners policy, for example, is a package combining property, liability and theft coverages for the homeowner.
  • Paid Losses : The amount actually paid in losses during a specified period of time, not including estimates of amounts that will be paid in the future for losses that occurred then.
  • Paid-For : Insurance on which the premium has been paid.
  • Paid-In Capital : The amount paid for the stock sold by a corporation.
  • Paid-In Surplus : Surplus paid in by stockholders, as contrasted with surplus earned through the operations of a business.
  • Paid-up Insurance : Insurance on which all required premiums have been paid. The term is frequently used to mean the reduced paid-up insurance available as a nonforfeiture option. 
  • Paramedic : (1) A person having professional training in some area of medical care but who is not a doctor. (2) An adjective used to denote training or treatment by paramedical personnel.
  • Paramedical Examination : Physical examination of an applicant by a trained person other than a physician.
  • Parent Company : The senior company in a group or fleet of insurers.
  • Partial Disability Benefit : A benefit sometimes found in disability income policies providing for the payment of reduced monthly income in the event the insured cannot work full time and/or is prevented from performing one or more important daily duties pertaining to his occupation.
  • Partial Loss : A loss covered by an insurance policy which does not completely destroy or render worthless the insured property.
  • Participating (Par) : (1) Insurance that pays policy dividends. In other words, it entitles a policy owner to participate in allocations of the insurer's surplus. In Life Insurance there are several options available for the use of such dividends. (2) Insurance that contributes proportionately with other insurance on the same risk.
  • Participating Insurance : Insurance issued by an insurance company providing participation in dividend distribution.
  • Participating or Pro Rata Reinsurance : Includes Quota Share, First Surplus, Second Surplus, and all other sharing forms of reinsurance whereunder the reinsurer participates pro rata in all losses and in all premiums.
  • Participating Policy : One under which the policy owner is entitled to receive shares of the divisible surplus of the insurer. Such shares are commonly called dividends.
  • Partnership Entity : The partnership considered as an entity and not in terms of its individual part-owners.
  • Party Wall : A common wall between two buildings.
  • Passive Restraint System : A passenger safety system, such as an air-bag, that activates automatically in the event of an accident.
  • Payee : The person receiving money.
  • Payment Plans : Your auto insurance premium can be paid using one of our installment payment plans; you make several smaller payments but incur a service fee.
  • Payment Recovery : If your car is damaged because of another driver's negligence and you ask Magma HDI to settle the claim for damage to your vehicle, we will seek to recover your deductible and our payments from the other party. This process of payment recovery is also called subrogation.
  • Payment Recovery Examiner : The Payment Recovery Examiner is responsible for recovering your deductible from the other party's insurance company.
  • Pension Benefit Guaranty Corporation (PBGC) : The Federal body responsible for administering the plan termination insurance program under ERISA.
  • Pension Benefits : A series of payments to be provided in accordance with the plan of benefits.
  • Pension Plan : A plan established and maintained by an employer, group of employers, union or any combination, primarily to provide for the payment of definitely determinable benefits to participants after retirement. 
  • Per Risk Excess Reinsurance : Retention and amount of reinsurance apply “per risk” rather than on a per accident or event or aggregate basis.
  • Percentage Participation : A provision in a health insurance contract that the insurer and insured will share covered losses in agreed proportions. Also see Coinsurance.
  • Peril : The cause of a possible loss, such as fire, windstorm, theft, explosion, or riot.
  • Period of cover : Means the current period for which we have agreed to provide you with insurance cover. The current period is shown on the most recent of your insurance schedule and renewal notice and any receipt we may send to you. When we make a write-off payment, the period of cover comes to an end.
  • Permanent Life Insurance : A phrase used to cover any form of life insurance except term; generally insurance that accrues cash value, such as whole life or endowment.
  • Persistency : The degree to which policies stay in force through the continued payment of renewal premiums.
  • Personal Advice : A statement which influences or is intended to influence a person to purchase a particular financial service or product and which takes into account one or more of a person’s individual circumstances. This is a Financial Services Reform Act (FSRA) term—the FSRA is now part of the Corporations Act.
  • Personal Articles Floater : A form of coverage designed to meet the needs for insurance on property of a moveable nature. The coverage usually protects against all physical loss, subject to special exclusions and conditions. Examples of property covered include jewelry, furs, silverware, fine arts.
  • Personal Assets : Wealth and things of value accumulated and owned by an individual. These would include real estate, cash, investments and other items of value.
  • Personal Injury Protection (PIP) : First-party no-fault coverage in which an insurer pays, within the specified limits, the wage loss, medical, hospital and funeral expenses of the insured.
  • Personal liability insurance : Insurance covering the personal liability an insured may have to others as a result of being negligent.
  • Personal Lines : Those types of insurance, such as auto or home insurance, for individuals or families rather than for businesses or organizations.
  • Personal Property : Property that is not land or connected to land (real estate), such as furniture or jewelry.
  • Personal Property of Others : Property, other than real property, which is not owned by an insured. Liability forms have traditionally excluded coverage for property of others in an insured's care, custody or control. Modern homeowner forms and commercial property forms provide some coverage for property of others.
  • Personal representative : A person appointed through the will of a deceased or by a court to settle the estate of one who dies.
  • Personal Valuables : For most people, their Home contents include personal valuables which they often wear or take with them when they are away from their home. Cover for these items is often limited.
  • Physical Damage : Damage to or loss of the auto resulting from collision, fire, theft or other perils.
  • Physical Hazard : Any hazard arising from the material, structural, or operational features of the risk itself apart from the persons owning or managing it.
  • Physician's Expense Insurance : Coverage which provides benefits toward the cost of such services as doctor's fees for nonsurgical care in the hospital, at home or in a physician's office, and X-rays or laboratory tests performed outside the hospital.
  • Pilferage : "Petty theft, particularly theft of articles in less than package lots. This term is associated with the insuring of cargo under an Inland Marine Insurance form.
  • Plaintiff : A person or entity bringing civil proceedings against some other party.
  • Plan Administrator : The person or persons controlling the money or property contributed to the plan, usually designated in the plan agreement.
  • Point-of-Service Plans : Often known as open-ended HMOs or PPOs, these plans permit insureds to choose providers outside the plan yet are designed to encourage the use of network providers.
  • Policy : The legal document issued by the company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract or the contract.
  • Policy Anniversary : The anniversary of the date of issue of a policy as shown in the policy declarations.
  • Policy Change : Any change made to your insurance policy during the period that the policy is in force.
  • Policy Dividend : A refund of part of the premium on a participating life insurance policy reflecting the difference between the premium charged and actual experience.
  • Policy Loan : A loan made by a life insurance company from its general funds to a policyholder on the security of the cash value of a policy.
  • Policy Owner : (1) The person who has ownership rights in an insurance policy and who may or may not be either the policyholder or the insured. (2) Often used loosely to refer to the policyholder and/or the insured. See also Insured.
  • Policy Period (or Term) : The period during which the policy contract affords protection, e.g., six months or one or three years.
  • Policy Reserves : The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. Reserves are required by law to be so calculated that, together with future premium payments and anticipated interest earnings, they will enable the company to pay all future claims.
  • Policy schedule : A notice showing the particular details of a policy.
  • Policy Term : That period for which an insurance policy provides coverage.
  • Policy Year : The period between policy anniversary dates.
  • Policy Year Experience : The measure of premiums and losses for each 12-month period a policy is in force. Losses occurring during this 12-month period are assigned to the period regardless of when they are actually paid.
  • Policyholder : A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.
  • Policyholder's Surplus : "The amount over and above liabilities available for an insurer to meet future obligations to its policyholders. In the case of a mutual insurer, it is the whole equity section of the balance sheet. In the case of a stock insurer, the equity section is divided into two parts, stockholder's surplus and policyholder's surplus.
  • Policywriting Agent : An agent who has the authority to prepare and effect an insurer's policy.
  • Pollution Liability : Exposure to lawsuits for injury or cleanup costs that result from pollution damage.
  • Pool : An organization of insurers or reinsurers through which particular types of risk are underwritten and premiums, losses and expenses are shared in agreed-upon amounts.
  • Portability : The transfer of pension rights and credits when a worker changes jobs.
  • Portfolio : All of the insurer's in-force policies and outstanding losses, with respect to described segments of its business. Also, the total securities owned by an insurer.
  • Portfolio Reinsurance : In transactions of reinsurance, it refers to all the risks of the reinsurance transaction, For example, if one company reinsures all of another’s outstanding Automobile business, the reinsuring company is said to assume the “portfolio” of Automobile business and it is paid the total of the premium on all the risks so reinsured (less some agreed commission).
  • Portfolio Run-off : The opposite of Return of Portfolio - permitting premiums and losses in respect of in-force business to run to their normal expiration upon termination of a reinsurance treaty.
  • Post-retirement : Relating to the period following retirement.
  • Post-retirement Healthcare Liability : Relates to the liability incurred by members of a medical scheme following retirement. Can be divided into two parts; Employer portion (Contractual Liability) – The portion of the post-retirement contributions for which the company foots the bill. Employee portion – The portion of the contributions for which the member bears responsibility.
  • Power of Attorney : (1) The authority given to one person or corporation to act for and obligate another to the extent set forth in the agreement creating the power. (2) The authority given to the chief administrator of a reciprocal insurance exchange, who is called an attorney in fact, by each subscriber.
  • Pre-accident Condition : The state of the vehicle before the accident, including damage not related to the accident, mileage, options, and other factors.
  • Preadmission Certification : Process in which a health care professional evaluates an attending physician’s request for a patient’s admission to a hospital by using established medical criteria.
  • Precedent : A judge-made decision considered to be applicable in a later case.
  • Precedent condition : A condition which must be met beforehand. It may need to be met before a policy is issued or before a claim will be considered.
  • Precertification Authorization : "A cost containment technique which requires physicians to submit a treatment plan and an estimated bill prior to providing treatment. This allows the insurer to evaluate the appropriateness of the procedures, and lets the insured and physician know in advance which procedures are covered and at what rate benefits will be paid.
  • Pre-emptive Right : A current stockholder's right to maintain his or her proportionate ownership in a corporation through the exercising of this right to purchase new issues of stock before the public.
  • Pre-existing Condition : A physical and/or mental condition of an insured which first manifested itself prior to the issuance of his/her policy or which existed prior to issuance and for which treatment was received.
  • Preferred Provider Organisation (PPO) : An arrangement whereby a third-party payer contracts with a group of medical care providers who furnish services at lower than usual fees in return for prompt payment and a certain volume of patients.
  • Preferred Risk : Any risk considered to be better than the standard risk on which the premium rate was calculated.
  • Preferred Stock : Evidence of ownership which entitles the owners to receive dividends from the corporation before the common stockholders and which usually also provides a prior claim to corporate assets if the corporation is dissolved.
  • Preliminary Term : The period of a short-term insurance issued to cover a risk to a date which the policy owner wishes to establish as the anniversary date for future premiums.
  • Premises : The particular location of property or a portion thereof as designated in a policy.
  • Premium : The price of the insurance policy that the insured pays in exchange for insurance coverage.
  • Premium Discount : (1) A discount allowed on premiums paid in advance of one year, which is based on projected interest to be earned. (2) A discount allowed on certain Workers Compensation and Comprehensive Liability policies to allow for the fact that larger premium policies do not require the same percentage of the premium for basic insurer expenses such as policywriting. The discount percentage increases with the size of the premium.
  • Premium Finance : Allows the insured to pay part of the premium when coverage takes effect and pay the rest during the policy period.
  • Premium funding : An arrangement between an insured and a finance provider whereby the insurance premiums are paid directly to the insurer by the financier and repaid to the financier by the insured under agreed credit terms.
  • Premium Loan : A policy loan made for the purpose of paying premiums.
  • Premium Notice : A form notice from an insurer or agency to a policy owner that a premium will be due on a given date.
  • Premium Rate : "The price per unit of insurance. An example would be a Property Insurance rate of 10 cents per $100 of the value of the property to be insured.
  • Premium Receipt : The receipt given a policy owner for the payment of a premium.
  • Premium Tax : A tax, imposed by each jurisdiction, on the premium income of insurers doing business.
  • Prepaid Group Practice Plan : A plan under which specified health services are rendered by participating physicians to an enrolled group of persons, with a fixed periodic payment in advance made by or on behalf of each person or family. If a health insurance carrier is involved, a contract to pay in advance for the full range of health services to which the insured is entitled under the terms of the health insurance contracts. Such a plan is one form of Health Maintenance Organisation (HMO).
  • Prepayment of Premiums : Payment by an insured of future premiums through paying the present (discount) value of future premiums or having interest paid on his deposit by the insurer.
  • Prescribed Contract : The Insurance Contracts Act has special rules for six classes of personal insurance. These are called the Prescribed Contracts, and the Act prescribes the events an insurer must provide under each of these contracts by way of standard cover. Insurers are free to provide more than standard cover and can even provide less than standard cover, provided the insured was notified of this in writing. Home insurance, private motor insurance and personal accident insurance are examples of Prescribed Contracts.
  • Present Value : The amount of money that future amounts receivable are currently worth. For example, a Life Insurance policy may provide for payments to be made monthly for 10 years. The present value of that money would be less than the total amount of the monthly payments for 10 years because of the amount of interest that a present lump sum could earn during the term that the payments otherwise would have been made.
  • Presumption of Agency : A legally binding agency relationship when, in fact, no formal agency agreement is in effect. If an insurer acts to give the appearance of agency, perhaps by furnishing letterhead and applications before a person has been licensed and appointed, an agency relationship exists under the law and the insurer may be legally bound by the acts of a person acting as agent.
  • Primary Coverage : Insurance coverage which covers from the first dollar, perhaps after a deductible, as distinguished from excess coverage which pays only after some primary coverage has been exhausted.
  • Primary Residence : A primary residence is the place where you will live for the majority of your policy term.
  • Primary Use : Primary use is how you mainly use your vehicle. Primary use options include to/from work, business, pleasure or farm use.
  • Principal Driver : The person who drives the car most often is the principal driver.
  • Principal Sum : The amount payable in one sum in the event of accidental death and in, some cases, accidental dismemberment. When a contract provides benefits for both accidental death and accidental dismemberment, each dismemberment benefit is an amount equal to the principal sum or some fraction thereof.
  • Pro Rata : "(1) Distribution of the amount of insurance under one policy among several objects or places covered in proportion to their value or the amounts shown. (2) Distribution of liability among several insurers having policies on a risk, usually in the proportion that the amount of coverage in each policy bears to the total amount of coverage in all policies.
  • Pro rata cancellation : This refers to the proportion of premium refunded to an insured in the event of cancellation of the policy. A pro rata refund is calculated according to the period of insurance unearned by the insurer at the date of cancellation.
  • Pro Rata Rate : A rate charged for a period of coverage shorter than the normal period. An example, if an insured had coverage for only one quarter of a year, his premium would be only one quarter of the annual premium.
  • Probability : "The likelihood or relative frequency of an event expressed in a number between zero and one. The throw of a die is an example. The probability of throwing five is found by dividing the number of faces that have a five (1) by the total number of faces (6). That is a probability of one-sixth or one divided by six, which is .17. See also Degree of Risk, Law of Large Numbers, and Odds.
  • Probate : The court-supervised process of validating or establishing a distribution for assets of a deceased including the payment of outstanding obligations.
  • Probate Estate : That portion of the assets and liabilities whose distribution is supervised by the courts in the probate process.
  • Probationary Period : A period from the policy date to a specified time, during which no sickness coverage is effective. It is designed to eliminate a sickness actually contracted before the policy went into effect.
  • Product Disclosure Statement : A Document prepared by, or on behalf of, the product issuer which contains all the information about the product including the name and address of the issuer (the insurer), significant benefits, cost, terms and conditions, cooling off period and the dispute resolution process
  • 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 : 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 a covered product.
  • Professional Corporation : An artificial person or entity, governed by charter, engaged in a business which provides a professional service to the public such as medicine or law.
  • Professional indemnity : Insurance covering a professional for his or her legal liability to others due to professional negligence.
  • Professional Insurance Agents Association : A trade association of mutual insurance agents.
  • Professional Partnership : An association of two or more individuals who operate and manage a business which provides a professional service to the public such as medicine or law.
  • Professional Reinsurer : "A term used to designate a company whose business is confined solely to reinsurance and the peripheral services offered by a reinsurer to its customers as opposed to primary insurers who exchange reinsurance or operate reinsurance departments as adjuncts to their basic business of primary insurance The majority of professional reinsurers provide complete reinsurance and service at one source directly to the ceding company.
  • Profit Commission : A provision found in some reinsurance agreements, which provides for profit sharing. Panics agree to a formula for calculating profit, an allowance for the reinsurer
  • Prohibited List : A list of types of business or types of risks that an insurance company will not insure. Also called the "undesirable list," the "do not solicit list," and other designations.
  • Promulgate : (1) To develop, publish and put into effect insurance rates or forms. (2) To make public, by publishing or announcing, the fact that a statute or rule of court is a legal order or direction enforceable by law, and violation of such is punishable as provided by law. (G,LE)
  • Proof of Loss : A statement made regarding the extent of the claim; it may be requested in accordance with the conditions of the policy.
  • Property Damage Coverage : An agreement by an insurance carrier to protect an insured against legal liability for damage by an insured automobile to the property of another.
  • Property Damage Liability Coverage : Pays for damage to someone else's property resulting from an accident for which you are at fault and in most cases provides you with a legal defense. This coverage is subject to the terms, limits and conditions of your policy contract.
  • Property Insurance : Insurance providing financial protection against the loss of, or damage to, real and personal property caused by such perils as fire, theft, windstorm, hail, explosion, riot, aircraft, motor vehicles, vandalism, malicious mischief, riot and civil commotion, and smoke.
  • Proposal : "Includes a document containing questions to which a person is asked to give answers that will be used in connection with a proposed contract of insurance. A completed proposal form is an offer by the intending insured to enter into an insurance contract. It is NOT an offer by the insurer. An insurer may accept or decline a proposal.
  • Proposer : A person who proposes for insurance. If the proposal is accepted then the person becomes the insured.
  • Prorating : The adjustment of benefits paid because of a mistake in the amount of the premiums paid or the existence of other insurance covering the same accident or disability.
  • Prospect : The term commonly used to refer to a potential buyer of insurance.
  • Prospecting : The act of looking for prospects, i.e., potential insurance buyers.
  • Prospective Payment : An advancement of payment for health care charges that are likely to occur.
  • Prospective Rating : A method used in arriving at the rate and premium for a specified future period, based in whole or in part on the loss experience of a prior specified period.
  • Prospective Rating Plan : A plan which uses a formula for determining premiums for a specified period on the basis, in whole or in part, of the loss experience of the previous period.
  • Protection : "(1) A term used interchangeably with ""coverage"" to denote insurance provided under the terms of a policy. (2) The fire-fighting facilities in the area in which a risk is located.
  • Prototype Plan : "A standardised plan approved and qualified as to its concept by the Internal Revenue Service, which is made available by life insurance companies, banks and mutual funds for employers? Use.
  • Provision : A part (clause, sentence, paragraph, etc.) of an insurance contract that describes or explains a feature, benefit, condition, requirement, etc. of the insurance protection afforded by the contract.
  • Provisional Rate : Tentative rates, premiums or commissions that are subject to subsequent adjustment. See Commission and Premium.
  • Provisions : Statements contained in an insurance policy which explain the benefits, conditions and other features of the insurance contract.
  • Proximate Cause : The first event in a chain of continuous events. Some insurance policies require the proximate cause of an event to be determined in order to assess whether the policy responds to a particular claim.
  • Public Adjuster : An insurance adjuster who represents an insured on a fee basis in claims settlement. Contrast with Independent Adjuster.
  • Pure Premium : A term used in insurance rate making. It refers to that portion of the total premium which is needed to pay expected losses. It does not take into account money needed for other company expenses.
  • Pure Risk : Uncertainty as to whether a loss will occur. Under a pure risk situation, there is no possibility for gain.
  • Pure risk premium : The portion of the premium needed to pay losses (claims).
  • Qualification Period : The period during which the insured must be totally disa
  • Qualified Impairment Insurance : A form of substandard or special class insurance, which restricts benefits for the insured person's particular condition.
  • Qualified Plan : A plan which the Internal Revenue Service approves as meeting the requirements of Section 401(a) of the 1954 Internal Revenue Code. Such plans receive tax advantages.
  • Qualified terminable interest property : A category of property, created by the Economic Recovery Tax Act, which by a deceased spouse's will entitles the surviving spouse to all income from the property for life, with that income payable at least annually, and precludes anyone including the spouse from appointing the property to anyone else during the spouse's life. Rate The pricing factor upon which the insurance buyer's premium is based.
  • Quick Assets : Assets that are quickly convertible into cash.
  • Quid Pro Quo : "Latin for ""this for that,"" or ""one thing for another."" In insurance it could refer to the consideration in an insurance contract which calls for the exchange of values by both parties to the contract in order for it to be a valid contract. See also Consideration.
  • Quota Share : The basic form of participating treaty whereby the reinsurer accepts a stated percentage of each and every risk within a defined category of business on a pro rata basis. Participation in each risk is fixed and certain.
  • Quota share treaty (reinsurance) : A form of proportional reinsurance under which the cedant is obliged to cede, and the reinsurer to accept, a fixed share of every risk up to a maximum dollar amount, in a specified class of business.
  • Quote : A statement of the premium that will be charged for insurance coverages based on specific information provided by the person requesting the quote including drivers, vehicles, and driving record.
  • Rate : Often used as a synonym for premium but actually refers to the base rating units that are used to determine the final premium.
  • Rate of Natural Increase (Or Decrease) : The birth rate minus the death rate. If there were no migration, this would equal the rate of population increase (or decrease).
  • Rated Policy : Sometimes called an "extra-risk" policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured has impaired health or a hazardous occupation.
  • Rating : The statistical process by which insurers determine risks and pricing for the basic classes of insurance.
  • Rating Bureau : A private organization that classifies and promulgates manual rates and in some cases compiles data and measures the hazards of individual risks in terms of rates in geographic areas, the latter being true especially in connection with Property Insurance.
  • Rating Class : The rate class into which a risk has been placed.
  • Rating Plan : The rules that determine the cost of your insurance premium. These rules modify the base rates by applying discounts and surcharges based on your personal characteristics, for example, using your seat belt, insuring more than one car.
  • Rating Territory : A geographical grouping in which like hazards tend to equalize and permit the establishment of an equitable rate for the territory.
  • Rating, no claim bonuses and no claim discounts :" "(usually associated with motor vehicle insurance) - A discount off your car insurance premium. The discount increases each year providing no claim that reduces your rating/discount is made on your policy. It keeps on increasing until it reaches the maximum discount level, called 'rating one' or 'maximum no claim bonus'.
  • Real property : Real estate—e.g. land and permanent buildings.
  • Reasonable and Customary Charge : A charge for health care, which is consistent with the going rate or charge in a certain geographical area for identical or similar services.
  • Rebate : A portion of the agent's commission returned to an insured or anything else of value given an insured as an inducement to buy. The payment of policy dividends, retroactive rate adjustments, and reduced premiums that reflect the savings of direct payment to an agent or home office are not usually considered to be rebates. In most cases rebates are illegal, both for the agent or insurer to give a rebate and for an insured to receive one.
  • Rebating : Giving any valuable consideration, usually all or part of the commission, to the prospect or insured as an inducement to buy or renew. Rebating is prohibited by law.
  • Reciprocal Insurance Exchange : An unincorporated group of individuals, called subscribers, who mutually insure one another, each separately assuming his share of each risk. Its chief administrator is an attorney in fact.
  • Recital clause : The clause in a policy document which introduces the parties to the contract and some basic information about the contract.
  • Recurring Claim Provision : A provision in some health insurance policies which specifies a length of time during which the recurrence of a condition is considered to be a continuation of a previous period of disability or hospital confinement.
  • Recurring Clause : A provision in some health insurance policies, which specifies a period of time during which the recurrence of a condition is considered a continuation of a prior period of disability or hospital confinement.
  • Reduced Paid-up Insurance : A form of insurance available as a nonforfeiture option. It provides for continuation of the original insurance plan, but for a reduced amount.
  • Regulation : Supervision of business practices by a governmental entity.
  • Rehabilitation : (1) Restoration of a totally disabled person to a meaningful occupation, (2) a provision in some long - term disability policies that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume productive employment.
  • Reimbursement : The payment of the expenses actually incurred as a result of an accident or sickness, but not to exceed any amount specified in the policy.
  • Reinspection : A review of an estimate or appraisal done by an adjuster during or after repairs to a vehicle. This is done to guarantee the accuracy of staff or independent auto damage personnel, and to guarantee that the work required in an estimate or appraisal is being completed by the body shop.
  • Reinstatement : The resumption of coverage under a policy which has lapsed.
  • Reinstatement Clause : When the amount of reinsurance coverage provided under a treaty is reduced by the payment of a reinsurance loss as a result of one catastrophe, the reinsurance cover is automatically reinstated usually by the payment of a reinstatement premium.
  • Reinstatement Premium : A pro rata reinsurance premium is charged for the reinstatement of the amount of reinsurance coverage that was reduced as a result of a reinsurance loss payment under a catastrophe cover.
  • Reinsurance : The purchase of insurance by an insurance company from another insurance company (reinsurer) to provide it protection against large losses on cases it has already insured.
  • Reinsurance Facility : An alternative mechanism to service those insureds that cannot obtain insurance in the voluntary market. Premiums and losses for the business that is ceded to the facility are pooled and all insurers share according to their proportion of the voluntary market.
  • Reinsurance Treaty : An agreement in writing between an insurer and one or more reinsurers. The insurer agrees to pass on some of the risk, and the reinsurers agree to accept, within pre-arranged limits.
  • Reinsured : "An insurance company or Lloyd’s syndicate who buys reinsurance. This term is the preferred usage to “cedant” in non-proportional reinsurance contracts as risks are not ceded to these contracts— losses exceeding the deductible being payable by the Reinsurer.
  • Reinsurers : Insurers which take on part of the risks taken on by insurers.
  • Release : Legally binding contract stating that all obligations past, present or future arising from a particular accident or occurrence have been fulfilled.
  • Renewable Term Insurance : Term insurance which can be renewed at the end of the term, at the option of the policyholder and without evidence of insurability, for a limited number of successive terms. The rates increase at each renewal as the age of the insured increases.
  • Renewal : Continuance of coverage under a policy beyond its original term by the insurer's acceptance of the premium for a new policy term.
  • Renewal Certificate : A short form certificate which is used to renew a policy. It refers to the original policy, keeping all of its provisions, but does not restate all of its insuring agreements, exclusions, and conditions.
  • Renewal Certificate : "A certificate which is used to renew a policy. It refers to the original policy, keeping all of its provisions, without restraining all of the insuring agreements, exclusions, and conditions.
  • Renewal Commission : "A commission paid on premiums subsequent to the first-year commission.
  • Renewal Date : The date that your insurance policy expires and the date that your renewed policy will begin.
  • Renewal Premium : The premium paid for a renewed policy.
  • Renewals : (1) The premiums paid for renewed policies. (2) The commissions paid on renewal premiums.
  • Rental Reimbursement : Optional coverage that helps pay rental vehicle costs when your insured vehicle is disabled as the result of a covered accident or loss. Available to most policyholders for an additional premium. In Virginia, the term Rental Reimbursement is known as "Transportation Expense."
  • Rental Reimbursement Coverage : Rental Reimbursement provides rental car coverage if you have a claim that is covered under Comprehensive or Collision coverage. Daily rental amounts are subject to the limit purchased.
  • Renter’s Policy : A package type of insurance that includes coverage similar to a homeowner’s policy to cover the personal property of a renter or tenant in a building.
  • Renters Insurance : Property Insurance providing coverage to an individual living in an apartment, condominium or single family home owned by someone else.
  • Renter's Policy : A package type of insurance that includes coverage similar to a homeowners policy to cover the personal property of a renter or tenant in a building.
  • Replacement : The substitution of health insurance coverage from one policy contract to another.
  • Replacement Cost : The cost to repair or replace property at construction costs prevailing at time of loss; the cost to repair or rebuild property without considering depreciation. (See Actual Cash Value)
  • Replacement Parts : Several types of parts may be used when your vehicle is repaired : new parts, both original equipment manufacturer and after-market; and recycled parts. New or after-market parts will be used if we can't find like-kind and quality recycled parts. A 5-year-old car, for instance, would be repaired with parts at least as good as the parts that had been in the car. We guarantee the after-market parts used for these repairs for as long as you own the car.
  • Replacement ratio : The percentage of income before retirement that is required to be replaced to maintain the same standard of living after retirement.
  • Representation : Statements made by an applicant in the application, which he represents as being substantially true to the best of his knowledge and belief, but which are not warranted as exact in every detail.
  • Representation : A statement made about material facts relating to the insurance being proposed—e.g. previous claims. These representations become the basis of the contract.
  • Representative : An agent or sales representative.
  • Rescission : Termination of an insurance contract by the insurer on the grounds of material misstatement on the application for insurance. The action of rescission must take place within the contestable period or Time Limit on Certain Defenses but takes effect as of the date of issue of the policy, thus voiding the contract from its inception.
  • Reservation of Rights : An arrangement whereby an insurer defends a case without commitment to provide coverage in the event that the facts disclosed during the trial reveal that the occurrence is not covered.
  • Reserve : (1) An amount representing liabilities kept by an insurer to provide for future commitments under policies outstanding. (2) An amount allocated for a special purpose. Note that a reserve is usually a liability and not an extra fund.
  • Resident Adjuster : Staff adjuster who handles claims in remote areas of a region.
  • Residual Disability : A period of partial disability that immediately follows a period of total disability. Benefits for residual disability are paid on a pro-rata basis, depending on the percentage of earnings loss. 
  • Residual Disability Benefits : A provision in an insurance policy that provides benefits in proportion to a reduction of earnings as a result of disability, as opposed to the inability to work full-time.
  • Residual Markets : Various insurance markets outside of the normal agency-company marketing system. Residual markets include government insurance programs, specialty pools (aviation risks and nuclear risks), and shared market mechanisms (assigned risk plans).
  • Residual risk : This refers to the remaining levels of risk, after risk treatment measures have been taken.
  • Retail Client : "General Insurance is provided to a person as a Retail Client where the client is an individual or the product is sold for use in a small business and the product is : • A motor vehicle insurance • A home building or contents insurance • Consumer Credit, Sickness and Accident or Travel Insurance • Personal and domestic property insurance • Any other class of insurance as prescribed by the regulations of the Financial Services Reform Act (FSRA) now part of the Corporations Act. Note : A small business is defined as less than 100 employees for a manufacturer, or 20 employees for any other business.
  • Retained Limit : In umbrella insurance, retained limit is similar to a deductible in other types of insurance. The retained limit is the amount of damages for which the policyholder is responsible before the umbrella coverage begins to cover a loss.
  • Retained surplus / (deficit) : The percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business or to pay debt.
  • Retention : The amount of the risk kept for oneself, as opposed to the amount it insures (or reinsures) with another. 
  • Retention : The amount retained by a reinsured after placing reinsurance. Normally, this refers to the retained amount after cessions to proportional reinsurance. The “retention” under non-proportional reinsurance is the deductible.
  • Retention of Risk : Assuming all or part of a risk instead of purchasing insurance or otherwise transferring the risk. One of the four major risk management techniques. See Risk Management.
  • Retrocession : Reinsurance of reinsurance, either on a risk-by-risk basis, or on a portfolio of business.
  • Retrocessionaire : A reinsurer that accepts retrocession business.
  • Retrospective Date : The first date for which claims will be paid under a claims-made policy of liability insurance.
  • Retrospective Premium : The final premium in a retrospective rating plan. See Retrospective Rating.
  • Retrospective Rating : Rating procedure which allows adjustment of an insured's final rate on the basis of the insured's own loss experience.
  • Return Commission : A commission which is paid back by the agent if a policy is cancelled before its normal expiration date. This situation arises because the commission was based on the full annual premium, and if the policy is cancelled before it is earned, a pro rata portion of the commission must be returned.
  • Return Premium : A portion of the premium returned to a policy owner as a result of cancellation, rate adjustment, or a calculation that an advance premium was in excess of the actual premium.
  • Revocable Trust : A trust that can be terminated or revoked by its creator.
  • Rider : A document that modifies the policy. It may increase or decrease benefits, waive a condition or coverage, or in any other way amend the original contract.
  • Right of Survivorship : At the death of one co-owner of property, that person's interest in the property automatically passes to the surviving joint tenant or tenants.
  • Risk : A term used to refer to a person or the peril insured.
  • Risk Classification : The process by which a company decides how its premium rates for life insurance should differ according to the risk characteristics of individuals insured (e.g., age, occupation, sex, state of health) and then applies the resulting rules to individual applications.
  • Risk control : any conscious action (or decision not to act) intended to reduce the frequency, severity, or unpredictability of accidental losses.
  • Risk management : "Management of the risks to which a company might be exposed. It involves analysing all exposures to the possibility of loss and determining how to handle these exposures through such practices as avoidance, reducing the risk, retaining the risk, or transferring the risk e.g. see reinsurance.
  • Risk Retention Group : An alternative form of insurance in which members of a similar profession or business band together to self insure their risks.
  • Robbery : The taking of property from a person by force or threat of violence.
  • Rollover : Transfer of IRA or other qualified pension funds from one financial institution (trustee) to another.
  • Roth IRA : An special type of individual retirement account to which an individual can make contributions with after-tax dollars. Funds can be withdrawn tax-free at retirement.
  • Run-off : The remaining liability of a reinsurer after the effective cancellation date of a treaty where there is no portfolio withdrawal. Losses may continue after the date of termination until expiry of individual cessions made to the treaty during its currency. Liabilities may continue to be discharged in respect to claims incurred prior to termination.
  • Run-off company : An insurance company that is being wound up or otherwise not underwriting business in a particular line. It is thus letting its present insurance policies run to their expiration dates.
  • Salvage : Damaged property which is taken over by the insurance company after payment of a claim.
  • Salvage and Subrogation : Those rights of the insured which, under the terms of the policy, automatically transfer to the insurer upon settlement of a loss. Salvage applies to any proceeds from the repaired, recovered, or scrapped property. Subrogation refers to the proceeds of negotiations or legal actions against negligent third parties and may apply to either property or casualty coverages.
  • Seasonal Risk : A risk which is present only during certain parts of the year. Examples might be manufacturing concerns such as canners who have operations only during the summer and seasonal dwellings such as cottages used for vacations.
  • Securities : Evidences of a debt or of ownership, as stocks, bonds, and checks.
  • Selection : The choosing by an underwriter of risks acceptable to an insurer.
  • Self- Administered (Trusteed or Directly Invested) Plan : A plan funded through a fiduciary, generally a bank, but sometimes a group of individuals, which directly invests the accumulated funds. Retirement payments are made from the fund as they fall due.
  • Self-Administration : The procedure where an employer maintains all records regarding the employees covered under a group insurance plan.
  • Self-insurance : Occurs when an individual or a company which has a large number of risk units, recognises that a risk exists and makes a conscious decision to bear that risk without insurance.
  • Self-Insured Retention (SIR) : That portion of a risk or potential loss assumed by an insured. It may be in the form of a deductible, self-insurance, or no insurance.
  • Separate Account : An asset account established by a life insurance company separate from other funds, used primarily for pension plans and variable life products. This arrangement permits wider latitude in the choice of investments, particularly in equities.
  • Service-Type Plans : Plans that provide their benefits in the form of services rendered rather than cash.
  • Settlement : "Usually, a policy benefit or claims payment. It connotes an agreement between both parties to the policy contract as to the amount and method of payment.
  • Settlement Options : "The several ways, other than immediate payment in cash, which a policyholder or beneficiary may choose to have policy benefits paid.
  • Shareholders interest : Owner's equity.
  • Shock Loss : A catastrophic loss so large that it has a material effect on the underwriting results of a company.
  • Short Rate Cancellation : A cancellation procedure in which the premium returned to the insured is not in direct proportion to the number of days remaining in the policy period. In effect, the insured has paid more for each day of coverage than if the policy had remained in force for the full term. Contrast with Pro Rata Cancellation.
  • Short Rate Premium : The premium required for issuing a policy for a period less than its normal term.
  • Short tail business : A term describing business where most claims arise and are settled relatively quickly. It is sometimes applied to those classes of business that take no more than three years to run off.
  • Short-Term Disability Income Insurance : The provision to pay benefits to a covered disabled person as long as he/she remains disabled up to a specified period.
  • Short-Term Policy : A policy written for a period of less time than is normal for that type of policy.
  • Sickness Insurance : A form of health insurance providing benefits for loss resulting from illness or disease.
  • Signed Line : The percentage expressed on a signing slip which indicates the reinsurer’s share of the contract liability.
  • Signing Down : The practice of reducing written lines on a placing slip so that when applied to the sum insured, the total amount placed equals 100% of the broker’s order. Usually, this is done on a proportional basis.
  • Simple contract : A legally enforceable contract which can be made either orally or in writing—e.g. insurance contracts. A contract for the purchase of real estate must be in writing to be legally enforceable and, therefore, is NOT a simple contract.
  • Single Limit : Any insurance coverage which is expressed as a single amount of insurance, or a single limit of liability. Contrast with Split Limit.
  • Sliding Scale Commission : A ceding commission, which varies inversely with the loss ratio under the reinsurance agreement. The scales are not always one to one.
  • Slip : A term used to describe a précis of contract terms and conditions shown to an underwriter by a broker when a risk is offered. Upon completion, a full wording is normally prepared.
  • Slip Endorsement : A document noting an amendment to a slip.
  • SME : Small and medium sized enterprises.
  • Social Insurance : Compulsory insurance legislated to provide minimum economic security for large groups of people, particularly those with low incomes. It is primarily concerned with the costs and loss of income resulting from sickness, accidental injury, old age, unemployment, and the premature death of the head of a family.
  • Soft Market : "That part of the insurance sales cycle in which competition is at a maximum as insurance companies use their excess capacity to sell more policies at lower prices.
  • Sole Proprietorship : "A business enterprise owned by one person who is its manager and employee.
  • Solicitor : An individual appointed and authorized by an agent to solicit and receive applications for insurance as his representative. Solicitors are not usually given the power to bind coverage but are required to be licensed.
  • Solvency : With regard to insurers, having sufficient assets (capital, surplus, reserves) and being able to satisfy financial requirements (investments, annual reports, examinations) to be eligible to transact insurance business and meet liabilities.
  • Solvency test or margin (General insurance) : An insurer's assets must exceed its liabilities by a certain amount. The formula for the calculation of that amount is set down in the Insurance Act.
  • Special Acceptance : The facultative extension of a reinsurance treaty to embrace a risk not automatically included within its terms.
  • Special Damages : Compensation awarded for actual economic losses, such as medical expenses and lost wages.
  • Special Investigation Units : Magma HDI helps fight fraud through its special investigation unit, staffed with experts in fraud detection and investigation.
  • Special Risk Insurance : Coverage for risks or hazards of a special or unusual nature.
  • Speculative Risk : Uncertainty as to whether a gain or loss will occur. An example would be a business enterprise where there is a chance that the business will make money or lose it. Speculative risks are not normally insurable.
  • Split Funding : The use of two or more funding agencies for the same pension plan. An arrangement whereby a portion of the contributions to the pension plan are paid to a life insurance company and the remainder of the contributions invested through a corporate trustee, primarily in equities.
  • Spread Loss : A form of reinsurance under which premiums are paid during good years to build up a fund from which losses are recovered in bad years This reinsurance has the effect of stabilising a cedant’s loss ratio over an extended period of time.
  • Staff Adjuster : Individual who is employed by Magma HDI to handle claims.
  • Standard Insurance : Insurance written on the basis of regular morbidity underwriting assumption used by an insurance company and issued at normal rates.
  • Standard Policy : (1) Coverage which has identical provisions regardless of the issuing insurer. Many common policies are standardized. (2) Insurance issued to a standard risk.
  • Standard Risk : A person, who, according to a company’s underwriting standards, is entitled to purchase insurance protection without extra rating or special restrictions.
  • State Fund : "A fund set up by a government to provide a specific line or lines of insurance. Some countries permit private insurers to compete with the state fund.
  • Statute law : Written law which changes the common law—Acts of Parliament.
  • Statute of Limitations : A law that specifies a time limit for which a person can bring a legal action for a claim.
  • Statutory : Required by or having to do with law or statute.
  • Statutory Accounting : Special accounting practices for insurance companies required by law and designed to provide greater protection for the public against potential insolvency of these essential institutions.
  • Statutory Reserve : A reserve, either specific or general, required by law.
  • Statutory Underwriting Profit or Loss : Premiums earned less losses and expenses.
  • Step-Rate Premium : A rating structure in which the premiums increase periodically at pre- determined times such as policy years or attained ages.
  • Step-up in Basis : An increase in the tax basis of property to the value claimed in the taxable estate of a decedent.
  • Stock Company : A company organised and owned by stockholders, as distinguished from the mutual form of company which is owned by its policyholders.
  • Stock Exchange : An organisation that provides a facility for buyers and sellers of listed securities to come together to make trades in those securities.
  • Stock Insurance Company : A company in which the legal ownership and control is vested in the stockholders.
  • Stock Life Insurance Company : A life insurance company owned by stockholders who elect a board to direct the company’s management. Stock companies, in general, issue nonparticipating insurance, but may also issue participating insurance.
  • Stock Option Plan : Surviving stockholders have the option to purchase or not purchase the shares of a deceased stockholder.
  • Stock Purchase Agreement : A formal buy-sell agreement whereby each stockholder is bound by the agreement to purchase the shares of a deceased stockholder and the heirs are obligated to sell.
  • Stockholder (or shareholder) : A person who owns shares of stock in a corporation.
  • Stop Loss : Any provision in a policy designed to cut off an insurer's losses at a given point. In effect, a stop loss agreement guarantees the loss ratio of the insurer.
  • Stop loss reinsurance : A reinsurance to protect the reinsured from losses in excess of a given percentage of its net premium income.
  • Storm : Means violent wind (including a cyclone or tornado), thunderstorm or a heavy fall of rain, snow or hail
  • Straight Life Insurance : Whole life insurance on which premiums are payable for life.
  • Strata Title : A system of title that allows the owner of a unit, in a block of units, to have a separate title for that unit.
  • Strict Liability : Liability for damages even though fault or negligence cannot be proven.
  • Subject matter : The object which forms the basis of the contract of insurance. For example, in the case of House and Contents Insurance, the subject- matter of the policy is the insured's house and contents.
  • Subject Premium : A cedant’s premium (written or earned) to which the reinsurance premium rate is applied to calculate the reinsurance premium. Often subject premium is gross/net written premium income (GNWPI) or gross/net earned premium income (GNEPI), where the term “gross/net” means gross before deducting reinsurance premiums for the reinsurance agreement under consideration, but net after all other adjustments, e.g. cancellations, refunds, or other reinsurance. Normally, subject premium refers to premium on subject basis.
  • Sublimit : Any limit of insurance which exists within another limit. For example, special classes of property may be subject to a specified limit per occurrence, even though the policy has a higher overall limit; a health insurance policy may limit certain benefits to fixed dollar amounts or maximum amounts per day, even though the overall coverage limit is higher.
  • Submitted Business : Applications for insurance submitted to an insurer but not yet acted upon by it.
  • Subrogation Clause : A clause giving an insurer the right to pursue any course of action, in its own name or the name of a policy owner, against a third party who is liable for a loss which has been paid by the insurer. One of its purposes is to make sure that an insured does not make any profit from his insurance. This clause prevents him from collecting from both his insurer and a third party. It is never part of a life insurance policy.
  • Subrogation Release : A release taken by an insurer upon indemnifying an insured.
  • Subrogation. : An insurer’s rights at law to take over the insured’s rights, following a claim payment to recover the payment from a third party responsible for the loss. Usually, this will be a negligent party who has breached his or her duty of care, but subrogation can also arise under contract, such as a lease or “hold harmless” agreement. The Insurance Contracts Act (1984) places some limits on recovery from family members.
  • Subscription Policy : A policy to which two or more insurers may subscribe, indicating in the policy the share of the risk to be
  • Substandard (Impaired Risk) : A risk that cannot meet the normal health requirements of a standard health insurance policy. Protection is provided in consideration of a waiver, a special policy form, or a higher premium charge. Substandard risks may include those persons who engage in certain sports and persons who are rated because of poor habits or morals.
  • Substandard Insurance : Insurance issued with an extra premium or special restriction to those persons who do not qualify for insurance at standard rates.
  • Substandard Risk : An individual, who, because of health history or physical limitations, does not measure up to the qualification of a standard risk.
  • Sum insured : The maximum liability of the insurer’s liability under an insurance contract.
  • Supplement/Supplemental Estimate : Used to cover damage not included in the original estimate.
  • Supplementary Contract : "An agreement between a life insurance company and a policyholder or beneficiary by which the company retains the cash sum payable under an insurance policy and makes payments in accordance with the settlement option chosen.
  • Surety Bond : "An agreement providing for monetary compensation in the event of a failure to perform specified acts within a stated period. The surety company, for example, becomes responsible for fulfilment of a contract if the contractor defaults.
  • Surplus : The excess of assets over liabilities. Statutory surplus is an insurer’s or reinsurer’s capital as determined under statutory accounting rules. Surplus determines an insurer’s or reinsurer’s capacity to write business responsibility for only that portion of any risk, which exceeds the company’s established retentions.
  • Surplus treaty : A form of proportional reinsurance in which the reinsured is obliged to cede and the reinsurer to accept within stated limitations, surplus amounts over a predetermined figure. For example, an insurer may decide to retain $500,000 on buildings it insures and has a 4-line surplus treaty. This means all sums insured up to $500,000 will be retained. For larger risks the surplus will be reinsured into the treaty up to a maximum of 4 times $500,000—in other words, $2,000,000.
  • Syndicate : A group of members at Lloyd’s who pledge their financial means to underwrite insurance/reinsurance business written on their behalf by an active underwriter. Each member is personally financially responsible for the insurance business accepted on his or her behalf.
  • Table of multiples : The life expectancy figures provided by the Internal Revenue Service to be used in calculating the exclusion ratio for life contingent annuities after June 30, 1986. Separate tables provide the figures for joint and last survivor annuities, annuities that contain a refund or minimum payment guarantee, and for annuities that pay quarterly, semiannually, or annually.
  • Target Risk : "(1) Certain high-value bridges, tunnels, and fine art collections that are excluded from an automatic reinsurance contract to permit specific handling of the capacity problem and to release the reinsurer from the potential heavy accumulation of liability on any one risk. (2) A large, hazardous risk on which insurance is difficult to place. (3) A large, attractive risk that is considered a target for competing insurance companies.
  • Tax Basis : The cost from which your profits or losses are calculated for income tax purposes.
  • Taxable estate : The value upon which estate taxes are calculated by the federal government. 
  • Taxation : Taxation refers to the act of a taxing authority actually levying tax.
  • Technical liabilities/reserves : The sum of Net UPR and Net OCR & IBNR.
  • Technical result : Net premiums earned less net claims incurred and net commission expenses.
  • Temporary Life Annuity : An annuity payable while the annuitant lives but not beyond a specified period, such as five years. No payments are to be made after the end of the stipulated temporary period or the death of the annuitant.
  • Ten Day Free Look : A notice on the first page of health insurance policies that the insured has ten days in which to examine the policy and return it for a refund of premium if he is not satisfied with the policy.
  • Tenants in common : A form of joint property ownership in which the owners may have unequal shares and which does not involve a right of survivorship. 
  • Term : Under insurance law it means the period of time for which a policy is issued.
  • Term Insurance : Life or health insurance protection during a limited number of years but expiring without value if the insured survives the stated period.
  • Term Rule : "The provision in a rating manual which states the periods for which coverages run, and discounts, if any, which apply to the rates or premiums of policies issued for more than one year.
  • Termination : The time the coverage under an insurance policy ends, either because its term has expired or because it has been cancelled by either party.
  • Testamentary trust : A trust created through the will of its creator.
  • Theft : The unlawful taking of another's property with the intent to permanently deprive the owner of its use or possession.
  • Theory of Probability : The mathematical principle upon which insurance is based. See also Degree of Risk, Law of Large Numbers, Odds, and Probability.
  • Third Party : The claimant under a liability policy. So called because the person making the claim is not one of the two parties, insured and insurer, to the insurance contract. Third party claim a demand made by a person against a policyholder of another company and any payment that will be made by that company.
  • Third Party Beneficiary : A person who is not a party to a contract but who has legally enforceable rights under the contract. It might be a Life Insurance beneficiary, or a mortgagee.
  • Third Party Claim : Claims for injury or damage to property of a third party alleged to have been caused by the insured.
  • Third-party over suit : a lawsuit where a third party tries to recover damages assessed against that party by bringing suit against the employer.
  • Three Hundred and Sixty Fifths System : "A method of calculating unearned premium. This is the most accurate of all methods as it is a strict pro rata. See Eighths system, and Twenty-fourths system.
  • Threshold (No-Fault) : The point, measured in money, time or other ways, beyond which tort liability can be established. Until that point is reached, reparations must be paid within the provisions of the no-fault plan, with no recourse to the courts.
  • Tickler : A reminder system used to call an individual's attention to actions that must be taken at a future point in time.
  • Time Limit : The period of time during which a notice of claim or proof of loss must be filed.
  • Time Limit on Certain Defenses : The 2-year or 3-year time period in health policies after which the insurer cannot deny a claim or void the policy because of pre-existing conditions or misstatements on the application.
  • Time Limits : The limits of time within which notice of a claim and proof of a loss must be submitted.
  • Tornado : A whirling wind over land, accompanied by a funnel-shaped cloud. It is usually very violent and destructive in a narrow path, often for many miles.
  • Tort : A civil wrong, other than a breach of contract, for which a court of law will afford legal relief, i.e. harming another by an act of negligence in driving an auto.Tort Law
  • Tortfeasor : One who commits a tort (see above).
  • Total assets : The final amount of all gross investments, cash and equivalents, receivables, and other assets as they are presented on the balance sheet.
  • Total capital : The sum of Owner's equity and Admissible supplementary capital
  • Total Disability : An illness or injury which prevents an insured person from continuously performing every duty pertaining to his/her occupation or engaging in any other type of work. (This wording varies among insurance companies.)
  • Total Loss : Property that has sustained damage so extensive that repairing it is not reasonable. A vehicle is considered a total loss if it cannot be repaired safely, if repairing the vehicle is not economically practical, or if state regulations require us to consider it a total loss.
  • Towing and Labor Coverage : Provides insurance if your auto needs to be towed or requires roadside assistance.
  • Transacting Insurance : The solicitation, inducement, and preliminary negotiations effecting a contract of insurance and the subsequent carrying on of business pertaining to it. The exact definition will vary somewhat according to the laws regulating insurance.
  • Transfer of Risk : Shifting all or part of a risk to another party. Insurance is the most common method of risk transfer, but other devices, such as hold harmless agreements, also transfer risk. One of the four major risk management techniques. See Risk Management.
  • Transferability : Any arrangement under which the accumulated benefit credits of a terminating participant, or their actuarial value, are transmitted from one plan to another, or to a central agency.
  • Traumatic Injury : An injury to a person's physical body caused by an outside source, as distinct from physical disability caused by sickness or disease.
  • Travel Accident Policy : A limited contract covering only accidents while an insured person is traveling, usually on a commercial carrier.
  • Treaty : An agreement between a reinsurer and a ceding insurer setting forth details of the reinsurance arrangement.
  • Trust : A legal instrument allowing one party to control property for the benefit of another.
  • Trustee : A person who is responsible for the property which is the subject of the trust. The trustee holds the property for the benefit of others. The property may be held in the name of the trustee but is never the personal property of the trustee. For example, the trustees of a superannuation fund hold the assets of the fund for the benefit of the members of the fund.
  • Turnover Rate : The rate at which employees terminate covered service other than by death or retirement. Expected future turnover can be taken into account in translating contributions into benefits. 
  • Twenty-fourths system : A method of calculating unearned premiums. Premiums accounted for in bulk on a monthly basis are assumed to attach on average on the middle day of each month. Therefore, at the end of a calendar year, 23/24ths of premium booked in January is assumed to be earned, with 24th unearned. 21/24ths of February policies earned, and 3/24ths unearned, and so on. See also Eighths system, and 365ths system.
  • Twisting : The practice of inducing by misrepresentation, or inaccurate or incomplete comparison, a policyholder in one company to lapse, forfeit or surrender his insurance for the purpose of taking out a policy in another company.
  • Uberrima fidei : The doctrine of Utmost Good Faith. This is an implied term in all contracts of insurance by virtue of the Insurance Contracts Act.
  • Ultimate Net Loss : "This term usually means the total sum which the assured, or any company as his insurer, or both, become obligated to pay either through adjudication or compromise, and usually includes hospital, medical and funeral charges and all sums paid as salaries, wages, compensation, fees, charges and law costs, premiums on attachment or appeal bonds, interest, expenses for doctors, lawyers, nurses, and investigators and other persons, and for litigation, settlement, adjustment and investigation of claims and suits which are paid as a consequence of the insured loss, excluding only the salaries of the assured’s or of any underlying insurer’s permanent employees.
  • Umbrella Cover : "Reinsurance protection for several classes of business, usually arranged by combining the retentions and/or deductibles of the different classes and protecting them by one excess of loss contract.
  • Umbrella Insurance : Provides high limits of additional liability coverage above the limits of your homeowners and auto policy. In addition, it provides coverage that may be excluded by other liability policies.
  • Umbrella Liability : Insures losses in excess of amounts covered by other liability insurance policies; also protects the insured in many situations not covered by the usual liability polices.
  • Umpire : For Property coverage, if a company and a claimant fail to agree on the amount of loss, each may appoint an appraiser, and these in turn select an umpire. A decision by any two of the three is binding.
  • Unallocated Benefit : A policy provision providing reimbursement up to a maximum amount for the cost of all extra miscellaneous hospital services, but not specifying how much will be paid for each type of service.
  • Underinsurance : A condition in which not enough insurance is held to cover the value of the insured property. This is particularly common with home contents insurance.
  • Underlying Layer : A layer of excess of loss business that operates immediately below another.
  • Underwriter : 1) a company that receives the premiums and accepts responsibility for the fulfillment of the policy contract; 2) the company employee who decides whether or not the company should assume a particular risk; 3) the agent who sells the policy.
  • Underwriting : The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.
  • Underwriting profit / (loss) : The profit or loss that an insurer derives from providing insurance or reinsurance coverage, exclusive of investment income and other income.
  • Unearned Premium : The portion of a premium that a company has collected but has yet to earn because the policy still has unexpired time to run.
  • Unearned Premium Reserve : The amount shown in the insurance company's balance sheet which represents the approximate total of the premiums which have not yet been earned as of a specific point in time.
  • Unemployment Insurance : Insurance against loss of income due to unemployment.
  • Unenforceable contract : A contract which has the requirements of a valid contract, but cannot be legally enforced for other reasons.
  • Unfunded Liability : Liability of an insurer or company that does not have a corresponding balance-sheet provision or asset.
  • Unfunded reserve : This arises when the provision made for expected losses is not backed by any assets set aside for such losses.
  • Unified Credit : a one-time credit of $192,800, usually applied against Federal Estate Taxes, that is available to every individual's estate. The credit also can be used for payment of Federal Gift Taxes during that individual's lifetime.
  • Uniform Premium : A rating structure in which one premium applies to all insureds, regardless of age, sex, or occupation.
  • Uniform Provisions : Statutory policy provisions of health insurance policies which specify some of the rights and obligations of the insured and the company. These provisions, with some modifications, are part of the insurance laws of all 50 states and the District of Columbia.
  • Unilateral Contract : A contract such as an insurance policy in which only one party to the contract, the insurer, makes any enforceable promise. The insured does not make a promise but pays a premium, which constitutes his part of the consideration.
  • Uninsurable Risk : One not acceptable for insurance due to excessive risk.
  • Uninsured Motorist Coverage : In some circumstances, may pay for your injuries or property damage caused by an uninsured motorist or, in some states, an unidentified driver. In some cases it also includes coverage for underinsured motorists and at-fault drivers with insufficient insurance to pay your claim. This coverage is subject to the terms, limits and conditions of your policy contract.
  • Uninsured perils : Events not mentioned in the policy document, but which are clearly outside cover.
  • Uninsured/Underinsured Motorist Coverage : A form of insurance that pays the policy holder and passengers in his/her car for bodily injury caused by the owner or operator of an uninsured or inadequately insured automobile.
  • Universal Life Insurance : A flexible premium life insurance policy under which the policyholder may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at rate which may change from time to time.
  • Unlevel Commission System : A system of commissions under which the first year commission is a higher percentage of the premium than are renewal commissions.
  • Unrealised gains / (losses) : A profit that exists on paper, resulting from any type of investment. An unrealized gain is a profitable position that has yet to be cashed in, such as a winning stock position that remains open.
  • Unreported Claims : A reserve, based on estimates, to set up claims that have occurred but have not yet been reported to the insurer as of the time when either the policy has expired or the insurer is preparing its annual statement.
  • Utmost good faith : The doctrine requires all parties to an insurance contract to act towards each other at all times and in respect to all things with the utmost good faith. The Insurance Contracts Act 1984 does not define the implied term "utmost good faith"; however, it has to do with matters of fairness, honesty, reasonableness, community standards of decency and fair dealing.
  • Valuation : Estimation of the value of an item, usually by appraisal eg. Jewellery appraisal.
  • Valuation Clause : A clause stating the value of items for insurance purposes, making it a valued policy.
  • Valuation Reserve : A reserve against the contingency that the valuation of assets, particularly investments, may be higher than what can be actually realized or that a liability may turn out to be greater than the valuation placed on it.
  • Valued : Relating to an agreement by an insurer to pay a specified amount of money to or on behalf of the insured
  • Valued policies : If the subject matter of the insurance is a total loss, then the sum insured is paid. This may provide more or less than indemnity value.
  • Vandalism : Destruction or defacement of property.
  • Variable Annuity : An annuity contract in which the amount of each periodic income payment may fluctuate. The fluctuation may be related to securities market values, a cost of living index, or some other variable factor.
  • Variable Life Insurance : Life insurance under which the benefits relate to the value of assets behind the contract at the time the benefit is paid. The amount of death benefit payable would, under variable life policies that have been proposed, never be less than the initial death benefit payable under the policy.
  • Variable Quota Share : A form of Quota Share treaty, with more than one cession percentage depending on the size of risks under the contract. Strictly speaking, a Surplus treaty is also a Variable Quota Share.
  • Vehicle Identification Number (VIN) : A 17-digit number assigned to each vehicle manufactured in the United States after 1980. This number is used for identification purposes and is visible on the dashboard when viewed from the outside of the vehicle.
  • Vested Commissions : Commissions on renewal business which are paid to the agent whether or not he or she still works for the insurance company with which the business is placed.
  • Vesting : A provision that a pension participant will, after meeting certain requirements, retain a right to all or part of the accrued benefits, even though the employee may leave the job before retirement.
  • Viatical Settlement : Payment of a portion of the proceeds from life insurance to an insured that is terminally ill.
  • Vis Major : An accident for which no one is responsible, an act of God.
  • Void : "Considered to have no legal force or effect. An insurer may avoid an insurance contract from its inception (termed ‘ab initio’) should it discover evidence of pre-contractual fraudulent non-disclosure or fraudulent misrepresentation.
  • Void contract : A contract which can be treated as if it never existed.
  • Voidable : A policy contract that can be made void at the option of one or more of the parties to it. An example would be a Property Insurance policy which is voidable by the insurer if the insured commits certain acts.
  • Voidable contract : A contract which can be avoided by one party.
  • Voluntary Market : A market where one seeking insurance obtains insurance in the open market with no help from the government, through an insurer of his or her own selection.
  • Voluntary Reserve : An allocation of surplus not required by law. Such reserves are often accumulated by insurers in order to strengthen their financial structure.
  • Waiting Period : The length of time an employee must wait from his/her date of employment or application for coverage, to the date his/her insurance is effective.
  • Waiver : An agreement attached to a policy which exempts from coverage certain disabilities or injuries that otherwise would be covered by the policy.
  • Waiver of Premium : A provision in some policies to relieve the insured of premium payments falling due during a period of continuous total disability that has lasted for a specified length of time, such as three or six months.
  • Waiver of Restoration Premium : (1) An agreement or decision to forego any premium for reinstatement of the face amount of coverage under an insurance policy after it has been reduced by the amount of a loss payment. (2) A provision, especially in bonds, for automatic restoration of the full amount of protection without cost to the insured.
  • War Risk Insurance : Insurance covering damage caused by war. Most often written by Ocean Marine Insurance companies covering vessels.
  • Warranty : A policy term setting out an obligation that the insured must comply with, either to do something, or refrain from doing something, or stating that some condition will be fulfilled. A warranty can also be a statement affirming the existence of certain facts.
  • Whole Life Insurance : A plan of insurance for the whole of life. It includes straight life on which premiums are payable until death.
  • Will : The legal statement of a person's wishes concerning the disposal of his or her property after death.
  • Will Ride : Coverage that remains in effect regardless of the geographical location in which a loss occurs.
  • Workers Compensation : A system established under state law that provides payments, without regard to fault, to employees injured in the course and scope of their employment.
  • Workers Compensation Insurance : Insurance against liability imposed on certain employers to pay benefits and furnish care to employees injured, and to pay benefits to dependants of employees killed in the course of or arising out of their employment.
  • Working Layer : The first layer above the cedant’s retention wherein moderate to heavy loss activity is expected by the cedant and reinsurer. Working layer reinsurance agreements often include adjustable features to reflect actual underwriting results.
  • Write-off : (usually associated with motor vehicle insurance) - Your car is declared a write-off when in our opinion, it is so badly damaged that it would not be either safe or economical to repair or when it has not been found within 14 days of you reporting its theft to us.
  • Written Line : The percentage written by underwriters on a placing slip to indicate the proportion of the sum insured and which they are prepared to accept.
  • Written Premiums : The entire amount of premiums due in a year for all polices issued by an insurance company.
  • X Table : A designation sometimes used to refer to an experimental table or a draft of a table that has not developed to a point of satisfaction or for actual use in rating.
  • XOL : Excess of loss reinsurance is a type of reinsurance in which the reinsurer indemnifies the ceding company for losses that exceed a specified limit. Excess of loss reinsurance is a form of non-proportional reinsurance.
  • YTD : Year to Date.