An employer-sponsored defined contribution retirement plan that provides certain tax benefits to both employees and employers.

The giving up of property by the insured to the insurance company in order to collect the value of the property rather than restoring or

The transfer of ownership of a life insurance policy to another person or entity. The assignee becomes the new policy owner.

Responsibility without regard to fault or negligence.

Payment of a portion of a death benefit to the insured prior to the insured’s death if the insured is diagnosed as terminally ill.

An unplanned event, definite as to time and place, that results in injury or damage to a person or property.

A benefit that typically equals the face value of the contract or principal sum, paid in addition to the face amount of a life insurance

Process to help quantify an organization’s assets, liabilities, stakeholder equities, and cash flows at a point in time.

In financial management, the measurement of the percentage return of average annual cash flows on initial investment.

Organized set of accounting methods, procedures, and controls to collect, record, classify, and present accurate and timely financial data for use in management decision-making.

Money owed to the insured by the insured’s clients.

The period during which deposits are made and investment earnings accrue between purchase of a deferred annuity and the distribution of funds.

During the accumulation period of a deferred annuity, the amount paid for the annuity, plus interest earned, less the amount of any withdrawals and fees.

One organization takes over another organization and is established as the new owner with the ownership interests continuing unchanged.

An event produced by a physical cause of nature, and not within human control or intervention.

An event produced by a physical cause of nature, and not within human control or intervention.

Planned acceptance of losses to be financed internally through the use of deductibles on insurance policies, loss sensitive insurance plans, and deliberate non-insurance. See Passive

Person’s ability to perform such activities as bathing, dressing, toileting, maintaining continence, transferring, and eating.

Replacement cost less an allowance for insurance depreciation, wear and tear, or obsolescence.

Provide information for risk financing from the calculation of future payouts of uncertain estimates.

An individual who calculates premium rates, reserves, dividends, and other important statistics.

Care requiring constant monitoring and designed to treat or cure an illness, injury, or condition.

Abbreviation for Actual Cash Value. Defined as replacement cost less an allowance for insurance depreciation, wear and tear, or obsolescence.

Person’s ability to perform such activities as bathing, dressing, toileting, maintaining continence, transferring, and eating.

Assets whose value is included in the annual statement of an insurance company to insurance regulators; include cash and short-term deposits readily convertible into cash,

An insurance company authorized to do business in a state by that state’s insurance department, including being subject to the department’s regulations regarding financial security,

An insurance company that is authorized and licensed to do business in a state.

A facility that provides long-term care services to adults during the day.

Individuals with poor health who are more apt to apply for or continue insurance than those with average or better-than-average health.

A relationship, express or implied, wherein one party (principal) delegates authority to another person (agent or proxy) to undertake certain activities for the principal. The

A captive owned by an insurance agency or agencies formed for the purpose of insuring the risks of agency clients or to participate with an

An office where insurance is sold. It may be directed towards property and liability insurance or life and health insurance, or both. Also, it might

A representative of one or more companies, who solicits, completes applications, collects initial premiums, issues binders and/or conditional receipts, delivers policies, and services insurance contracts.

A person empowered to act on behalf of another.

The re-insurer pays when the ceding company’s aggregate net losses exceed a predetermined amount or proportion of premium income. For example, reinsurance covers 90% of

The maximum amount of protection for all losses occurring under an insurance policy or funding arrangement during the specified term of the contract (usually one

Similar to LPT’s in how they treat existing losses and the development of premium. However, unlike an LPT, a retrospective aggregate loss contract addresses gaps

An expense directly assigned to or that arises from a particular claim; examples of Allocated Loss Adjustment Expense include court fees and outside legal counsel.

An accounting concept; expense (short-term) or capitalizing (long-term) of intermediate term costs (development costs); writing off the value of an intangible asset over its useful

Acronym for Agent of Record

Acronym for Associate Surplus Lines Insurance

Anything of commercial value, including real or personal, tangible or intangible property.

When one knowingly and voluntarily exposes themselves to a known danger.

Used when an application or medical examiner’s report regarding a life or health insurance applicant reveals conditions or situations, past or present, about which more

An accounting concept, a report on the auditor’s opinion of the correctness of the information and the freedom from material misstatements.

A land motor vehicle, trailer, or semi-trailer designed for use on public roads, but does not include “mobile equipment.”

Persons who are granted insured status because they fit into a category or class of persons described in the policy provisions.

A risk control technique which totally eliminates an exposure to avoid the chance of a loss; avoidance eliminates both positive and negative outcomes.

In computing workers compensation experience modifications, a specific value taken from a rating manual table used to limit the effect of a single severe accident

A procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age at which

An annuity contract clause that enables the owner of the contract to withdraw the invested money without surrender penalties if the annual interest rate drops

Person or organization that has possession of the property of others, usually for storage, repair, or servicing. A dry cleaning operation is a common example

Situation in which property of one has been entrusted to another. A bailment can be for the benefit of either party or both. The degree

Person or organization that owns property that has been entrusted to another. The owner of a suit who has entrusted it to a dry cleaning

An accounting concept, a measurement of the assets and equities (liabilities and owners’ equity) in an organization as of a specific point in time.

In computing workers compensation experience modifications, a specific value taken from a rating manual table used to limit the effect of a single severe accident

Provides limited benefits for hospital services, supplies and some physician expenses.

In retrospectively rated plans, usually a percentage of the standard premium, often determined by multiplying the standard premium by a basic premium factor. It provides

In retrospectively rated plans, a factor based on the Table of Expense Ratios, the Table of Insurance Charges, and the individual loss limitation if selected.

Manual rate that is adjusted to compensate for varying exposure to risk.

The process of comparing an organization’s business processes and performance measures to another organization’s processes and performance measures to provide a “snapshot” of the organization’s

An individual who is eligible to receive or is receiving benefits under an insurance policy. (Also see Irrevocable Beneficiary, Primary Beneficiary, Secondary Beneficiary, and Contingent

Factors calculated for each state by the National Council on Compensation Insurance (or other workers compensation rating agencies) representing the impact of regulatory changes on

The maximum length of time benefits are paid.

Discounted values of the cash inflows divided by the net investment. Used to compare the net present value (PV) of various projects, particularly when funds

Authority that is granted to the insurance agent as outlined in the company’s agent contract.

A method for combining the value of property of different types or at different locations into a single limit of insurance on a property insurance

Acronym for Board of Directors

Bodily harm, sickness, or disease, including death that results from the harm, sickness, or disease.

Contract that guarantees the performance of a contract, as in surety bonding, or protects against the dishonesty of employees, and in fidelity bonding. Unlike many

Historical cost less accumulated depreciation as recorded on the organization’s accounting records.

Commonly known as loss rating; losses are trended to ultimate values for a pre-set number of years; units of exposure are trended for those same

Failure to live up to the conditions or warranties contained in a contract.

Additional development on known claims or the increase in reserve value as the claim is investigated and settled.

Planned retention based upon the portion of expected losses the organization is willing and able to retain.

The taking of property from within a premises by a person unlawfully entering or breaking out of a premises as evidenced by marks of forcible

Includes trade, profession, or occupation.

As related to the Business Judgment Rule, action must be taken in making business decisions. Not taking action is protected if it results from a

Knowing what is right or wrong in the workplace and then doing what is right; fundamental ground rules of our work lives; the process of

Single most powerful defense available to a director or officer and recognizes that not all decisions of the directors or officers will benefit the organization

Insurance coverage that enables a business to remain open while the key person or business owner is disabled and unable to work.

An arrangement for the orderly disposition or transfer of a business interest that spells out what events specifically trigger the disposition of the business interest

A policy, typically disability insurance or long-term care insurance, that can be cancelled at any time, or at a specified time, by the insurer.

The termination of the insurance policy by either party.

Acronym for Chief Acquisitions Officer

Include management and acquisition expenses, domicile expenses such as annual licensing fees, actuarial expense, letter of credit expense, and other expenses not related to losses.

A closely held insurance company whose insurance business is supplied by and controlled by its owners and in which the insureds are the beneficiaries (adapted

Group of individually owned captives that combine to re-insure one another; risk sharing among captives. See Pooling.

Professional society for actuaries in areas of insurance work other than life insurance. This society grants the designation of Associate and Fellow of the Casualty

A team that carefully reviews and monitors the entire treatment process when unusually high expenses are projected or incurred for a condition.

Amount the claims adjuster puts on an individual claim that has not yet been paid; there is no provision for development and IBNR (incurred but

The amount of cash due an insured who surrenders a Cash Value Life Insurance policy.

The amount of cash due an insured who surrenders a Cash Value Life Insurance policy.

Acronym for Chief Brand Officer

CDHC or Consumer-Driven Healthcare – Originated in the late 1990’s with the intention of increasing healthcare consumer awareness of the rising cost of healthcare by

Acronym for Chief Executive Officer

Certified Insurance Counselor (CIC) is an insurance professional designation. The CIC program was started by the National Alliance for Insurance Education & Research in Austin, Texas in 1969 by founder

Acronym for Chief Information Officer

Acronym for Chartered Life Underwriter

Acronym for Chartered Life Underwriter

A federal regulation that requires employers with 20 or more employees in a prior year to allow employees and their covered dependents who lose employer-sponsored

Assignment of a life insurance policy or its value as security for a loan. In the event of death of the assignor (owner/insured), the creditor

The right of a beneficiary to receive in a single lump-sum the remaining payments under an installment option selected for the settlement of the proceeds

Providers are invited to present general proposals, ideas, or concepts for handling the insurance coverage and services without specific pricing of any coverage or service;

An insurance contract in which the insurer’s promise is conditioned upon (dependent upon) certain things occurring or being done.

A form normally required to be signed by an agent and given to a prospective life insurance policy insured/owner at the time a new application

A federal regulation that requires employers with 20 or more employees in a prior year to allow employees and their covered dependents who lose employer-sponsored

Also known as COPE – A term referring to a building structure’s construction, occupancy, protection and exposure; used by underwriting to determine the risk of

CDHC or Consumer-Driven Healthcare – Originated in the late 1990’s with the intention of increasing healthcare consumer awareness of the rising cost of healthcare by

The time period during which the insurer is not obligated to pay a claim (usually two years, but depending on state law) because of material

A provision in an insurance policy setting forth the conditions and the period of time during which an insurer may contest or void a policy.

The person who receives death benefits when a primary beneficiary does not survive the insured.

Body of law that governs the performance of a promise. An enforceable contract must have the following four characteristics: competent parties, agreement or assent, legal

Liability of another party assumed under a contract or agreement, either expressed or implied, as opposed to liability incurred directly, as in tort.

Assumption or limiting exposures of certain liabilities relating to another party. See non-insurance risk transfer.

When a Liability Insurance policy says it and another company will pay a share of the loss equally until either the loss is paid or

Provision found in group health policies, specifying how benefits will be paid when more than one insurer covers an insured.

A flat fee the insured pays each time covered services are provided or prescription drugs are purchased and is paid directly to providers, facilities or

A term referring to a building structure’s construction, occupancy, protection and exposure; used by underwriting to determine the risk of offering a policy.

A legal entity considered to be a separate tax and legal entity having an existence that is separate and distinct from its owners.

In statistics, a measure of the strength of a linear relationship between two variables ranging from -1 to +1. When the correlation coefficient r =

COVID-19 is a disease caused by a new strain of coronavirus. ‘CO’ stands for corona, ‘VI’ for virus, and ‘D’ for disease. Formerly, this disease

Underwriter

Acronym for Certified Risk Manager

A liquidity ratio that measures the organization’s ability to pay bills over the short term; current assets divided by current liabilities.

Acronym for Directors & Officers

Factor used in the workers compensation experience modification plan to separate the expected total losses into primary and excess losses. A D-ratio is the normal

Financial ratios measuring the ability of an organization to repay its creditors over the long term. Also a measure of the degree of leverage, or

Measure of the relationship of debt to equity; total debt divided by stockholders’ equity.

An accounting concept; the reduction in inventory and a charge against income for the use of natural resources, e.g., oil, coal, forest growth.

The writing/selling of insurance by mail or phone.

The writing/selling of insurance by mail or phone.

A system where the producer is an employee of the insurer, writing direct and only with that company, and is not an independent contractor.

Liability resulting from a director or officer of an organization committing a negligent act or omission, misstatement or misleading statement.

The benefit payable under a disability income policy or a disability provision of some other policy, such as a life insurance contract.

Provides a portion of income lost as the result of a total or partial disability.

When an insured once had the money and/or “securities,” and now does not know where they are.

The organization’s average cost of capital, rate income can be earned, or its weighted cost of capital, commonly referred to as the WACC.

Factor used in the workers compensation experience modification plan to separate the expected total losses into primary and excess losses. A D-ratio is the normal

Liability estimates that have been reduced to reflect the potential to earn investment on funds set aside to pay losses which have occurred but not

A dividend plan is a guaranteed cost plan with a dividend option.

Distributions to shareholders of a corporation’s earnings. Dividends can also be distributed to policy owners of participating insurance policies that are usually issued by mutual

Acronym for Direct Notice of Cancellation

During a dispute being decided by the courts, the courts ask what a reasonable person would expect in a particular situation.

One that is domiciled in a particular state, admitted or permitted to operate in their state of domicile and are closely regulated in that state

An insurance company that is incorporated in, domiciled in, and organized under the laws of a state.

Legal and regulatory jurisdiction under which an insurance company chooses to be formed and operate.

An accelerated depreciation method used for tax management purposes.

Acronym for Disaster Recovery

As related to the Business Judgment Rule, a decision must be made based on reasonable and relevant information.

Actions taken to investigate documents and records of a business and/or person prior to examination of a proposed action before it is undertaken, executing a

The length of time long-term care insurance will pay maximum daily benefits.

The Dynamics of Selling Series is a multi-day insurance specific sales training course. Designed and taught by leading, insurance sales professionals who are active in

Acronym for Excess & Surplus

Amount of the premium that has been “used up” during the term of a policy; for example, if a one-year policy has been in effect

Cumulative net income, also known as retained earnings.

After-tax net income divided by number of common shares of stock outstanding.

Acronym for Employee Benefits

A general class of risk; risks arising from operations, economy, financial marketplace or entrepreneurial activities.

Future stream of income assigned to the property.

The date an insurance policy goes into effect, sometimes referred to as the policy date.

The length of time an insured must be disabled under a disability income and long-term policy before receiving benefits.

When computing workers compensation experience modifications, the factor taken from actuarial tables used to calculate total expected losses for the specific classification given the audited

New exposures to loss for which a risk treatment has not been implemented; existing exposures to loss that are evolving, difficult to quantify and may

In statistics, the rule that nearly all values lie within 3 standard deviations of the mean for a normal distribution.

A person in the service of another under a contract of hire, who acts under the direction and control of the person who hired him/her.

Any plan, fund, or program established or maintained for the purpose of providing employee benefits to its participants or beneficiaries (EISA).

An agent of the company in a limited agency capacity.

A percentage of eligible employee participation required before an insurer will write an employer-sponsored group plan.

Any plan that provides retirement benefits to employees or defers income for employees to periods after termination of employment.

A federal regulation enacted to protect participants and their beneficiaries. ERISA contains provisions that stand on their own and also added or amended provisions of

Any plan that provides medical care or benefits for sickness, accident, disability, death, unemployment, vacation, training, day care, scholarships, or prepaid legal services, or any

The amount of premium an employer pays for employees and their dependents under the employer-sponsored group plan.

Acronym for Experience Modification Rate

Used by an insurer to clarify or make revisions to particular provisions of a policy. Also called “riders.”

A type of permanent life insurance where the cash value will be equal to the originally chosen face amount/death benefit at a predetermined future date.

A systemic process of identifying, analyzing, assessing, and responding to all risks, regardless of the source, that affects the achievement of an organization’s strategic and

Buyer purchases all ownership interests of the entity.

A network of medical care providers structured in a similar manner to a PPO but have many of the requirements of an HMO.

After-tax net income divided by number of common shares of stock outstanding.

A form of whole life, universal, or variable life insurance with the cash value account tied to a stock index, most commonly the Standard &

1) the applied science of equipment and workplace design intended to maximize productivity by reducing operator fatigue and discomfort; 2) fitting the work environment to

A federal regulation enacted to protect participants and their beneficiaries. ERISA contains provisions that stand on their own and also added or amended provisions of

A systemic process of identifying, analyzing, assessing, and responding to all risks, regardless of the source, that affects the achievement of an organization’s strategic and

A tax payable to the federal government due to the death of an individual. It is a transfer tax based on the value of owned

Amount of premium charged at the time a policy is issued. The estimated premium based on estimated exposures times the negotiated premium rate. This amount

Legal concept that holds a party is barred or impeded by his/her own acts from claiming a right to the detriment of another party who

Pertaining to standards of right conduct or practice arising out of ethics. See Business ethics.

Moral principles of a group or individual as developed over time and with life experiences.

A statement of information and proof of health condition for underwriting of an insurance policy.

“From favor”, a payment to a claimant without regard to legal liability.

Insurance protection for limits above those contained in a primary policy or above a self-insured retention. Excess insurance usually does not include a duty to

An agreement to share specified losses. The reinsurer indemnifies the primary insurer for the amount of loss in excess of a specified retention. The retention

The reinsurer pays only when the aggregate loss from any one occurrence exceeds the predetermined retention of the ceding company. The primary use of excess

Premium that is not a part of a loss sensitive rating formula. In a retrospective rating plan, the excess premium usually purchases the excess insurance

A form of Treaty reinsurance, where no insurance is ceded, only the losses are ceded.

Exclusions vary from one policy to another and limit or eliminate the insurer’s exposure to certain types of losses that are catastrophic in nature, beyond

A system made up of agents who represent only one insurance company or a group of companies under common ownership or control.

A network of medical care providers structured in a similar manner to a PPO but have many of the requirements of an HMO.

Pre-event exoneration of the fault of one party that results in any loss or specified loss to another.

Initial estimate of losses for a given policy period.

When computing workers compensation experience modifications, the factor taken from actuarial tables used to calculate total expected losses for the specific classification given the audited

Projection of the frequency and/or severity of losses based on loss history, probability distributions, and statistics; the expected loss projection is commonly called a “loss

The expected incidence of death within a given group during a given period of time, as shown in a mortality table developed by actuaries.

Expense factor (usually expressed as a dollar amount) added to the premium charged for a class of policies that would otherwise produce insufficient premium to

A ratio that indicates the percentage of premiums used to pay the insurers’ operating expenses.

An account held by an insurer funded through the initial premium and subsequent premium deposits, if any.

Factor developed by measuring the difference between the insured’s actual past experience and the expected experience of the class. The factor may be either a

A rating that considers the individual loss experience of a particular insured. It applies loss experience to the present policy year. Describes any plan that

Each unit is assigned costs on an equitable basis based on the loss experience each unit presents.

The mortality that actually occurs to a group of insureds in contrast to expected mortality.

A situation, practice or condition that may lead to an adverse financial consequence; an activity or resource; people and assets

Each unit is assigned costs on an equitable basis based on the exposures each unit presents.

Authority expressly given by the insurer, either orally or in writing.

A group policy provision that pays a life benefit when (1) the insured is totally and continuously disabled at the time the policy owner stops

Using other funds other than the organization’s funds for the financing of losses, e.g. insurance, borrowing and contractual transfer.

The amount of coverage provided by a life insurance policy, also referred to as coverage amount or death benefit.

A form of reinsurance using offer and acceptance of individual risks, in which under a contract of reinsurance, the reinsurer retains the faculty to accept

A federal regulation that provides employees who have been employed at least 12 months and have worked at least 1,250 hours within that 12 month

A person related to the insured by blood, marriage, or adoption who is a resident of the insured’s household.

1) under common law, liability imposed upon a party who stands in a special relationship of trust with another party for a breach of that

An accounting method used to value inventory and the cost of goods sold. Sales are considered to be made against the earliest-purchased or produced merchandise

Process of managing an organization’s assets, liabilities, and cash flows to maximize shareholder (or stakeholder) wealth.

Risks related to an organization’s financial activities resulting in upside and downside outcomes.

Used by primary insurance companies and large self-insurers; the accepted term used to describe a spectrum of loss financing concepts that combine internal and external

An accounting method used to value inventory and the cost of goods sold. Sales are considered to be made against the earliest-purchased or produced merchandise

Insurance policy on two lives, with a death benefit to be paid to the surviving insured upon the death of one of the insureds (also

Assets with an expected life in excess of one year.

A benefit, the dollar amount of which does not vary.

Costs that do not vary with the level of output, especially fixed financial costs such as interest, lease payments, and sinking fund payments.

Fixed, periodic benefit payments are made until the principal and interest are exhausted.

Benefits are guaranteed to be paid in equal installments for a specified period of time.

Insurance that pays out a death benefit when the life insured dies during the term of the policy.

A whole life contract and a security vehicle that features flexible premium payments, non-guaranteed cash values and either a minimum guaranteed death benefit or no

A federal regulation that provides employees who have been employed at least 12 months and have worked at least 1,250 hours within that 12 month

In the law of insurance, a superior or irresistible force. Also common to construction contracts to protect parties in the event that a part of

Insurer domiciled outside a state that operates in that state under a certificate of authority granted by that state’s insurance department. A foreign insurer may

Event subject to chance without the implication of suddenness.

Material used to construct the building.

An intentional manipulation of the truth, and the act of getting someone to rely on that manipulation of the truth, which results in the person’s

A period of time (usually 10, 20 or 30 days) during which a policy owner may examine a newly issued policy of life and surrender

The number of losses occurring in a given time period.

Use of one insurance company, usually a domestic, admitted carrier, to issue policies on behalf of the captive.

A healthcare reimbursement account that allows employees to set aside money through payroll deductions on a pre-tax basis to pay for anticipated eligible medical expenses,

A plan where the policyholder (individual or employer) pays a defined premium to an insurer and does not share in the risk associated with actual

Used by larger organizations to assume management of all exposures; useful when losses for both frequency and severity are very predictable and often used in

Employer retains 100% of the cost of claims. Because there is no reinsurance protection most employers choose a partially self-funded financial arrangement.

Cost to repair or replace damaged or destroyed property with materials that are functionally the equivalent of the damaged or destroyed property.

The setting aside of sufficient sums of money to meet future liabilities.

Value in the future of a payment or payments made in the present.

Principles in financial accounting that serve to assure consistency in financial reporting. GAAP is a type of self-regulation in that members of the financial accounting

An award based on a measure of intangible damages inferred from the Special Damages and other facts and circumstances (e.g., pain and suffering).

A partnership in which each general partner may act on behalf of the partnership and is personally liable for the partnership’s obligations.

Principles in financial accounting that serve to assure consistency in financial reporting. GAAP is a type of self-regulation in that members of the financial accounting

As related to the Business Judgment Rule, a decision must be made with an honest belief that the decision is in the best interest of

1) In accounting, the difference between the market price paid for an asset an organization and its book value; 2) in common usage, customer relationship

Non-commercial accounting system that features accounts for budgets, encumbrances and restricted use assets. Also called “fund accounting.”

A prescribed period, usually 30 to 31 days after the premium due date, during which an insurance contract stays in force and the overdue premium

Death benefits that, in the early years of the contract for an otherwise uninsurable individual, are less than the face amount of the policy, but

A modified life insurance policy for which the initial premium is low, and then increases in steps over a period of time (usually five years),

The premium for participating life insurance. If an insured elects to use his dividends to pay premiums, the gross premium becomes the net premium when

Gross profit Sales revenue less cost of goods sold.

Gross profit divided by sales.

The annual premium showing on the policies, collected on a gross basis. For a captive, GWP is the annual pay-in of premium by the organization(s).

Owned by multiple, unrelated organizations who are the policyholders; owners may be either homogeneous or heterogeneous.

A single multi-specialty medical group contracted with an HMO to provide care to the HMO’s insureds.

Any of a wide array of arrangements in which two or more small employers purchase health insurance collectively, often through a common intermediary who acts

Insurer guarantees to convert into a different type of policy at the request of the policy owner.

An insurance plan for which a fixed premium for the policy term, subject to audit, is paid by the insured regardless of the number and

Sometimes called Guaranteed Purchase Option, an option that allows an insured or owner to buy additional coverage at certain times even though he or she

Guarantees the premium rates will not change during the entire term of the policy.

Guarantees an insurance policy will continue in force, provided the policy premiums are paid on time.

The annual premium showing on the policies, collected on a gross basis. For a captive, GWP is the annual pay-in of premium by the organization(s).

A condition or circumstance that may give rise to a loss from a given peril; physical, moral, or morale characteristics that make the likelihood of

Risks covered by insurance resulting in downside outcomes only.

A plan that requires employees to bear a greater financial burden in their healthcare by requiring a larger amount of expenses be paid by the

A federal law that provides rights and protections for employees and their covered dependents in group health plans that limit exclusions for pre-existing conditions; prohibit

Provides a comprehensive benefits package including physician visits, laboratory services, hospitalization and surgery, and focuses on preventive care, early diagnosis and outpatient treatment. An HMO

An account owned, maintained and funded by the employer to pay Qualified Medical Expenses for employees.

A tax-saving plan for individuals and employees participating in High Deductible Health Plans to save and pay for Qualified Medical Expenses. HSA funds may also

A healthcare reimbursement account that allows employees to set aside money through payroll deductions on a pre-tax basis to pay for anticipated eligible medical expenses,

A plan that requires employees to bear a greater financial burden in their healthcare by requiring a larger amount of expenses be paid by the

A federal law that provides rights and protections for employees and their covered dependents in group health plans that limit exclusions for pre-existing conditions; prohibit

Original purchase price.

Provides a comprehensive benefits package including physician visits, laboratory services, hospitalization and surgery, and focuses on preventive care, early diagnosis and outpatient treatment. An HMO

Affirmative assumption of the financial consequences for liabilities of another through a contract. See Indemnification agreement.

Medical care provided by trained personnel in the patient’s home for patients who do not need the more extensive treatment provided by a hospital, skilled

A program or facility that provides care to the terminally ill.

An account owned, maintained and funded by the employer to pay Qualified Medical Expenses for employees.

A tax-saving plan for individuals and employees participating in High Deductible Health Plans to save and pay for Qualified Medical Expenses. HSA funds may also

Minimum accepted rate of return from a project.

Represents the liability for unpaid claims not reflected in the case reserve estimates for individual losses. The two components to IBNR reserves are pure IBNR

Implementing the desired actions and risk management plans; an element of the risk administration step of the Risk Management Process.

Authority of the agent, which is not specifically expressed or communicated, but which is consistent with the agent fully exercising the express authority granted by

An event that disrupts normal activities and may become a loss, claim or business interruption.

Various rights a policy owner may exercise under the policy contract. Some of the incidents of ownership would be the rights to (1) cash in

A life insurance contract that provides income on a monthly basis, as opposed to a policy that pays proceeds in a lump sum.

A report of the organization’s financial performance for a stated time period.

Tax treatment depends upon type of captive, premium volume, and investment income.

A clause in a policy stating that after a policy has been in effect for a given length of time (generally one or two years),

Ratio applied to losses at one retention level (e.g. $1,000,000 per occurrence) to determine expected losses at another retention level (e.g., $5,000,000).

Represents the liability for unpaid claims not reflected in the case reserve estimates for individual losses. The two components to IBNR reserves are pure IBNR

Expenses not yet paid. Can also include paid expenses in some accounting systems.

Portion of an earned premium dollar that is spent on incurred losses.

1) The total amount of paid claims and loss reserves associated with a particular period of time (usually a policy year). Generally, incurred losses are

Affirmative assumption of the financial consequences for liabilities of another through a contract. See Indemnification agreement.

To make compensation to an entity for incurred hurt, loss, or damage; restore to original position.

The party that is relieved of liability assumed by the indemnitor.

The party that assumes the liability inherent in a situation.

Restoring an injured party to the financial position they enjoyed prior to a loss; reimbursing an injured party suffering loss for the amount of the

Also known as “fee-for-service plans”, provide a specified payment for medical services rendered regardless of the actual charges.

Organization or a person hired by an insurer and paid a fee for settling claims.

A system of marketing insurance that involves self-employed parties (independent contractors (agents)) who enter into contracts with usually more than one insurer to represent the

Individual or entity that agrees to perform specific work for another but is not subject to direction or management by the person who contracted for

Physicians that retain their individual practices and separate offices but belong to a legal entity for contracting purposes with HMOs.

Contracts where the policy owner can share in a percentage of the growth of an indexed investment (a mutual fund tied to the Standard &

What is an Indexed Ultimate Total Loss? Answer: Indexed Ultimate Total Loss are incurred losses that have been developed (trended) and indexed (adjusted) for inflation.

Amount of premium calculated for any one period using the retrospective rating formula.

A loss or damage that results from an insured’s inability to use his/her property because of direct loss to the property of others.

Health insurance that is typically purchased by individuals who are self-employed, unemployed or work for a company that does not offer employee health benefits.

A self-directed, tax-deferred retirement investment account established by employed workers who earn a salary, wage, or self-employment income. An individual may establish an IRA account

Premium loading to provide for future increases in claims costs and loss payments resulting from inflation.

A feature that increases the amount of an insurance benefit by a fixed percentage automatically every year, to adjust for inflation.

Requirement to refrain from doing an act.

General acceptability by an insurer of an applicant for insurance, based on underwriting review, which may include items such as the applicant’s current health status,

The existence of potential financial loss on the part of the policy owner and/ or beneficiary in the event of the death of the insured.

A person authorized by an insurer to solicit applications, collect premiums, and write policies on behalf of the insurer.

The insurance broker is an individual who acts or aids in the negotiation of insurance contracts, in placing risks, or in soliciting or effecting contracts.

Insurance company.

Person(s) protected under an insurance contract.

Insurance company that assumes risks for insureds and performs other insurance-related operations, such as loss control and claims settlements.

Property that has a value and lacks a physical existence, such as industrial property consisting of inventions, designs, or trademarks, or copyrights, such as artistic

When an individual commits an act with the intent of causing injury, damages, or a private violation of another person’s rights.

Using the organization’s funds for the financing of losses, e.g. deductibles, planned retentions, uninsured losses (planned or unplanned).

The calculation of an “unknown” discount rate that makes the PV of future cash inflows exactly equal to the net investment at time zero; only

A global system of interconnected computer networks using a standard Internet protocol to access data and information available on the World Wide Web (www); a

Investment returns on invested funds (loss reserves, capital, and retained earnings).

Acronym for Insurance Operations

A self-directed, tax-deferred retirement investment account established by employed workers who earn a salary, wage, or self-employment income. An individual may establish an IRA account

A beneficiary that cannot be changed without the beneficiary’s consent.

The date an insurance policy is issued. This may also be the effective date of the policy coverage.

Acronym for Inception To Date

1) Legal doctrine applying in some states that allows an injured person to sue and recover the full amount from any one or more of

Association of two or more individuals or organizations who engage in a specific or limited business transaction; a partnership between separate business organizations.

An annuity that provides income to two or more people and continues in force as long as any one of them survives.

Provides annuity payments to the annuitant until they die then to the named survivor for their life. Usually spouse, but could be anyone named.

Exterior walls of masonry material (adobe, brick, concrete, gypsum block, hollow concrete block, stone, tile, or similar materials) with combustible floor and roof.

A rate that is applied solely to individual insureds by the insurance company.

A general class of risk; risks arising from a jury or judge’s decision or from court or jury attitudes.

In probability theory and statistics, a statistic that measures the degree of peakedness in a distribution; also known as a measure of the volatility of

The point in time when the policy has been terminated or cancelled, usually due to non-payment of premium.

An accounting method used to value inventory and the cost of goods sold. Sales are considered to be made using the latest-purchased or produced merchandise

In probability and statistics, the larger the number of units independently exposed to loss, the more accurate the ability to predict loss results arising from

Building an insurance program in steps, utilizing the excess-of-loss approach, whereby one insurer writes in excess of lower limits accepted by other insurers.

The behavior from a risk manager to cause people to take action; an element of the managerial process.

A general class of risk; risks inherent in compliance or arising from statutory liability.

In Universal life insurance, an option that provides a level death benefit similar to a whole life policy. This option may also apply in some

Insurance where the premium remains the same throughout the life of the contract.

The face value remains the same from the effective date until the expiration date.

Use of external fixed cost sources of capital for the organization, e.g., long-term debt and preferred stock.

Legal responsibility or fault.

As shown in the mortality or annuity table used as a reference, the average number of years remaining for a person of a given age

Provides protection for a person’s “expectation of life.” This becomes the term of the policy, as opposed to the ordinary term policies that are for

A settlement option under which a life insurance policy pays equal installments as long as the beneficiary lives, even if the principal has been exhausted.

A contractual system of risk sharing under which contributions are accumulated and redistributed to meet the economic consequences of the uncertain duration of life.

Benefits continue for the lifetime of the insured.

The maximum amount the insurer would pay in benefits for an insured during the insured’s lifetime while covered under the policy.

Pre-event limitation of the amount, type, or method of calculation of damages available by one or both parties to an agreement.

Health insurance plans that contain certain limitations that impose internal limits or “caps” on specific types of medical care.

A business organization possessing the pass-through tax nature of a partnership while creating a separate legal entity similar to a corporation.

A partnership in which the general partner is the managing partner who operates the business and the limited partners are not involved in the day-to-day

A life insurance contract with premiums paid for an indicated number of years.

See Limit of liability clause.

Ability of an organization to convert assets into cash quickly with little or no loss, such as selling or factoring accounts receivable and selling marketable

Financial ratios that measure the organization’s ability to pay bills over the short term. Includes the current ratio, quick ratio, and net working capital.

Arises from causing or contributing to another’s intoxication, or from furnishing alcohol to a minor

A rider attached to a life insurance policy that allows for the payment of a percentage of the death.

An association of private underwriters, each of whom underwrites (backs) insurance contracts on a basis of personal liability.

A term that refers to the amount of money an insured can borrow using the cash value of his or her life insurance policy as

A network of computers interconnected with one another within a limited area.

A blanket term for a wide range of services designed to meet medical, personal, and social needs in a variety of settings and locations.

An individual who plans and coordinates long-term care and assists individuals with the details of housing, home care services, socialization programs, and financial and legal

An amount that will be available under a long-term care policy taking into consideration the expected daily cost of a chosen care facility at a

The maximum amount of time, expressed in years, that the insured will receive long-term care benefits.

Funds borrowed from external sources; the least expensive source of capital for an organization.

Liabilities that are expected to be paid after one year, such as long-term debt, mortgages or deferred income tax liability.

A reduction in value.

See Risk control.

In retrospective rating, a factor used to cover claim adjustment expenses and the cost of the insurer’s or third-party claim administrator’s services.

Application of various methods of analyzing loss data to identify and understand the potential impact those losses may have on the organization’s risk management program

Difference between the original loss frequency and/or severity as originally reported to an insurer and its subsequent evaluation at a later date or at the

Ratios applied to a current valuation of losses to determine an estimate of ultimate incurred losses. These factors are calculated by comparing the period-to-period changes

Predicting future losses through an analysis of past losses.

Used in retrospective rating formulas, the maximum amount of any one loss included in the retrospective rating plan. In effect, this lessens the impact of

Portfolio of previously incurred losses that is transferred for a premium; addresses known losses.

Rating technique that establishes the prospective rate based upon historical losses that will be applied to an exposure base to compute the premium.

Proportionate relationship of incurred losses to earned premiums expressed as a percentage.

Listing of reported claims providing such information as the date of occurrence, type of claim, amount paid and amount reserved for each as of the

Estimation of the liability for unpaid claims that have occurred as of a given date, including the IBNR claims, claims due but not yet paid,

See Retention Loss run. See Loss report.

Adjusting historical losses to account for inflationary trends so that the ultimate value is more current or meaningful. Loss trend factors are multiplied by actual

Study of changes, the relationship of one period to a previous period. The process involves graphs in which the data is displayed in an inverted

Benefits paid to the beneficiary all at once rather than in installment payments.

Provides greater benefits for services such as in-patient and out-patient hospital care, intensive care, physician charges and other medical services.

A partnership between insurers and providers through contracts to provide care at discounted costs for benefits defined in the policy.

Incorporates basic utilization programs such as case management, pre-certification and recertification of certain services into a traditional indemnity plan.

An internal accounting system that provides accurate and timely financial information for use by managers to make short-term and day-by-day financial decisions.

Planning, organizing, leading and evaluating the resources of people, funds, materials, and time to protect the organization’s assets and positively affect the organization’s performance.

A person or firm who has an independent business that performs for one or more insurers some or all of the functions typically attributable to

Rates as promulgated by a rating bureau before application of any credits, discounts, surcharges or deviations. Such rates are referred to as “manual rates” because

Measures of the value of a corporation’s common stock in the financial market.

Amount a willing buyer will give to a willing seller.

Measure of the market price of a share of common stock divided by its book value per share.

Highly liquid securities that have a low but positive yield, normally publicly traded stocks and bonds.

Exterior walls of masonry material (adobe, brick, concrete, gypsum block, hollow concrete block, stone, tile, or similar materials) with floor and roof of metal or

An attempt by insurance companies to provide some forms of insurance in a more economical fashion.

The date cash value equals the face value of a whole life or endowment policy and becomes payable to the policy owner.

The amount paid under a whole life insurance contract if the insured reaches the age of the mortality table on which the contract was based.

Worst possible Property loss that could occur.

Maximum that can be charged under a retro plan regardless of the losses; maximum paid by the insured under a retro plan.

See Probable Maximum Loss

In retrospective rating, a factor established by agreement between the insured and the insurer to determine the maximum premium. Excess loss premiums may be included

Sum of all observations divided by the number of observations; the average (also known as the arithmetic mean).

In statistics, a statistic that defines the center of a distribution, such as the arithmetic mean or average, the median, or the mode.

In statistics, a statistic that describes the spread of values about the mean of a distribution, such as range, variance, and standard deviation.

Midpoint of the observations ranked in order of value; half the observations lie below and half above; the middle value (also known as the 50th

A jointly funded federal and state program that provides hospital expenses, medical expense coverage, and in some cases long-term-care-type coverage to the low-income population and

A data pooling organization that maintains information on individuals who have applied for insurance with life and health insurance companies that subscribe to the bureau.

A trust created exclusively for paying qualified medical expenses of the account holder. Allowable contributions are tax-deductible and growth is tax- free if the account

A federal government medical insurance plan originally for individuals age 65 and older or disabled. The age requirement has been raised based on year of

Also known as “Medigap”, individual health insurance coverage designed to bridge coverage gaps in Medicare.

A federal regulation that requires employers to provide coverage for the diagnosis and treatment of mental illness and substance abuse under the same terms and

Two or more organizations that create a new entity, agree to move forward as one and issue the appropriate ownership interests (common stock, memberships, partnerships,

Acronym for Managing General Agent

Acronym for Managing General Underwriter

As a consequence of COVID-19 and the closing of schools, parents have started organizing “microschools,” or homeschooling pods, where groups of three to 10 students

Provides a lower level of benefits with a lower premium.

Automatic 60-day extended reporting period allowing for the making of claims after expiration of a “claims made” liability policy.

Also known as “minimum continuation premium”, the premium that is lower than the target premium. It is used in universal life policies to skip premiums

In retrospective rating, the minimum amount of premium to be paid by the insured, determined by multiplying the minimum retrospective premium factor by the standard

A self-insured health plan that includes a maximum dollar amount that an employer must pay for claims.

In retrospective rating, a factor established by agreement between the insured and the insurance carrier to determine the minimum premium.

A misstatement of facts regarding the subject of insurance (the item being insured).

Legal concept that imposes a duty on an injured party to exercise reasonable diligence and ordinary care in attempting to minimize damages after injury or

Also known as a “hybrid HMO”, are closed-panel HMOs that expanded their market by offering an open model product on a regional or national level

Observation that occurs most often in the sample; the highest frequency.

Depreciation by IRS schedule according to the type of asset; ach MACRS class has a predetermined schedule used to determine the percentage of the asset’s

Examining and evaluating the results of risk management actions and plans; an element of the Risk Administration step of the Risk Management Process.

Proclivity to cause a loss to effect an insurance recovery, e.g., arson.

Indifference to loss, such as poor housekeeping or maintenance.

The measure of the probability of expected sickness or injury within a given group.

The measure of the probability of dying at a certain age. Mortality rates usually reflect the actual experience of an insurer with its insureds, adjusted

An incorporated insurance company owned by its policyholders.

National Alliance Difference Makers is a quarterly multimedia series highlighting insurance and risk management professionals who display excellence and make positive impacts on the industry

Association of insurers selling workers compensation coverage that operates as a rating organization. NCCI collects statistics, develops rates and policy forms, and makes state filing

Failure to exercise a degree of care which a reasonably prudent person would exercise under the same circumstances. The following four elements must be proven

Value of an organization’s assets as carried on the balance sheet in accordance with applicable accounting system principals. Under financial accounting (GAAP), the historic or

Premium deposited in the captive. From the perspective of the fronting company, it is ceded reinsurance. From the captive’s perspective, it is assumed reinsurance.

Operating income less interest expense and taxes; amount that can be distributed to an organization’s owners or kept as retained earnings.

Net income divided by sales.

The measurement of the PV of future cash inflows compared to the net investment of a project.

In financial management, the evaluation of a project or option by determining if the PV of expected inflows exceeds the PV of expected outflows.

Measure of the amount of profit within sales; net income divided by sales.

Sum of underwriting profit (loss) and investment income from underwriting.

Measure of ability of an organization to quickly meet its current obligations; current assets less current liabilities.

Total value of all assets minus all liabilities.

Multiple groups of medical providers contracted with an HMO to provide services to HMO insureds.

A federal regulation that requires group and individual plans that offer maternity benefits to provide coverage for a hospital stay following a normal delivery for

Director or officer is protected against honest errors in judgment that can be justified by a rationale or that are not egregious on their face.

A policy sold directly to consumers from the insurer, thus minimizing sales expenses.

Anything that distorts a message by interfering with the communication process.

Assets of an insurer that are not permitted by the state insurance department or other regulatory authority to be taken into account when determining an

Insurer authorized to operate in a state under a certificate of authority but not being subject to that state’s financial, form, and rate regulations.

An insurance policy that the insured has the right to keep in force by paying the premium for a period (stated in the contract). The

A term used to describe a situation where there are two or more insurance policies not written with the same coverage, or effective dates.

A group health plan that has no cost sharing – the employer pays the full cost of an eligible employee’s coverage under the plan.

Pain, suffering, and other non-monetary losses.

Provision that ensures the insured cannot lose the equity of a whole life insurance policy. A policy owner can select from three options under the

The transfer of risk through a contract other than an insurance contract.

Transfer of risk from one party to another party other than an insurance company. This risk management technique usually involves risk transfers by way of

Assets that are not entered onto the balance sheet.

Often combine general liability, automobile liability, workers compensation (with fronting carriers) and other miscellaneous lines with no per occurrence stop loss or loss limitation; works

The action by the insurance company to terminate insurance coverage at the expiration date or anniversary date of the policy.

A premium that is not a part of a loss sensitive rating formula. For example, in a retro plan, the non-subject premium usually purchases the

In claims management, a bilateral agreement between an insurer and a claimant that permits the continued processing of the claim while preserving the insurer’s rights

Exterior walls, floor, and supports made of metal, asbestos, gypsum, or other noncombustible materials.

In statistics, a distribution in which the mean, median, and mode are the same; it has the same value at the high point of the

An accounting concept, the explanation of how specific transactions have been treated; the rules by which the financial statements are drawn.

Amount that an insurer will pay to settle a claim that may not be valid or may be of lesser value so as to avoid

A licensed facility that provides 24-hour-a-day nursing care to assist individuals who need long-term care.

Person, firm, or corporation protected by a surety bond; the party to whom the principal under the bond is obligated.

Under a surety bond, the party who owes the obligation to the obligee.

The occupants or operations in the building.

In, upon, getting in, on, out, or off.

An accident with the limitation of time removed; an “accident” that is extended over a period of time rather than a single observable happening.

An accident with the limitation of time removed; an “accident” that is extended over a period of time rather than a single observable happening.

An insurer domiciled outside the US. By definition, all off-shore insurance companies are alien, in spite of ultimate ownership by a US corporation.

Acronym for Operating Committee

A period when eligible individuals can choose to enter or make changes to in a plan.

Insurers contract with individual or groups of physicians to provide services to the HMO insureds. Open-panel providers and facilities may also contract with other HMOs

Gross profit less operating expenses.

Operating income divided by sales.

Risks related to processes and management resulting in upside and downside outcomes.

The actions a risk manager takes to arrange and relate work to be done so that it can be performed most effectively by others.

In Health Insurance, a stop loss provision that defines the maximum dollar amount an insured must pay in out-of-pocket expenses during the year. Once an

In statistics, an extreme value, or a value numerically distant from the rest of the data.

On a loss run, the amount calculated by subtracting paid losses from incurred losses and representing the remaining liability to be paid on a loss

The specific regular occupation in which an individual is engaged at the time he or she becomes disabled.

The individual or entity controlling all rights, benefits, and privileges of a life insurance contract. This may or may not be the insured. Ownership may

Value of the organization’s assets less liabilities; includes capital, surplus and accumulated retained earnings.

Acronym for Property & Casualty

Retrospectively rating insurance plan that uses only paid losses to determine the retrospective premiums due at each adjustment. A paid loss retrospective rating plan allows

Amount actually paid in losses during a specified period of time, not including estimates of amounts (i.e., reserves) that will be paid in the future

Amount actually paid in losses during a specified period of time, not including estimates of amounts (i.e., reserves) that will be paid in the future

Original cost of a newly issued share of common stock less its stated par value. Insurance company common stock (and commercial bank stock) often has

A policy that has no further premium payments due, but under which the insurance coverage (life benefit) remains in effect.

Question: What are Pandemic Pods? Answer: As a consequence of COVID-19 and the closing of schools, parents have started organizing “pandemic pods,” or homeschooling pods,

In business management, the observation that 80% of effects come from 20% of the causes. Also known as “Pareto Efficiency” or the “80/20 Rule”.

Legal concept describing oral or verbal evidence. In contract law, parole evidence relates to the inadmissibility of oral representations that would otherwise alter or defeat

Partial Disability – When an insured is working, but is unable to perform one or more of the major duties of his or her occupation,

Employer retains a portion of claim risks by paying incurred claims up to an amount determined in the contract. Employers typically purchase a reinsurance policy

A policy that pays dividends if the board of directors authorizes such payments.

Any transaction involving any fiduciary, counsel, or employee of a plan; plan service provider, or anyone with a stated interest in or relationship with a

Unplanned acceptance of losses because of failure to identify risk, failure to act, or forgetting to act.

Enacted by the federal government on March 23, 2010 to ensure consumer rights and protection for healthcare.

In financial management, the measurement of the length of time needed to recoup the cost of a capital investment.

Schedule illustrating the percentage of loss dollars actually paid in settlement of claims over time.

The cause of a loss.

A payout of a fixed dollar amount that remains the same throughout the specified annuitization period.

An accounting of goods sold and their corresponding costs performed at specified points during the accounting period; the most common method.

A policy that offers lifetime protection by combining a cash value with death benefits.

A record is made of every sale and continuous costs of each item sold are transferred from inventory asset to the cost of goods sold

All tangible property not classified as real property. See Real property.

All property other than buildings or other structures.

Coverage that protects the collection of property owned by an insured that is not considered part of a building or structure.  It can be at

A general class of risk; risks arising from property, people or information.

A group of physicians or hospitals that form alliances to help providers attain market share, improve bargaining power, reduce administrative costs and sell their services

Party bringing a lawsuit against another.

The process a risk manager takes to predetermine a course of action; an element of the managerial process.

Acronym for Program Managers Agreement

A hybrid of HMO and PPO plans.

The maximum dollar amount an insurance policy will pay for a covered loss.

A loan from the insurer to the policy owner, secured by the policy’s cash value.

The owner of an insurance policy. The policy owner can be different from the insured.

The period of time for which the insurance policy provides coverage.

The geographical area in which accidents, occurrences, or events must happen to have coverage under the insurance policy.

A general class of risk; risks arising from changes in the law, governmental reinterpretations or changes in government policy.

A self-insurance strategy used by two or more organizations that desire to share risks with each other. The organizations are not individually capable of self-insuring.

In statistics, the entire group of observations. See Sample.

A healthcare provider’s authorization, or pre-admission certification, for an insured’s non-emergency hospital admission and certain covered benefits prior to an insured receiving the care.

Requirement that an insured must notify the insurer prior to an elective inpatient hospital admission after an emergency admission.

Excludes coverage for conditions the policy defines as pre- existing. Under PPACA, beginning September 23, 2010, group health plans may not exclude insureds under age

Insureds have the option of obtaining service within the PPO network (in-network) or with providers that are not contracted with the PPO (out-of-network). Primary Care

Type of stock issued by a corporation that has ownership privileges with respect to payment of dividends and distribution of assets greater than those of

Amount of money an insurance carrier charges to provide the coverage described in the policy.

1) A discount allowed on premiums paid in advance of one year based on projected interest to be earned. 2) a discount allowed on certain

Used in self-insured health plans, the cost per covered employee, or the amount the employer would expect to reflect the cost of claims paid, administrative

Value today of a future payment or payments, discounted at the appropriate discount rate.

In a disability income policy, a percentage of disability that will be considered without a waiting period if the insured suffers the total and complete

Measure of the market price of a share of common stock to its earnings; market price of a common share divided by earnings per share.

When computing workers compensation experience modifications, the actual loss amount (each loss equal to or less than $15,000) is included in the calculation at its

The person or entity named on the policy who has the first right to receive life insurance policy death benefits.

Also known as a “gatekeeper,” authorizes and refers the insured to specialists and other healthcare providers.

The entity whose performance is being guaranteed in a surety bond.

The organizational charter and its by-laws control what the executives can and cannot do. Violations of these “laws” are ultra vires acts, or acts beyond

An agreement to share insurance. The reinsurer gets an agreed percentage of the original premium, less a ceding commission, and pays the same percentage of

A form of reinsurance where the treaty is set up on the understanding that a certain part of every exposure will be shared on an

Chance of something occurring within a stated time period, ranging from 0 (impossibility) to 1 (certainty).

An estimate developed for property insurance underwriters that represents the worst amount of loss that is likely to happen, as opposed to the worst possible

A court-supervised process by which a will is determined to be the deceased’s final statement regarding the disposition of his or her property.

Measure of the returns on various bases.

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Legal concept holding that a false statement will be treated as a promise when the listener relied upon the false statement to his/her detriment. The

Physical damage to, destruction of, or loss of use of property.

Covers losses that have not yet occurred, that may never occur and those losses that occur after the effective date of the contract.

A type of rent-a-captive which is permitted by legislation to legally separate the assets and liabilities of insureds as opposed to contractual separation or no

As related to property, the safeguards, equipment and measures provided by the building owner or occupant to minimize hazards.

An independent adjuster who represents policyholders in the adjustment of their losses with insurers for a fee.

Damages in excess of those required to compensate the plaintiff for the wrong done. Punitive damages, also called exemplary damages, are imposed to punish the

Ratio of the losses incurred in a given period to the earned premium for that period.

Chance of loss or no loss; no chance of gain.

Acronym for Quarter to Date

Defined by the IRS Code Section 213 and include expenses for the diagnosis, cure, mitigation, treatment or prevention of disease, obtained from medical providers and

Concerning the income taxation of contributions, plans that cannot discriminate and must comply with specific IRS codes and regulations. Contributions are deductible from income taxes

An insurance plan subject to state regulation, such as self-insured workers compensation plans or self-insured automobile liability plans, in which regulatory oversight is needed to

The “what” analysis; identification and assessment of loss exposures that cannot be easily measured by traditional statistical or financial methods; helps management understand the potential

The “how much” analysis; attempts to accurately measure risks by using acceptable traditional methodologies to calculate relative numerical values.

A liquidity ratio that measures the organizations ability to pay bills over the short term; the remainder of current assets less inventory divided by current

Latin for “this for that,” or “one thing for another.” In contract law, it refers to the legal consideration of values required by both parties

The primary insurer or ceding company cedes (sells) a portion of every exposure it insures within a class or classes subject to the treaty. Both

The difference between the largest and smallest values.

The manner in which a life insurance premium is determined, based upon the individual’s health condition, family history, occupation, hobbies and other factors specific to

Land and most things attached to the land, such as buildings and vegetation.

A group of individuals or organizations, called subscribers, who join together into an association for the purpose of insuring one another.

A repetitive sickness or injury that is a continuation of a prior covered sickness or injury.

Act of abstaining from a discussion or decision because of a conflict of interest or the appearance of a conflict of interest.

The use of any one method or a combination of methods to reduce loss frequency or loss severity.

Changing a contract to reflect true intentions.

In statistics, a technique of modeling the relationship between variables by fitting a line to a scatter of dots.

Restoration of a lapsed life insurance policy to its original status.

The acceptance by one or more insurers of a portion of the risk underwritten by another insurer that holds a contract for the entire coverage.

A process involving the transfer of risk from one insurer to another insurer.

A contractual agreement in which one insurer agrees to insure the assumed liabilities of another insurer, a self-insured firm, or another reinsurer.

Portion of the risk that the primary or original insurer transfers to the reinsurer.

Insurer who accepts all or a portion of the liabilities of the ceding or primary company.

A policy the insured can renew without presenting evidence of insurability, also known as guaranteed renewable.

A licensed offshore insurer owned by an outside organization, e.g., a broker, reinsurer, insurance company, or other business enterprise, which makes its services available to

The cost to replace damaged property with like kind and quality without taking into account depreciation.

Providers are “invited” or requested to provide a proposal for insurance coverages; typically, the providers are assigned markets from which they will obtain proposals and

Rate of return required from an investment to compensate for the level of risk involved.

“The matter has been decided,” a legal concept of common law stating that the prior decisions of judges and juries have determined the outcome. See

In claims administration, a letter sent by an insurer to a claimant to preserve the insurer’s right to deny a claim following their investigation by

Amount of money earmarked for a specific purpose.

After a period of total disability, the insured is able to return to work. However, the insured is unable to do one or more important

A provision in a disability income policy that provides for benefits to be paid when the insured can do some, but not all, of his

Separate charge intended to subsidize an assigned risk or involuntary market.

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Usually associated with a long-term care situation, and normally occurs when a family member of the patient who is providing a majority of the care

Internal funds retained from net income and not distributed to holders of common stock.

Acceptance or assumption of the risk of loss, which means any loss is paid out of pocket.

1) Internal funds used to pay losses; 2) budgeted losses plus the “tolerance corridor.” See Tolerance corridor; 3) assumption of risk of loss as through

Amount of loss that is self-insured. It is usually expressed on a per occurrence basis and is sometimes referred to as the self-insured retention (SIR).

Graphic depiction of an organization’s financial ability and risk appetite.

Amount of additional premium or return premium for each successive period determined by comparing the current period’s indicated retro premium to the preceding period’s retro

Transaction that transfers liability from the reinsurer to another insurer, perhaps even back to the primary insurer, in whole or in part.

Are directed to the past and contemplative of post-loss situations. Two types – loss portfolio transfers and aggregate loss contracts.

Rating plan that adjusts the premium, subject to a certain minimum and usually a maximum, periodically to reflect the actual loss experience of the insured.

Rating plan that adjusts the premium, subject to a certain minimum and usually a maximum, periodically to reflect the actual loss experience of the insured. 

A rider that can be attached to many life, health, disability and LTC policies (for an extra charge), that will return all or part of

Measure of the return on assets; net income divided by total assets.

Measure of the return on equity; net income divided by stockholders’ equity.

A highly flexible ratio measuring the financial benefits of an investment activity to its costs.

A status in which a life policy can be changed without the consent of the beneficiary. The owner of the policy can change any part

A provision that an insurer attaches to a policy to expand or restrict the benefits of the policy.

The chance of loss; the uncertainty of loss; the variation from the expected outcome over time; the difference between expected losses and actual losses.

Uncertainty that may be either positive or negative arising from a given set of circumstances. Common definitions also include: 1) chance or probability of loss,

Visual analytical tool utilized to communicate key risks; it presents the risks with the highest impact and probability; can range from simple to complex depending

Implementation and monitoring of the Risk Management Process; a step of the Risk Management Process.

The assessment of the potential impact of various exposures on an organization; a step of the Risk Management Process.

The organization’s willingness to accept or tolerate risk.

Any conscious action or inaction to minimize at the optimal cost, the probability, frequency, severity, or unpredictability of loss; a step of the Risk Management

The use of back-ups for critical systems or operations; a risk control technique in which the goal is to reduce overall severity.

The acquisition of internal and external funds to pay losses at the most favorable cost; a step of the Risk Management Process.

Process of identifying and examining exposures of an organization; the first and most important step of the risk management process.

The practice of protecting an organization from financial harm by identifying, analyzing, and controlling risk at the lowest possible cost.

Process of managing uncertainty of exposures that affect an organization’s assets and financial statements using five steps: identification, analysis, control, financing and administration.

Information system that supports the user in identifying, measuring and managing risks in the organization or other organizations.

States the purpose and overall goal of the risk management program and guides the actions and decision-making of the risk manager.

Defines the policy for managing risks and the relevance to the organization’s strategic plan, goals, and objectives; clarifies risk management goals and direction; outlines the

Reaffirms and communicates senior management’s support for the risk management program to all employees with a brief statement; defines scope, responsibilities and authority of risk

Provides an overview of risk management programs on a periodic basis to identify successes and opportunities for improvement.

An action taken to break the sequence of events that leads to a loss or that makes the event less likely; the goal of this

Measurement of expected losses for a finite period of time based on historical data including but not limited to, total losses, number of losses, average

Group formed in compliance with the Risk Retention Act for the purpose of negotiating for and purchasing insurance from a commercial insurer.

Actual forecasting of loss frequency and severity to determine allocation decisions.

A risk control technique in which the goal is to reduce the severity or financial impact from losses that are not prevented.

Conscious acceptance of losses that the organization or company will finance using only internal funds. See retention.

A special type of group captive whose business is limited to liability coverage for owners/insureds. Formed under the Federal Liability Risk Retention Act of 1986,

An isolation of an exposure from other exposures, perils, or hazards; a risk control technique in which the goal is to reduce overall severity.

The spread of exposures or activities over several locations; a risk control technique in which the goal is to reduce overall severity.

Risk control technique that attempts to reduce or prevent loss by transferring some or all of the risk to another organization, either through a physical

Difference between an anticipated result (loss) and the standard deviation.

An organization’s financial capacity for assuming risk.

The unlawful taking of property from a person by actual violence or threat of violence.

A retirement savings account that allows an individual to deposit after-tax funds (not tax-deductible) up to specified annual contribution limits and accrue earnings income tax

Acronym for Regional President

Acronym for Risk Retention Group

Damaged or recovered stolen property taken over by the insurance company.

1) Gross salvage is the total amount a company expects to recover from salvage, and 2) net salvage is the gross amount less costs associated

In statistics, a subset of a larger group having the same characteristics of the group.

See Severability clause.

A type of life insurance policy that insures two lives, also referred to as a survivorship policy, where the death benefit is payable at the

A person designated by the policy owner to receive policy proceeds if the primary beneficiary is deceased at the time benefits become payable, also known

The federal agency charged with the responsibility of regulating the securities industry and enforcing federal securities regulation.

See Protected cell company.

Any transaction using plan assets for personal gain, transactions on behalf of persons whose interests are adverse to the plan, and personal.

An insurance plan in which an organization makes a conscious decision to not purchase insurance and pay certain claim amounts using 100% internal funding. Self-insured

Dollar amount specified in an insurance policy that must be paid by the insured before the insurance policy will respond to a loss; often used

See Severability clause.

An injury resulting in death, serious impairment of body function, or permanent serious disfigurement.

The choices available for the payment of death benefits. The owner can select a settlement option before the insured’s death and the beneficiary has no

Contract provision that rescues the balance of a contract if one or more parts are held to be invalid or unenforceable. Also referred to as

The dollar amount of a given loss or the aggregate dollar amount of all losses for a given period.

A long-term care plan that allows the insured to purchase an additional Daily Benefit that either spouse may use.

A method of handling risk that involves the potential loss exposure being distributed among a number of persons.

A temporary policy to bridge gaps in coverage during times of transition such as coverage loss due to life or job changes, employment as a

An individual retirement account for a self-employed person or a small company. Allows for a greater contribution maximum than an IRA.

A type of captive that insures or reinsures the risks of its owner.

Requires one lump-sum, up-front premium and is often guaranteed to remain paid-up throughout the insured’s lifetime.

Damage caused by the sudden sinking or collapsing of land into an underground empty space typically caused by water on limestone or dolomite.

In statistics, an asymmetrical distribution in which the mass of the distribution is concentrated on one side or the other.

In statistics, the measure of the degree of asymmetry of a distribution.

A facility with a professionally trained staff that provides medical treatment, continuous nursing, rehabilitation, and various other health and social services to patients who are

A general class of risk; risks arising from public relations, loss of reputation, damage to brand, cultural issues, social direction or social media.

A business organization in which a sole proprietor is entitled to all profits, and will bear all losses, generated by the business and free of

A person who is hired and authorized by the insurance agent to solicit applications of insurance.

The measurable dollar amounts of an actual loss.

Also known as “dread disease” insurance, it covers some expenses associated with narrowly-defined illnesses listed on the policy, most commonly available for cancer, heart attack

A form of reinsurance using offer and acceptance of individual risks, in which under a contract of reinsurance, the reinsurer retains the faculty to accept

Chance of loss or gain; often referred to as a “business risk”.

The most restrictive type of HMO where insureds select his or her primary care physician within the model but the HMO may close a particular

In statistics, the square root of the variance.

Premium that is determined on the basis of authorized rates, any experience modification rating, applicable loss constants and minimum premiums; specifically excludes premium discounts and

“Let the decision stand,” a legal concept of common law stating that the prior decisions of judges and juries have determined the outcome. See Res

A method of fixing the maximum amount payable in an insurance policy.

A report summarizing the effects of cash on the operating, investing, and financial activities of an organization for a specific period of time.

See Income Statement.

Legal concept that holds no suit or action shall be maintained on certain classes of contracts or engagements unless there is a note or memorandum

Any statute that prescribes the time limit in which a legal action must be brought.

Those principles required by statute that must be followed by a regulated financial organization, such as an insurance company or bank when submitting its financial

Enactments of legislative and administrative bodies.

An incorporated insurance company owned by its stockholders.

Net worth, retained earnings or total assets less total liabilities; sum of the book value of common stock less treasury stock, preferred stock, and additional

A form of reinsurance for self-insured employers that limits the amount the employers will have to pay for each covered employee’s and dependents healthcare claims

Most commonly used method; annual depreciation = historical cost less estimated salvage value divided by years of estimated useful life.

Risks related to an organization’s strategic plan and its mission resulting in upside or downside outcomes; most likely cause of failure of organizations.

Liability directed by law (statute or common law) without regard to the intention of the offender’s actions. Strict liability shifts the burden of proof; it

Holds sellers, distributors, and manufacturers of products responsible for defective or unduly hazardous products.

Settlement in which the plaintiff agrees to accept a stream of payments, in whole or in part, in lieu of a lump sum. Annuities are

In retrospective rating plans, the portion of the premium applied to the retrospective rating formula. It is generally used to help calculate the basic premium,

1) The legal right of one who has paid another’s obligation to collect from the party originally owing the obligation, e.g., the insurer’s right to

The right of an insurance company to recover an amount of money paid to an insured for a loss when the loss is someone else’s

Legal doctrine that protects the party to a contract who makes an honest endeavor in good faith to perform his/her part of the contract with

A life insurance policy provision that states if the insured dies by suicide within a certain period of time from the date of issue (usually

Promisor under a bond; the party that promises to fulfill the obligation of the bonded party or principal; a surety company.

The primary insurer or ceding company cedes to the reinsurer a pro rata share of risks, but the reinsurer only pays its percentage of losses

An annuity contract that allows the owner to surrender the contract if income payments have not yet started. Upon surrender, the contract terminates and the

A fee charged when an owner surrenders the policy for the policy’s cash value.

A life insurance provision stating when the death of the insured and the primary beneficiary is at the same time, the benefits would skip the

When calculating loss development factors from historical data, a factor that recognizes that at some point, older data becomes unavailable or is no longer relevant

A suggested premium used in universal life policies that does not guarantee there will be adequate funds to maintain the policy to any time, including

In retrospective rating plans, a factor applied to an insurance premium to cover licenses, fees, assessments, and premium taxes the insurance carrier must pay on

Growth in the value of a plan or account that is not taxed until the dollars are withdrawn at the applicable tax rate at that

A type of life insurance that provides coverage for a predetermined amount of time.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed into law by President Trump on March 27th, 2020.  This

The Certified Insurance Service Representative (CISR) Program for High School gives students the opportunity to earn a nationally recognized industry designation before they graduate. Provided by

The National Alliance story began in 1969 in Austin, Texas when a small group of independent agents approached insurance professor Dr. William T. Hold to

Any act of stealing.

An individual or company hired by an employer to process claims, pay providers, and manage other functions related to the operation of a plan.

Claims administrator or insurance company that processes claims on behalf of a self-insured organization.

A financial ratio that measures how much of the interest obligation of an organization is covered by net income; a measure of default risk; earnings

An analysis that identifies trends over time.

The value of money over a given amount of time considering a given amount of interest.

Marginal retention beyond budgeted retention that the organization may also choose to retain.

Commonly known as manual rating or scheduled rating; an experience modification factor, scheduled credits or debits, premium discounts and/or deductible credits are applied to a

Private or civil wrong, other than a breach of contract, for which the courts will provide a remedy in the form of an action for

A civil wrong (as opposed to criminal) against another party.

Sum of all quantified costs and expenses associated with the risk management function of an organization. TCOR includes insurance costs, retained losses, risk management departmental

The process that identifies and attributes the total cost of risk among the various business, operating, or accounting units within an organization.

Incurred losses that have not been developed nor indexed for inflation.

Ratio of the losses incurred and the Allocated Loss Adjustment Expense (ALAE) for those losses in a given period to the earned premium during the

A technique involving one party transferring the uncertainty of loss to another party or parties.

Includes loss or damage arising from collision, derailment, or overturn of a vehicle, stranding or sinking of vessel, or collapse of bridges, piers, or docks.

A form of reinsurance in which a contract of reinsurance automatically establishes the terms for reinsuring a class or classes of business.

The ceding company agrees to cede certain classes of business to a reinsurer. The reinsurer agrees to accept all business qualifying under the reinsurance treaty

Used to adjust past loss experience to the current cost levels, generally taking into account inflation and other similar forces.

An obligation that binds a person (trustee) to deal with property in a particular way for the benefit of another person or class of persons

A fixed annuity in which the interest rate credited to the annuity varies depending on the distribution option chosen by the owner.

Total losses that will have been paid when all claims have reached final settlement.

Incurred losses that have been developed.

Salaries, overhead, and other related adjustment expenses not specifically allocated or charged to a particular claim. Certain insurance carriers apply a nominal flat charge to

The process of selecting a risk and assigning a proper rating classification (to calculate the correct premium) in a manner that the insured obtains coverage

The process by which the cost of the coverage is determined. Insurers (and self- funded plans) seek assistance from actuaries.

Expected losses, allocated loss adjustment expenses, captive expenses and any miscellaneous costs borne by the captive.

Net ceded premium less total underwriting expenses.

Amount of premium remaining after deducting the earned premium from written premium; the portion of a premium representing the unexpired part of the policy period.

Reserves with no or insufficient funds to meet future liabilities.

A federal regulation that requires employers to meet certain requirements for employees who are involved in the uniformed services. The rights cover: COBRA, medical, dental,

Depreciation charged per unit of production – historical cost less estimated salvage value divided by number of units to be produced.

A type of permanent life insurance policy that gives the policy owner the flexibility to change the face amount as well as the payments, has

A building that may contain furnishings and/or personal property, but it does not have people occupying it.

A practice using survey information that identifies medical charges by geographic area, specific medical service Current Procedural Terminology (“CPT”) code, and medical cost trends.

The process of reviewing the appropriateness and quality of health care provided to patients. Utilization review may take place before, during, or after the services

A contract is considered to be a contract of “utmost good faith” when the parties to the contract rely heavily on the honesty and integrity

Not enough business personal property to conduct normal operations. In a rather broad sense, it means no contents.

Cut-off date for adjustments made to paid claims and reserve estimates in a loss report.

Declares the amount that will be paid in the case of a total loss of the property

An annuity with investments in separate accounts directed by the owner, such as growth, high-yield, or small cap mutual funds, etc.

A life insurance policy where the assets are invested in mutual funds or similar equity securities. Cash value accumulation over time will depend solely on

In statistics, the modified average of the squares of the deviation of each value from the arithmetic mean of those values. The “modified average” refers

A term that describes the process by which a participant earns ownership rights of a benefit funded by an employer. When fully vested, a participant

A general term referring to transactions in the viatical settlement marketplace. A viatical settlement is the proceeds from the sale of a life insurance policy

Rules created by professional, trade, and other organizations to internally govern their members.

Waiver- 1) Legal concept that holds a party who intentionally or voluntarily relinquishes a known right, claim, privilege, or the opportunity from taking advantage of

1) Legal concept that holds a party who intentionally or voluntarily relinquishes a known right, claim, privilege, or the opportunity from taking advantage of that

The voluntary giving up of a known right.

An insurance policy rider that allows a policy owner to stop making premium payments if the insured suffers a disability. Premium payments will be waived

A statement that promises or guarantees that something is absolutely true or will be true in the future.

Acronym for Workers Compensation

An accounting method used to value inventory and the cost of goods sold. This method applies the costs of individual items as items are sold

A computation of the cost of capital from the organization’s current mix of capital sources. Capital consists of long-term debt, preferred stock, common stock, and

In workers compensation experience modifications, a percentage value taken from the same actuarial tables used above to determine the percentage of excess losses to be

In workers compensation experience modifications, a percentage value taken from the same actuarial tables used above to determine the percentage of excess losses to be

Whole Life Insurance – A type of permanent life insurance that is characterized by guarantees such as fixed death benefit, guaranteed cash value, and fixed

A type of permanent life insurance that is characterized by guarantees such as fixed death benefit, guaranteed cash value, and fixed premiums.

A telecommunication network that covers a broad area.

A federal regulation that includes protections for individuals who elect breast reconstruction in connection with a mastectomy. Group and individual health plans that cover medical

A federal regulation that includes protections for individuals who elect breast reconstruction in connection with a mastectomy. Group and individual health plans that cover medical

Inventory that is in the process of being manufactured or worked upon.

Inventory that is in the process of being manufactured or worked upon.

An area of excess reinsurance in which loss frequency is expected.

An area of excess reinsurance in which loss frequency is expected.

Total premiums on all policies written by an insurer during a specified period of time, regardless of the portions that have been earned.

Total premiums on all policies written by an insurer during a specified period of time, regardless of the portions that have been earned.