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A

  • "A" (or Judgment) Rates
  • AAA
  • AAI
  • AAIPA
  • AAIS--American Association of Insurance Services
  • AAM
  • AAMGA--American Association of Managing General Agents
  • AAU--Associated Aviation Underwriters
  • Abandonment
  • Abandonment clause
  • ABI
  • Absolute assignment
  • Absolute beneficiary
  • Absolute liability
  • Absolute ownership
  • Abutting coverage
  • ACAS
  • Accelerated death benefits (ADB)
  • Accelerated endowment
  • Accelerated option
  • Accept
  • Accident
  • Accident and sickness insurance
  • Accident control
  • Accident experience
  • Accident frequency
  • Accident insurance
  • Accident only insurance
  • Accident prevention
  • Accident reconstructionist
  • Accident report
  • Accident severity
  • Accident year experience
  • Accidental bodily injury
  • Accidental death
  • Accidental death and dismemberment insurance (AD&D)
  • Accidental death benefit
  • Accidental death insurance
  • Accidental means
  • Accidental occurrence
  • Accommodation line
  • Account current
  • Account executive
  • Account premium modification plan
  • Account selling
  • Accountants professional liability insurance
  • Accounts receivable insurance
  • Air passenger insurance
  • Accrual basis of accounting
  • Accrued benefit
  • Accumulate at interest option
  • Accumulated funding deficiency
  • Accumulation
  • Accumulation period
  • Accumulation units
  • Accumulation value
  • ACFE--Association of Certified Fraud Examiners
  • Acid and chemical damage policy
  • ACORD—Association for Cooperative Operations Research and Development
  • ACORD forms
  • ACORD - User Groups Information Exchange
  • Acquisition cost
  • ACS
  • ACSR
  • Act of God
  • Act of God bond
  • Actionable
  • Active life fund
  • Active life reserve
  • Active malfunction
  • Actively-at-work-provision
  • Actual authority
  • Actual cash value
  • Actual total loss
  • Actuarial adjustment
  • Actuarial assumptions
  • Actuarial benefit equivalence
  • Actuarial cost method
  • Actuarial equivalent
  • Actuarial funding method
  • Actuarial gains and losses
  • Actuarial present value
  • Actuarial report
  • Actuarial science
  • Actuarial Society of South Africa
  • Actuarial valuation
  • Actuaries and pension consultants professional liability
  • Actuary
  • ADA—Americans With Disabilities Act
  • ADB—accelerated death benefits
  • Add-ons
  • Additional coverages
  • Additional death benefit
  • Additional deposit provision
  • Additional extended coverage
  • Additional insured
  • Additional living expense insurance
  • Additional medical
  • Additional named insured
  • Additional premium
  • Additional provisions
  • Additional term insurance option
  • Adequacy
  • Adhesion contract
  • Adjacent
  • Adjoining
  • Adjustable life insurance policy
  • Adjustable policy
  • Adjustable premium
  • Advance profits insurance
  • Adjuster
  • Adjusters errors and omissions insurance
  • Adjustment
  • Adjustment bureau
  • Adjustment expenses
  • Adjustment income
  • Administration expenses
  • Administrative services only (AS0) plan
  • Administrator
  • Admiralty
  • Admiralty courts
  • Admiralty liability
  • Admiralty proceeding
  • Admitted assets
  • Admitted company
  • Admitted insurer
  • Admitted liability
  • Admitted market
  • Admitted reinsurance
  • Admitted reinsurer
  • Ad valorem
  • ADR
  • Advance deposit premium plan
  • Advance funding
  • Advance payment
  • Advance premium
  • Adventure
  • Adventure clause
  • Adverse selection
  • Adverse underwriting decision
  • Advertisers liability insurance
  • Advertising injury
  • Advisory organization
  • A and E coverage
  • Affiliated company
  • Affiliation of health providers
  • Affinity group
  • Affinity marketing
  • Affirmative warranty
  • African-American Insurance Professionals Association (AAIPA)
  • AFSB
  • Aftercare
  • After charge
  • AGC
  • AGC Surety Bond Committee
  • Age Adjustment Clause
  • Age Change
  • Age Discrimination in Employment Act (ADEA)
  • Age Limits
  • Age of Majority
  • Agent of Record Letter
  • Agency
  • Agency Appointment
  • Agency Company
  • Agency Contract
  • Agency Plant
  • Agency Reinsurance
  • Agency Superintendent
  • Agent
  • Agent of Record
  • Agent's Authority
  • Agent's Balance
  • Agent's Commission
  • Agents Errors and Omissions Insurance
  • Agent's License
  • Agent's Qualification Laws
  • Aggregate Benefits
  • Aggregate deductible
  • Aggregate excess insurance
  • Aggregate excess of loss reinsurance
  • Aggregate extension clause
  • Aggregate funding method
  • Aggregate indemnity
  • Aggregate limit
  • Aggregate working excess reinsurance
  • Aggregator
  • Agreed amount
  • Agreed amount clause
  • Agreed value
  • Agreed value clause
  • Agricultural equipment insurance
  • AIA--American Insurance Association
  • AIAF
  • AIC
  • AICP
  • AIM
  • AIMU
  • Air cargo liability insurance
  • Air travel insurance
  • Aircraft hull insurance
  • Aircraft insurance
  • Aircraft liability insurance
  • Aircraft passenger liability insurance
  • Aircraft product liability insurance
  • Aircraft spare parts insurance
  • Airport liability insurance
  • Airway bill
  • AIU--American International Underwriters Corporation
  • Alarm valve
  • ALCM
  • Alcoholic Beverage Control (ABC) laws
  • Alcoholic beverage liability insurance
  • Aleatory contract
  • Alien company
  • Alienated premises exclusion
  • Alienation clause
  • Alienation of benefits
  • All American Marine Slip
  • All payers system
  • All-comers
  • All-lines insurer
  • All-risk policy
  • Alliance of American Insurers
  • Allied lines
  • Allocated benefits
  • Allocated claim expense
  • Allowed assets
  • Allowed costs
  • Alphabet broker (alphabet house)
  • Alternative dispute resolution
  • Alternative market
  • Alternative risk transfer
  • Alternate settlement option
  • Ambiguity
  • Ambulance service malpractice insurance
  • Ambulatory care
  • Amendment
  • American Academy of Actuaries (AAA)
  • American agency system
  • American Arbitration Association
  • American Association of Insurance Services (AAIS)
  • American Association of Managing General Agents (AAMGA)
  • American Bureau of Shipping
  • American Cargo War Risk Reinsurance Exchange
  • American College, The
  • American Council of Life Insurance
  • American Hull Insurance Syndicate
  • American Institute for Property and Liability Underwriters, Inc.
  • American Institute Hull Clauses
  • American Institute of Marine Underwriters (AIMU)
  • American Insurance Association (AIA)
  • American International Underwriters Corporation (AIU)
  • American Lloyd's
  • American Mutual Insurance Alliance
  • American Nuclear Insurers
  • American Risk and Insurance Association
  • American Society of Insurance Management, Inc. (ASIM)
  • Americans with Disabilities Act (ADA)
  • AMIM
  • Amortization
  • Amortization period
  • Authorized reinsurer
  • Amortized value
  • Amount at risk
  • Amount of insurance
  • Amount subject
  • Analytic System for the Measurement of Relative Fire Hazards
  • Analytics
  • Ancillary benefits
  • Animal insurance
  • Animal mortality insurance
  • Anniversary date
  • Annual aggregate deductible
  • Annual form
  • Annual renewal agreement
  • Annual report
  • Annual statement
  • Annual (yearly) renewable term insurance
  • Annualization
  • Annuitant
  • Annuity
  • Annuity certain
  • Annuity due
  • Annuity period
  • Annuity table
  • Annuity with period certain
  • Anti-arson application forms
  • Anti-coercion laws
  • Anti-concurrent causation
  • Antidiscrimination laws
  • Anti-rebate law
  • Anti-selection
  • Antitrust laws
  • Any occupation
  • APA
  • Title
  • APM
  • Apparent authority
  • Applicant
  • Application
  • Appointment
  • Apportionment
  • Appraisal
  • Appraisal clause
  • Appraisal inventory
  • Appraiser
  • Appreciation
  • Approved
  • Approved roof
  • Appurtenant structures
  • "A rates"
  • Arbitrage
  • Arbitration clause
  • Arbitrator
  • Architects and engineers (A&E) coverage
  • Architects and engineers professional liability insurance
  • Architects', Surveyors' and Consulting Engineers' Fees
  • ARe
  • ARIA
  • ARM
  • Armored car and messenger service insurance
  • ARP
  • Arson
  • Arson fraud
  • ART
  • A.S.--automatic sprinkler
  • ASA
  • ASIM--American Society of Insurance Management, Inc.
  • ASLI
  • ASO
  • AS0 plan
  • ASSA
  • Assailing thieves
  • Assessable insurance
  • Assessable policies
  • Assessment
  • Assessment mutual
  • Assets
  • Assigned risk plan
  • Assignee
  • Assignment
  • Assignment of benefits
  • Assignor
  • Associate in Surplus Lines Insurance
  • Associated Aviation Underwriters (AAU)
  • Associated General Contractors of America
  • Association captive insurance company
  • ACORD—Association for Cooperative Operations Research and Development
  • Association group insurance
  • Association of Average Adjusters
  • Association of British Insurers
  • Association of Certified Fraud Examiners (ACFE)
  • Association of Insurance Compliance Professionals
  • Association of Trial Lawyers of America (ATLA)
  • Association professional liability insurance
  • Assume
  • Assumed liability
  • Assumption endorsement
  • Assumption of risk
  • Assumption reinsurance
  • Assurance
  • Assured
  • ATLA--American Trial Lawyers Association
  • Attach
  • Attachment
  • Attachment point
  • Attained age
  • Attained age conversion
  • Attending physician's statement
  • Attestation clause
  • Attorney-in-fact
  • Attractive nuisance
  • At-will employment
  • AU
  • Auctioneers errors and omissions insurance
  • Audit
  • Audit bureau
  • Audit policies
  • Audit provision
  • Audited premium
  • Auditor
  • AUGIE
  • AUS--automated underwriting systems
  • Authorization
  • Authorized company or insurer
  • Auto insurance premium discounts
  • Automated home
  • Automated underwriting systems (AUS)
  • Automatic cover
  • Automatic dividend option
  • Automatic nonforfeiture option
  • Automatic premium loan
  • Automatic reinstatement
  • Automatic reinsurance
  • Automatic sprinklers (A.S.)
  • Automatic treaty
  • Automobile death and disability coverage
  • Automobile fleet
  • Automobile insurance
  • Automobile insurance plan
  • Automobile liability excess policy
  • Automobile liability insurance
  • Automobile medical payments insurance
  • Automobile physical damage insurance
  • Auxiliary yacht
  • Average
  • Average adjuster
  • Average clause
  • Average indexed monthly earnings (AIME)
  • Average rate
  • Average risk
  • Average weekly wage
  • Aviation clause
  • Aviation insurance
  • Aviation passenger liability insurance
  • Avoidance of risk
[A000]

"A" (or Judgment) Rates

Rates used by an insurer that are not statistically credible because adequate data does not exist for that particular coverage or class. Such rates are based on the experience and best judgment of the underwriter for each individual risk.
AAA

(See American Academy of Actuaries.)
[A363]

AAI

Alliance of American Insurers
(See: 1. accredited adviser in insurance; 2. Alliance of American insurers [also see Property Casualty Insurers Association of America.])
AAIPA
(See African-American Insurance Professionals Association.)
[A001]

AAIS--American Association of Insurance Services

The rating bureau for inland marine, aircraft hull and package insurance fields for insurers choosing to participate. Formerly Transportation Insurance Rating Bureau. Headquarters: Bensenville, IL.
[A301]

AAM

Associate in Automation Management designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

[A002]

AAMGA--American Association of Managing General Agents

A trade association of independent insurance general agents serving the interests of insurance companies and local agents. Provides markets for all types of insurance with emphasis on surplus and specialty lines. Established in 1926. Headquarters: Washington, DC.

[A003]

AAU--Associated Aviation Underwriters

Formerly a pool of aviation risk underwriters formed in the 1920s. AAU is now, through a merger with a British aviation insurer, known as Global Aerospace.

[A004]

Abandonment

1) In ocean marine insurance, the transfer by the insured to an insurer of all rights, title, and interest in and to the insured property, in return for the sum insured. It is effected by the insured's tender of such transfer (notice of abandonment) and the insurer's acceptance. A valid tender can be made only when the facts show that there has been a "constructive total loss" or "actual total loss" of the insured property through an insured cause of loss. In such case, however, the insured can recover the sum insured as for a total loss, even though the insurer has refused to accept the tender and there has been no abandonment.

2) The word also appears in "sue and labor" clauses of various inland marine policies by way of a stipulation that compliance with the requirements of the clause shall be without prejudice to either the insured or the insurer respecting waiver or acceptance of abandonment.

3) In property insurance, abandonment is relinquishing ownership of damaged property to an insurer to permit a total loss claim to be made; but most commercial property coverage forms, dwelling policies, and the homeowners policy prohibit such abandonment. Instead, these policies require the insured to protect damaged property from further loss.

(See abandonment clause.)

[A005]

Abandonment clause

The actual provision in an insurance contract, usually ocean marine, inland marine or property, that refers to abandonment and whether or not it is allowed by that particular policy.

(See abandonment, actual total loss, and constructive total loss.)
[A364]

ABI

(See Association of British Insurers.)

[A006]

Absolute assignment

When the policyowner or insured transfers or assigns all of the rights and subsequent control in a policy to another party or entity.

(See assignment and absolute ownership.)

[A007]

Absolute beneficiary

A provision in a life insurance policy stating that the beneficiary cannot be changed unless the insured obtains the beneficiary's consent.

(See irrevocable beneficiary.)
[A008]

Absolute liability

Liability that exists and is imposed upon a party, even though no negligence or fault was committed by that party. Absolute liability is most often imposed when the circumstances of the operation, product, or activity are considered highly hazardous or dangerous.

[A009]

Absolute ownership

Those cases where the policyowner or insured has full and absolute rights to assign, sell or give away all rights to a policy to another party.

(See absolute assignment and assignment.)

[A010]

Abutting coverage

Two or more insurance policies with consecutive policy periods providing common insurance to an insured.

[A302]

ACAS

Associate, Casualty Actuarial Society designation sponsored by the Casualty Actuarial Society. Headquarters: Arlington, VA.

[A010a]

Accelerated death benefits (ADB)

In a life insurance policy, this is when the benefits (or payoff) are paid before the death of the insured person in cases where that person is terminally ill and may need those benefits for medical and living expenses.

[A011]

Accelerated endowment

With respect to life insurance, some policies will offer an option to convert the policy into an endowment before its normal or set maturity date by using the accumulated policy dividends for this purpose.

(See accelerated option.)

[A012]

Accelerated option

With respect to life insurance, some policies will offer an option to convert the accumulated policy dividends and cash value to pay off the policy.

(See accelerated endowment.)

[A013]

Accept

The taking of risk (by an insurer or other person authorized to act for that insurer, such as an underwriter) by expressing a willingness to issue insurance. Also known as assume.

[A014]

Accident

An event or occurrence that is unintended, unforeseen, and unexpected; something which could not be considered as a foreseeable occurrence and consequence of an undertaking; a casualty or mishap.

[A023]

Accident and sickness insurance

A broad term describing protection from loss because of illness or injury which may result in loss of life, loss of earnings, or expenses incurred. Within the broad area of health insurance, there are several major coverages which focus on more specific needs.

(See disability income insurance, health insurance, hospitalization insurance, and sickness insurance.)

[A015]

Accident control

Inspection and engineering work on insured risks to help remove potential causes of loss. Loss prevention work applies to both property and casualty insurance and is also referred to as safety engineering, accident prevention, accident control, or loss prevention.

[A016]

Accident experience

1) A summary of claims activity, which details the insured's frequency of accident to a selected unit of measurement, thus making the loss experience more meaningful.

2) In workers compensation insurance, the rate of disabling injuries, number of lost work days due to accidents, or the number of first-aid cases are among items that may be considered in an accident experience.

[A017]

Accident frequency

The determination of how often the rate or frequency of accidents occur at a particular operation, site, location, or to the insured as a whole for a specified period of time for the exposure units involved. These ratios and calculations are used to determine and verify the projected claims and loss exposure a risk may experience in order to price and set rates, claims services, and loss control services needed. Use of accident frequency ratios over a period of time for a specified risk also may be used to determine if loss trends are improving and if the loss control services are effective.

[A018]

Accident insurance

Insurance covering death, dismemberment, loss of sight, loss of income, and medical expenses caused by accidental injury.

[A019]

Accident only insurance

Policies issued to cover death, dismemberment and medical services for accidents only.

[A020]

Accident prevention

All the ways and means used to avoid the occurrence of an accident or to reduce its consequences if it does occur, such as the control of personal performance, machine performance, and physical environment, including the training needed to reduce the number of accidents and cost of accidental injuries. Accident prevention is one of the less publicized functions of risk managers and insurers, many of which improve safety in industry, the home, and on the roads through safety engineering and research. Also called loss prevention, safety engineering, accident control, or loss prevention.

Accident reconstructionist

A person with expertise in evaluating accident circumstances (such as vehicle or craft speed, lighting conditions, weather, influence, substances, reaction times, safety equipment, human factors, etc.) in order to report on that accident’s cause (and sometimes whether the applicable accident could have been avoided) .

[A021]

Accident report

Either the report that is used to document the time, cause, results, injuries, parties, and other pertinent facts of an accident for insurance purposes or a similar type of report prepared by law enforcement persons as a result of an accident.

[A022]

Accident severity

A formula or calculation used to determine a ratio for use in evaluating how serious or severe an insured's accidents or injuries are, such as the ratio of the amount of loss to the value of property in property insurance, or the amount of loss to exposure units in liability or workers compensation insurance.

[A024]

Accident year experience

Simply stated, it is the statistical matching of all losses occurring (regardless of when the losses are reported) during a given 12-month period of time, with all premium earned (regardless of when the premium was written) during the same period of time. Calendar year experience, on the other hand, is the statistical matching of all losses incurred (not necessarily occurring) within a given 12-month period, usually beginning on January 1, with all premium earned within the same period of time. Yet a third related term is policy year experience which, to put it simply, is the statistical segregation of all premiums and losses attributable to policies having an inception or renewal date within a given 12-month period.

(See calendar year experience and policy year experience.)

[A025]

Accidental bodily injury

Bodily injury to a person or persons that has been caused accidentally and with unforeseen results.

[A026]

Accidental death

Any death that results from causes other than natural causes or homicide.

[A028]

Accidental death and dismemberment insurance (AD&D)

A specific type of life insurance policy that pays benefits in the case of the death or dismemberment of the insured from accidental causes. If dismemberment occurs, benefits are paid on a periodic basis, such as weekly, bi-weekly or monthly for the injury. The amount of the benefit payment is based on the type and severity of the dismemberment.

[A027]

Accidental death benefit

Some life insurance policies have provisions that provide for an additional benefit payment in the case of an accidental death.

(See double indemnity and multiple indemnity.)

[A029]

Accidental death insurance

A life insurance policy that pays a benefit only in the event that death was accidental.

[A030]

Accidental means

The cause of a result which was not intentional.

[A031]

Accidental occurrence

Injury or damage that is caused by an unexpected and unforeseen incident, event or series of events.

[A032]

Accommodation line

A line of business an insurer accepts which does not meet all or most underwriting criteria but which is accepted for other reasons:

1) the value of the total account, the producer, or the center of influence

2) to help a good producer, and thus possibly obtain more submissions from that producer.

[A033]

Account current

A monthly report between an agent and the insurer, which includes policy numbers, premiums, and applicable commissions on business produced by that agent.

[A034]

Account executive

A person whose duty is to specifically service an account or group of accounts for an agency or brokerage firm.

[A035]

Account premium modification plan

Rating plans that have been developed for accounts and that apply to specified lines of business, most often property lines. Usually based on some combination of size and loss ratio with respect to that individual account. These rating plans can result either in credits or debits to the risk.

[A381]

Account selling

An insurance sales strategy that focuses on handling all of a client's coverage needs rather than handling only a portion of those needs. The method is one that improves customer retention.

[A036]

Accountants professional liability insurance

A form of professional liability insurance covering the negligence of accountants in their professional practices.

[A037]

Accounts receivable insurance

Coverage that protects businesses against their inability to collect their accounts receivable because of the loss of supporting records that have been destroyed by a covered cause of loss. Also covered are the extra collection expenses that are incurred because of such loss or damage and other reasonable expenses incurred to re-establish records of accounts receivable after loss or damage.

[A141]

Air passenger insurance

Life insurance purchased at airports by passengers on scheduled airlines. The face value of the policy is paid to the beneficiary in the event of death on that particular flight. Also called air travel insurance.

[A038]

Accrual basis of accounting

A specific accounting method that records credits and debits when the income and expenses actually occurred rather than on the date they are actually paid or received.

[A303]

Accrued benefit

Refers to the amount of benefit that accrues for an individual participant of a defined benefit pension plan. The benefit is often calculated as a percentage of salary combined with years of service, but it is not paid until normal retirement age.

[A304]

Accumulate at interest option

One of the dividend options of participating life insurance policies. Dividends paid by the insurer are left with the insurance company to accumulate interest.

[A305]

Accumulated funding deficiency

If a company fails to fund the qualified pension plan to the minimum levels required by law it has a funding deficiency. Such plans (and their sponsors) are subject to penalties and other legal remedies designed to correct the situation before participants are hurt by the underfunding.

[A039]

Accumulation

This is a life insurance term that reflects the increase in value and, therefore, the subsequent benefits available for payouts as the life of the policy progresses and the premiums paid into the policy have a chance to accumulate and earn income for the insurer.

[A040]

Accumulation period

With respect to health and medical insurance policies, it normally refers to the amount of time within each policy period that is available to the insured to satisfy the deductible amounts.

[A306]

Accumulation units

Variable annuities are invested in equities called side funds. The monies paid into the annuity are placed into the side funds and one way to represent their value is in units. For example, a $100 annuity premium may purchase 2.3 units this month and 3.2 units next month because the value of the equities in the side fund has fallen.

[A041]

Accumulation value

Specifically applicable to universal life insurance policies, this term is used to express the sum total of all the premiums paid and interest accrued without regard for deductions made for benefits, expenses, etc.

[A343]

ACFE--Association of Certified Fraud Examiners

An international organization that sponsors the certification of professionals trained to detect, investigate and prevent fraud and white collar crime. Headquarters: Austin, Texas.

[A042]

Acid and chemical damage policy

A specially designed property policy to provide coverage to property for loss from acids and chemical contact or spills. Related coverage to consider would be a difference in conditions insurance.

(See difference in conditions insurance (DIC).)

[A043a]

ACORD—Association for Cooperative Operations Research and Development

A nonprofit insurance facility dedicated to serving the independent agency system in the USA by developing and maintaining standard application forms, providing electronic data interchange standards and other support of agency automation. ACORD is located in Pearl River, NY.

[A043b]

ACORD forms

Standard application forms, used nationwide, for gathering the necessary data needed to rate, classify and underwrite requested insurance coverages. These forms come under the auspices of the nonprofit ACORD insurance association.

[A382]

ACORD - User Groups Information Exchange

A network created and supported by ACORD. Its purpose is to encourage greater use of standardized processes and procedures between insurance carriers and agents.

[A043]

Acquisition cost

1) The cost of selling insurance. Normally the agent's and broker's commission, but in some cases the term is used to designate any cost of putting the business on the books.

2) In rate filings by insurers with state insurance departments, one of three expense elements shown: general expenses, commissions, and other acquisition costs (such as advertising and service office expenses).

[A307]

ACS

Associate Customer Service designation sponsored by the Life Office Management Association. Headquarters: Atlanta, GA.

[A308]

ACSR

Accredited Customer Service Representative designation sponsored by the Independent Insurance Agents of America. Headquarters: Alexandria, VA.

[A044]

Act of God

An event beyond human origin or control (lightning, windstorms and earthquakes are examples), the damage from which would not be the responsibility of an insured. Acts of God are excluded under certain liability insurance policies.

Act of God bond

(See catastrophe bond.)

[A044a]

Actionable

Omissions, conditions, offenses or acts which could result in contractual or legal action. Example: If an insured does not file the required proof of loss on an insurance policy within the specified period of time, that omission is actionable, meaning the coverage on the claim may be denied.

[A045]

Active life fund

A life product where an unallocated fund is maintained for the active members of the fund. Fund assets are included under a deposit accumulation plan. When a member retires, an individual annuity is purchased for the member with the resources within the fund.

[A046]

Active life reserve

Life insurance reserves set up to accommodate the present value of future death claims. Since claims are usually low in the early years of policies but increase throughout the life of the policies, the expected results are that the reserves are overstated during the early years and understated in the later years when viewed on an individual policy basis.

[A047]

Active malfunction

With respect to products liability, this term refers to a product that actually results in damage or injury to a user's property when put to use as originally designed and intended.

[A309]

Actively-at-work-provision

This is a health insurance policy provision. It stipulates that on the date a group insurance contract becomes effective, an employee who is absent due to an accident or illness is ineligible for coverage until he or she returns to work.

[A383]

Actual authority

The level of operating responsibility that an insurance carrier deliberately assigns to an agent.
(Also see express authority and implied authority.)

[A048]

Actual cash value

The basis of loss settlement in property insurance policies, which takes into consideration factors such as replacement value less depreciation, market value, rental value, the use of the building, the area in which it is located, obsolescence, assessed valuation, and any other factor that would have an effect upon the value. A working rule-of-thumb definition, however, is "replacement cost new at the time of loss, less depreciation."

(See replacement cost insurance.)

[A049]

Actual total loss

When insured property is so badly damaged by a covered cause of loss that it is not repairable or recoverable or when there is so little remaining of the salvageable or repairable nature that it no longer has any value, it is considered an actual total loss. This usually signifies the maximum settlement possible under the terms of the policy.

(See abandonment clause.)

[A050]

Actuarial adjustment

This term refers to the revisions that are made to reserves or premiums, based on a company's experience and projected claims.

[A051]

Actuarial assumptions

Estimated factors used by an actuary to project future financial situations. The factors forecasted may include such items as premium levels, company expenses, or loss reserves.

[A052]

Actuarial benefit equivalence

When plans or coverages have benefit differences, this term is used to explain the degree of difference when comparing the benefits of the different plans.

[A053]

Actuarial cost method

A method used to determine future benefits based on present fixed contributions or the contributions necessary to reach a desired benefit level at some time in the future.

[A054]

Actuarial equivalent

In order to statistically compare data on unlike items, products or factors, mathematical or actuarial equivalencies are set.

[A055]

Actuarial funding method

A method developed by the actuarial operation to set the amounts of contributions and the intervals of those contributions that are necessary to achieve the benefit(s) offered.

[A056]

Actuarial gains and losses

With respect to insurance company operations, actuarial calculations are used to predict or determine the necessary rate, premium, expense and reserve levels, etc., needed to accomplish goals. When the actual results are better than those set or predicted, actuarial gains are achieved; and when results are worse than those set or predicted, losses are experienced.

(See experience.)

[A057]

Actuarial present value

A term used to designate the current value that has been assigned to future benefits, including contingencies for factors such as early payouts of benefits.

(See present value.)

[A058]

Actuarial report

A report outlining current conditions or future requirements of an insurer, self-insured or pension fund necessary to meet its obligations. The report is prepared and signed by an actuary.

[A059]

Actuarial science

The science of using data, statistics and mathematical calculations to make rate, premium, coverage, loss/ claims, benefit and other pertinent decisions as applied to the insurance industry.

[A370]

Actuarial Society of South Africa

This society consists of actuaries and actuarial students in South Africa. Founded in 1948, it promotes professionalism among its members who work (or plan to someday work) in the country's financial services sector. It promotes conferences for networking and continuing education. Headquarters: Cape Town, South Africa.

[A060]

Actuarial valuation

The review and evaluation of the creditability of some specific aspect of the insurance operation at a given time. For example, a valuation of the creditability of a reserve for a line of business as of a specified date and time.

[A061]

Actuaries and pension consultants professional liability

Professional liability insurance developed for actuaries and pension consultants and their unique and special needs.

[A062]

Actuary

A social mathematician who uses mathematical skills to define, analyze and solve complex business and social problems involving insurance and employee benefit programs. The work of actuaries involves the various contingencies that face human beings: birth, marriage, sickness, accident, loss of property, legal liability, retirement and death, and the financial effects which these and other contingencies have on various insurance and benefit programs. Many of these programs involve long-range financial obligations, for which actuarial forecasts are fundamental in maintaining a sound financial basis: rate-making, premium and loss reserving, investment valuation, pension benefits, and insurance statistics, among others.

[A063]

ADA—Americans With Disabilities Act

A federal act designed to set standards to remove the barriers to employment, transportation, public accommodations, public services, and telecommunications that exist to those members of our society who have physical disabilities of many types. The act encompasses many aspects of everyday life and generates wide-ranging implications for almost every commercial business or service.

[A063a]

ADB—accelerated death benefits

In a life insurance policy, this is when the benefits or payoff are paid before the death of the insured person in cases where that person is terminally ill and may need those benefits for medical and living expenses.

[A344]

Add-ons

Coverages provided under a policy that are extras, supplementing the main coverages.

[A345]

Additional coverages

Largely obsolete term that formerly referred to adding additional causes of loss to a very basic property insurance policy, Typically, such coverages are included in broad or special cause of loss forms.

[A064]

Additional death benefit

Life insurance benefits offered should death occur during a specific time period or as a result of specific causes.

(See death benefit and double indemnity.)

[A066]

Additional deposit provision

A clause used in some whole life insurance policies that allows the insured to choose to make unscheduled premium payments. This type of provision is common in policies that pay variable rates of interest on deposit premiums or that allow for the purchase of additional insurance coverage.

[A065]

Additional extended coverage

Additional causes of loss added to property policies which include items such as vandalism and malicious mischief, water from ruptured plumbing and heating systems, glass breakage, ice, snow and freezing, and falling trees and collapses. This coverage is rarely used and has been replaced by the broad or special cause of loss forms as they relate to property insurance.

[A067]

Additional insured

A person, other than the named insured, who is protected by the terms of the policy. Usually a specified individual such as a spouse or a member of the insured's family but sometimes, as in automobile insurance, any person, provided that person is driving the insured vehicle with the insured's permission.

[A068]

Additional living expense insurance

Insurance for the extra amount it costs an insured to live until repairs are made to the insured's dwelling.

[A069]

Additional medical

A workers compensation endorsement used to provide additional medical benefits in excess of those required by the workers compensation law of the state jurisdiction(s) covered in the policy.

[A069a]

Additional named insured

A party, other than the first named insured, that has been shown as an insured in the policy Declarations or in an addendum to the policy Declarations or by endorsement once the policy has been issued. This party has the status of named insured.

[A070]

Additional premium

When a policy has been issued subject to rate, audit, inspection; is assessable; or when the policy is endorsed; the additional premium is the extra amount due, over and above the initial premium stated in the Declarations. Such premium is charged for increased exposures, retrospective rate calculations, additional coverage, or premium audit.

[A071]

Additional provisions

Additional clauses or provisions that have been added to the basic coverage form insuring agreements, to the benefit provisions of a policy, or to the standard/uniform provisions which have been added to clarify, define, broaden, exclude, or limit the coverage normally provided.

[A310]

Additional term insurance option

Sometimes called the fifth dividend option in a participating life insurance policy, paid dividends are entered as a single net premium to purchase one-year term insurance.

[A384]

Adequacy

(See rate adequacy.)

[A072]

Adhesion contract

A type of contract in which the conditions of the contract are drawn or written by the insurer with no input from the insured who must adhere to the terms and conditions as set forth, and who has little recourse to negotiate for better benefits or terms. If there is any ambiguity when a contract of adhesion has been written, court decisions and rulings will be in favor of the party who did not have control of the wording of the provisions; in this case the insured.

[A073]

Adjacent

One building is adjacent to another if it is very close to another building although not actually touching it, with no intervening building.

[A074]

Adjoining

When a building is so located that it touches another building.

[A311]

Adjustable life insurance policy

A form of life insurance where the insured is permitted to adjust either their insurance coverage or premiums. The effect of increasing premiums without increasing coverage is that more cash tends to accumulate. Keeping coverage the same while decreasing premium will make the policy look more like term insurance because there will be less cash accumulation. Universal life is also called flexible premium adjustable life insurance.

[A075]

Adjustable policy

A policy in which the exposure basis is a variable (such as sales or payroll), which can be determined only at the end of the policy term.

(See audit, and reporting policy (or form).)

[A076]

Adjustable premium

Policies issued by an insurer that do not guarantee the premium upon renewal. At each subsequent renewal the policy may be re-rated and bear premiums that may or may not be substantially different than the previous period premium.

(See annualization.)

Advance profits insurance

This is a form of business income (interruption) insurance, but with a twist. Rather than acting as a contingency against a halt to ongoing activity, it protects against a delay in getting new operations up and running on time. Naturally the delay has to be due to a source of direct damage that is eligible for coverage. Typically such insurance must be negotiated on a customized basis.

[A077]

Adjuster

One who determines the amount of loss suffered. A "company" adjuster represents the company. A "public" adjuster represents the policyholder. An "independent" adjuster may be hired by either.

[A078]

Adjusters errors and omissions insurance

A type of insurance designed to provide coverage for adjusters for their errors, omissions, or negligent acts committed while performing the functions of their job. This coverage is available for individuals, firms or insurers.

[A079]

Adjustment

The process of handling and settling claims by determining the amount of a loss an agreeing on the amount requested by a policyholder or claimant because of a loss or damages suffered. Also referred to claims adjustment.

[A080]

Adjustment bureau

An organization that maintains a staff of adjusters and whose business it is to adjust losses for those companies which refer their losses to the bureau.

(See General Adjustment Bureau, Inc.)

[A081]

Adjustment expenses

Those expenses that are directly attributed to the process of handling or adjusting claims, but which specifically exclude the actual claims payment amounts. Expenses may include items to investigate the claim, forensic reports, and cost of research.

[A082]

Adjustment income

A life insurance benefit which provides the beneficiary with income often used during the interim period while other living finances are arranged; hence, the term adjustment income.

[A083]

Administration expenses

The normal and expected operating costs to run an organization.

[A346]

Administrative services only (AS0) plan

Where a self-insurer pays an insurer or other organization to administer its operations, including benefits and claims.

[A084]

Administrator

An individual who has been appointed by the court to administer or manage the estate and affairs of a deceased person. The difference between an administrator and an executor is that an executor is named in the decedent's will, while the administrator is appointed by the court in cases where there is no will or where the executor cannot or will not fulfill the necessary duties.

(See executor and executrix.)

[A085]

Admiralty

A term used to encompass anything to do with maritime operations.

[A086]

Admiralty courts

Section of the federal or national court system that deals with matters pertaining to vessels, crew and their cargoes navigating on interstate or international waters. Maritime procedures, precedents and rules are different in admiralty courts than in other courts.

[A087]

Admiralty liability

The liability posed by the combination of both common and statutory law, as it relates to maritime operations and activities.

[A088]

Admiralty proceeding

A legal proceeding relating specifically to maritime law (including ocean marine insurance issues) and handled in a maritime court.

[A089]

Admitted assets

Those assets, or portions thereof, of an insurance company which under state insurance laws may be taken into account in establishing the financial condition of the insurance company, e.g., agents' balances or uncollected premiums under 90 days old.

(See nonadmitted assets and assets.)

[A090]

Admitted company

A foreign or alien insurance company which has been licensed by the insurance department of the state in question and which, thereby, is authorized to conduct business within that state to the extent licensed. Also called an admitted market or admitted insurer.

[A091]

Admitted insurer

A foreign or alien insurance company which has been licensed by the insurance department of the state in question and which, thereby, is authorized to conduct business within that state to the extent licensed. Also called an admitted market or admitted company.

[A092]

Admitted liability

An aviation specific coverage for passengers or guests aboard aircraft, which precludes the need for those guests or passengers to prove the liability of the insured owner or operator of the aircraft in order to recover for damages suffered in an accident. This coverage is normally written with a maximum limit per seat, and the passenger or guest can recover up to that amount.

[A093]

Admitted market

A foreign or alien insurance company which has been licensed by the insurance department of the state in question and which, thereby, is authorized to conduct business within that state to the extent licensed. Also called an admitted company or admitted insurer.

[A094]

Admitted reinsurance

Reinsurers that have been admitted to operate in the states in which they are accepting cessions from primary insurers.

Admitted reinsurer
(See admitted company. Same status, except for a reinsurance operation.)

[A095]

Ad valorem

A legal term meaning according to value. Often used with respect to a value bill of lading. A value bill of lading is the receipt issued by the transportation company for goods being shipped and which describes the specifics of carriage, including freight and value of goods.

(See value bill of lading.)

[A372]

ADR

(See alternative dispute resolution.)

[A356]

Advance deposit premium plan

A reinsurance industry arrangement in which a ceding company pays its premiums in installments over the period of the reinsurance contract. Ideally the payments should, ultimately, match the amount the reinsurer pays to cover losses. The plan is adjusted at the contract's end if payments do not balance.

[A312]

Advance funding

The basic premise behind pension plans is that money accumulates during an employee's working years in order to "fund" the payment of benefits after the employee retires.

Content

[A096]

Advance payment

Moneys or payments made for coverage payment prior to the inception of the policy period, usually accompanied by the application or request for coverage.

[A097]

Advance premium

A provisional or deposit premium charged at the start of a policy term, with the final premium determined after the policy has expired.

[A098]

Adventure

With respect to ocean marine insurance, any type of commercial venture which exposes a maritime vessel (including cargo) to potential losses by perils of the sea.

[A099]

Adventure clause

With respect to ocean marine insurance, the clause within the insurance coverage that requires the insured to provide the insurer with an accurate and detailed description of the voyage, which in turn will become attached to and part of the Declarations of the policy and which will be used as the basis for the coverage, underwriting, and pricing of the insurance policy.

[A100]

Adverse selection

The insuring of one or more risks with a higher chance of loss than that contemplated by the applicable insurance rate. The selection of such risks is adverse because the rate is inadequate. Also called anti-selection.

[A101]

Adverse underwriting decision

Any underwriting decision that either rejects the request for coverage or offers coverage that is less than what was originally requested. It includes decisions that in any way restrict or limit coverage, call for higher pricing or increased deductibles, apply substandard classifications or places in residual markets, or assign risk pools or state pools.

[A102]

Advertisers liability insurance

Covers an insured against claims for libel, slander, defamation, infringement of copyright, invasion of privacy, etc., arising out of its advertising program. Also available for radio and television stations and advertising agencies.

[A103]

Advertising injury

Damages or injury sustained by a claimant in the course of the advertising activities of the insured which included such injury as libel, slander, violation of the right to privacy, misappropriation of advertising ideas, or the infringement of copyright.

[A104]

Advisory organization

One of the three basic forms of insurance organizations: rating bureaus, advisory organizations, and trade associations. Rating bureaus make and file rates, loss costs, rating plans, schedules, manuals and forms for members, subscribers and service purchasers who choose to use them. Advisory organizations perform advisory functions for insurers relative to these rating bureau activities and, like rating bureaus, are licensed by state insurance departments, subject to examination and other regulation. Trade associations are cooperative organizations to protect the business interests of their member insurers, producers, adjusters, attorneys, or other groups. Either a rating bureau or an advisory association can function as a statistical organization, and the function of advisory organizations and trade associations can overlap. Distinctions in functions can best be appreciated by understanding that, historically, rating and advisory organizations were licensed and regulated under state rating laws because of the public interest in the cooperative activities of insurers, relative to pricing and the need for regulation, in order to replace application of antitrust laws.

(See rating bureau and trade association.)

[A371]

A and E coverage

(See architects and engineers coverage.)

[A105]

Affiliated company

A company that is operated independently from other related companies but has some type of common ownership with those companies, such as the same set or sub-set of owners or stockholders.

[A106]

Affiliation of health providers

An association or partnering of health care providers that collectively offer health care coverages to a specific group of patients.

[A357]

Affinity group

A group of persons with some area of interest in common (such as a job, hobby or employer) that is turned into an association to which insurance products are marketed on a group rather than an individual basis.

[A385]

Affinity marketing

(See target marketing.)

[A107]

Affirmative warranty

An acknowledgment or affirmation by the insured as to the credibility or verification of certain facts or conditions pertinent to the issuance of the policy.

African-American Insurance Professionals Association (AAIPA)

An association that promotes the advancement and enhancement of the image of African-American professionals whose job responsibilities are related to the insurance industry. The association is also dedicated to educating the public about insurance careers and to improve network opportunities. Headquarters: Los Angeles, CA.

[A313]

AFSB

Associate in Fidelity and Surety Bonding designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

[A108]

Aftercare

The care, follow-up treatment, or therapy needed by a patient who has recently undergone surgery, accident, or illness.

[A109]

After charge

In some fire insurance rating schedules for commercial property, certain additions or loadings on the rate are made for defects (such as poor housekeeping or minor wiring defects) that can be easily corrected. The purpose of separate charges for such defects is to encourage their prompt correction, in which event the rate will be lowered by the amount of the after charges.

[A365]

AGC

(See Associated General Contractors of America.)

[A366]

AGC Surety Bond Committee

An Associated General Contractors of America standing committee. It assists various surety organizations with policy questions related to forms, industry issues and products.
[A110]

Age Adjustment Clause

With respect to a life insurance policy, it is the provision that allows the insurer to adjust the death benefit payment if the age of the insured was misrepresented, and if that misrepresentation has been proved.
[A111]

Age Change

In life and health insurance, a concept that allows the insurer to set a procedure to determine the "age" of the insured and when that age changes to another year to be used in the setting of rates and benefits. When used for life insurance contracts, it is common to use the date midway between the insured's natural birthdays. When used by health insurers, it is common to use the insured's age of the previous birthday.
[A314]

Age Discrimination in Employment Act (ADEA)

Federal legislation prohibits mandatory retirement at age 65 and requires pension plans to continue funding individual accounts and benefit accruals if an employee should work after the age of 65. The law also provides protection for older employees (aged 40+) from discriminatory hiring, firing and other practices.
[A112]

Age Limits

For certain coverages or types of policies, insurers will set minimum and maximum age limits in order for applicants or insureds to remain eligible. Should an existing insured reach the maximum age limit, coverage may not be offered for renewal.
[A315]

Age of Majority

It is the age (which varies by state) when an individual may legally enter into and be bound by the terms of any contract. Until the age of majority a minor may not apply for life insurance without the signature of a parent or guardian.
[A373]

Agent of Record Letter

A simple letter that a new agent sends to an insurer as formal notice that he or she has been authorized to take over an insurance account from another agent. It permits the insurer to change its records to reflect the change.
[A113]

Agency

A business office whose function is the sales of insurance and insurance products. An agency may be owned or run by a general agent, manager, independent agent, or company manager. The principal is responsible for the statements and actions of agents performing within the scope of authorization specified in the agency agreement.

(See captive agent, general agent, and independent agent.)
[A386]

Agency Appointment

An insurance company's formal agreement to grant an agency the authority to represent the company and sell its insurance products.
[A114]

Agency Company

Insurers who use agents as their sales force when producing insurance business.
[A115]

Agency Contract

The legal contract drawn to establish the terms and conditions used as the basis of the relationship between an insurance company and its agency force.
[A116]

Agency Plant

This term refers to those insurers who use agents as the company's sales organization and includes both captive and independent agency forces.
[A117]

Agency Reinsurance

A very specific type of reinsurance arrangement in which a contract is drawn between insurer and reinsurer covering only the specified business that is produced by a specific agent of that ceding insurer.
[A118]

Agency Superintendent

A management position of an insurance company. An agency superintendent usually oversees a territorial division and the agents within that territory. Often strictly a production person, as distinguished from one in charge of certain lines of insurance.
[A119]

Agent

One who has the authority to act for another. In insurance language, an agent is the person who sells insurance by contacting the policyholder. By contract and by law, the agent is endowed with many of the powers of the company itself. There are various types of agents, based upon the contractual relationship with the insurer they represent.

(See independent agent, exclusive agent, and broker.)
[A120]

Agent of Record

The agent who has been recognized by the insured or customer as his or her authorized representative for handling the specified insurance transactions.
[A121]

Agent's Authority

The authority that has been legally granted to an agent in the agency contract between the agent and insurer.
[A122]

Agent's Balance

Based on the commission schedule set forth in the agency contract between the insurer and agent, the agent's balance is the detailed statement of commission credits or debits earned by the agent on the business written with that insurer.
[A123]

Agent's Commission

The income or remuneration earned by an agent for writing business with an insurer, usually based on commission or specified percent of premium placed by that agent with the insurer. The commission schedule (the percent of premium for the business placed) is set forth as part of the agency contract with the insurer.

(See commission.)
[A124]

Agents Errors and Omissions Insurance

A type of professional liability insurance designed for agents covering professional acts, errors, and omissions that may occur during the performance of their duties as an agent.
[A125]

Agent's License

The license issued by a state which confirms that an agent has completed the requirements and has been given authority to conduct the specified types of business for the time period indicated. Often, agents must qualify for a license by examination, and licenses must be renewed annually with proof of continuing education.
[A126]

Agent's Qualification Laws

Laws that define standards of insurance knowledge that an individual must meet in order to be licensed as an agent.
[A128]

Aggregate Benefits

The maximum amount an insured is able to collect under a single policy regardless of the number of claims, injuries, accidents, or number of insureds.
[A387]

Aggregate deductible

Under this deductible provision, an insured qualifies for insurance payment only after all eligible, incurred losses during the policy year exceeds the established deductible amount.

[A129]

Aggregate excess insurance

Coverage developed for operations that fully or partially retain (self-insure) their losses, subject to a specified maximum loss amount. When accumulated annual losses exceed the established maximum, any remaining (subsequent) losses are paid by the aggregate excess policy (subject to that policy's limit).

[A130]

Aggregate excess of loss reinsurance

A company wishing to protect itself in the event its net loss ratio for a given year rises above a certain percentage, may buy reinsurance which pays in excess of that figure up to a higher agreed percentage beyond which the company is once more liable. In short, a plan which takes the sting out of an above-average net loss ratio. Also known as stop loss reinsurance or excess of loss ratio reinsurance.

Aggregate extension clause
(See claims series clause.)

[A316]

Aggregate funding method

A method where the necessary contributions for a pension plan are calculated for the entire group of plan participants. This approach is less expensive than performing individual calculations.

[A131]

Aggregate indemnity

The most that an insured or beneficiary is allowed to collect in indemnity benefits under that policy as a result of any one disability or in that policy period.

[A132]

Aggregate limit

In a policy providing such an aggregate limit, the maximum amount the insurer will pay during the policy period, irrespective of the policy's limit of liability.

(See limit or limit of liability.)

[A133]

Aggregate working excess reinsurance

Treaty reinsurance in which the ceding insurer retains a portion of each risk plus an aggregate amount of loss in excess of each retention.

[A358]

Aggregator

A vendor who combines information from information publishers with similar characteristics (rating, underwriting, forms analysis, etc.) into larger packages. Value is derived from cost savings or the ability to reach a larger market and charge higher prices from bundling multiple products.

[A134]

Agreed amount

The amount of coverage that the insurer and insured have mutually agreed to be the value of the property at the time the insurance is purchased.

[A135]

Agreed amount clause

A condition of a policy stating that the insurer agrees to waive the coinsurance requirement in consideration of the insured's maintaining insurance equal to the amount agreed upon at the inception of the policy.

[A136]

Agreed value

An agreement made between the insurer and insured at policy inception confirming that both parties concur that the limit of insurance set forth in the schedule of property is that item's value, and that agreed upon value is the amount that will be paid by the insurer in the event of a total loss.

[A137]

Agreed value clause

A condition of a policy stating that the insurer agrees to waive the coinsurance requirement in consideration of the insured's maintaining insurance for the scheduled item, equal to the value agreed upon at the inception of the policy.

[A138]

Agricultural equipment insurance

An inland marine policy tailored to insure the equipment found on a farm or ranch. Available with causes of loss on an "all-risk" or "specified cause of loss" basis.

[A139]

AIA--American Insurance Association

A trade association of primarily stock property and casualty insurers that performs numerous functions, such as fire and accident prevention, reviews of insurance legislation, research, setting of building and fire department standards, arson and fraudulent claims investigations, etc. Headquarters: Washington, DC.

[A317]

AIAF

Associate in Insurance Accounting and Finance designation sponsored by the Insurance Institute of America, headquarters: Malvern, PA, and the Life Office Management Association, headquarters: Atlanta, GA.

[A318]

AIC

Associate in Claims designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

[A374]

AICP

(See Association of Insurance Compliance Professionals.)

[A319]

AIM

Associate in Management designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

[A359]

AIMU

A trade association representing marine insurers and related organizations. It also acts as a lobbyist on marine insurance issues and provides support services, such as inspections, claims, loss control, and tracking legal and industry trends and news. Headquarters: New York, NY.

[A140]

Air cargo liability insurance

Coverage for the legal liability of an air carrier for loss or damage to cargo while in its care, custody or control.

[A142]

Air travel insurance

Life insurance purchased at airports by passengers on scheduled airlines. The face value of the policy is paid to the beneficiary in the event of death on that particular flight. Also called air passenger insurance.

[A143]

Aircraft hull insurance

Covers any loss arising out of physical damage to the aircraft itself in flight, on the ground, or both.

[A144]

Aircraft insurance

A type of package policy for aircraft which combines both the property insurance for the hull and coverage for bodily injury and property damage liability arising out of the ownership or use of the insured aircraft.

[A145]

Aircraft liability insurance

Covers the insured for both bodily injury and property damage liability arising out of the ownership or use of the insured aircraft.

[A146]

Aircraft passenger liability insurance

Covers the liability resulting from bodily injury and sickness or disease suffered by any passenger arising out of the ownership or use of the insured aircraft.

[A147]

Aircraft product liability insurance

Coverage required by a manufacturer of aircraft, components or equipment. Also covered are those involved in selling aircraft, parts or fuel, or entities that repair or maintain aircraft. This policy protects such operations against claims arising from injury or damage caused by product defects or by improperly completed operations.

[A148]

Aircraft spare parts insurance

"All-risk" coverage for leased aircraft parts, such as engines, spare parts and equipment, while the property is on the ground or being carried as cargo by air, land or waterborne transit.

[A149]

Airport liability insurance

Covers the liability arising out of the ownership or maintenance of premises, normally a hangar located at either a municipal or private airport.

[A150]

Airway bill

A bill of lading specifically designed for air carriers. When issued by an air carrier, the bill verifies that the carrier is in receipt of the cargo and sets the terms and conditions for carrying that cargo.

[A151]

AIU--American International Underwriters Corporation

Acting as foreign manager for a group of American stock insurance companies, this corporation underwrites all classes of insurance on properties and risks outside the United States and Canada. Headquarters: New York, NY.

[A152]

Alarm valve

A mechanism on many automatic sprinkler systems which activates an alarm, sometimes a loud gong, or in other cases signals directly to the fire department when a sprinkler head has opened.

[A320]

ALCM

Associate in Loss Control Management designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

[A388]

Alcoholic Beverage Control (ABC) laws

(See dram shop laws.)

[A153]

Alcoholic beverage liability insurance

More commonly called liquor liability insurance or dram shop liability insurance, this coverage is for owners and operators of a business that sells or serves liquor. This coverage was designed to protect against liability for accidents caused by intoxicated customers.

[A154]

Aleatory contract

A contract in which the consideration or monetary value between the parties to the contract is not equal. In the case of insurance contracts, the insured or policyholder pays a premium and may collect nothing from the insurer if no loss occurs. On the other hand, if a loss does occur, the insured or policyholder may collect considerably more than the amount of the premium.

[A155]

Alien company

An insurance company that is domiciled or incorporated in a country outside the United States, but which conducts either insurance or reinsurance operations in the U.S.

(See domestic company.)

[A155a]

Alienated premises exclusion

A provision that bars liability for property damage occurring to a structure that is alienated (sold, abandoned, donated, given away) by an insured.

[A156]

Alienation clause

A policy clause that details the terms, conditions, or requirements that will apply should property which is the subject of the insurance be sold and title transferred during the policy term. Two of the most common examples are the alienation clause in a mortgage insurance policy which requires that the balance of a loan be paid should the property be sold, or a property insurance policy which clarifies that the insurance coverage cannot be assigned or transferred to the new owners when the property is sold.

[A321]

Alienation of benefits

Refers to a situation when someone other than the plan participant is designated to receive a pension benefits, such as a creditor attempting to garnish pension benefits to pay for a defaulted loan. Federal law generally forbids alienation of benefits.

[A157]

All American Marine Slip

A syndicate of many American insurance and reinsurance companies formed in 1972 to provide a substantial market for large, high-risk or unusual marine exposures historically handled by foreign markets.

[A158]

All payers system

This is a health insurance term that indicates that both public and private participants are subject to the same rules and rates when paying hospitals for services rendered.

[A159]

All-comers

State requirements or pending legislation that require an insurer to take or accept all applicants for a given type of insurance. Also referred to as take-all-comers.

[A160]

All-lines insurer

Insurers offering property, liability, life and health coverages. Governmental and business constraints prevent an insurer from literally providing every single possible line of insurance.

[A161]

All-risk policy

A policy that covers loss caused by any cause of loss which is not excluded, as contrasted to "named peril" policies which protect against certain perils named in the policies. Usual to certain types of property and marine insurance contracts, the term "all risk" frequently appears in quotes, since such coverage includes "almost" all risks (i.e., all but those excluded).

[A162]

Alliance of American Insurers

A trade association made up primarily of mutual property and casualty insurers, though as of September, 1977, membership was open to nonmutual companies. Fosters research and publishes educational materials, with headquarters in Schaumburg, IL. Formerly the American Mutual Insurance Alliance.

(See Property Casualty Insurers Association of America.)

[A163]

Allied lines

Those coverages that are frequently written with fire insurance (e.g., sprinkler leakage, earthquake and water damage).

[A164]

Allocated benefits

When the benefits provided by a health or disability policy are scheduled for specified items, as to the maximum amount allowed for that item. As an example, a maximum amount is set per day for room charges or specified tests.

[A165]

Allocated claim expense

Expenses that can be attributed to an individual claim and are charged to that specific claim. The most common are investigative expenses such as research and forensic or defense costs.

Allowed assets

(See admitted assets.)

[A166]

Allowed costs

In health insurance, those expenses that are covered by the insurance policy, which may include such items as physicians' or nursing services, drugs, dressings, bandages, prosthetics, etc.

[A167]

Alphabet broker (alphabet house)

Slang for any of several large brokers occasionally referred to by initials derived from their names.

[A375]

Alternative dispute resolution

Refers to methods that attempt to resolve an insurance dispute without resorting to litigation. Common methods are mediation, and either binding or nonbinding arbitration.

[A348]

Alternative market

This term applies to the use of insurance or coverage sources that fall outside of the traditional insurance/reinsurance market and includes captive insurance companies, insurance purchasing groups and risk retention groups.

[A376]

Alternative risk transfer

Typically refers to methods of transferring the risk of loss that don't involve traditional insurance, such as risk retention groups, captive insurers and contractual agreements to shift or transfer an exposure to loss.

Alternate settlement option

In mortgage insurance, it refers to a carrier’s claim settlement option. An insurance company may settle a loss by paying the total actual loss, as well as legal costs and expenses that are related to the foreclosure and/or repossession. However, the action has to take place before actual foreclosure and the option waives the insurer’s right to any future recovery when the applicable property is later sold.

[A168]

Ambiguity

Anything doubtful, uncertain, unclear, or capable of being misunderstood in an insurance contract. Ambiguities are usually construed against the insurer.

[A169]

Ambulance service malpractice insurance

Professional liability coverage for ambulance drivers, EMTs, and attendants for bodily injury, mental injury, or death to patients caused by error, omission, or negligence in the services rendered in the course of their professional duties.

Ambulatory care

Medical services provided on an outpatient (non-hospitalized) basis. Services may include diagnosis, treatment, surgery and rehabilitation.

[A349]

Amendment

A document with language attached to and becoming part of a basic policy for the purpose of modifying the policy, either at inception or mid-term. The term endorsement is usually associated with property and casualty policies while the term rider is normally used with life, accident and health contracts.

(See attachment and rider.)

American Academy of Actuaries (AAA)

National association that promotes training, education and accreditation in expertise in the actuarial (pricing and ratemaking) sciences. Headquarters: Washington D.C.

[A170]

American agency system

The contracting of insurance companies with agents who are independent contractors to effect property-liability insurance, to issue policies, to own the expiration records thereof, and in general to represent the companies in their communities. Agents may represent more than one company. The system has reached its highest development in the United States, hence "American" agency system.

(See independent agent, direct writer and expiration.)

[A171]

American Arbitration Association

An organization sponsoring voluntary arbitration for labor-management and commercial and international trade disputes. Has established an accident claims tribunal to service arbitration proceedings under the family protection coverage of automobile liability policies, which name the association as administrator of arbitration. Headquarters: New York, NY.

[A172]

American Association of Insurance Services (AAIS)

AAIS is a national insurance advisory organization that develops policy forms, rules, rating information, provides statistical reporting and product development for its programs in personal, commercial, farm, and inland marine insurance. Headquarters: Wheaton, IL.

[A173]

American Association of Managing General Agents (AAMGA)

A trade association of independent insurance general agents serving the interests of insurance companies and local agents. Provides markets for all types of insurance with emphasis on surplus and specialty lines. Established in 1926. Headquarters: Washington, DC.

[A174]

American Bureau of Shipping

A technical society, sponsored by ship owners, which sets minimum standards for ship design, materials and construction. Provides periodic surveys of ships and machinery to maintain adequate standards, and publishes American Bureau of Record listing vessels "classed." This record provides detailed information, such as type, size, construction material, machinery, fuel used, and date and type of last survey. Headquarters are in New York, but the bureau has correspondents in principal seaports.

[A175]

American Cargo War Risk Reinsurance Exchange

An association of companies writing ocean marine business, formed for the purpose of reinsuring war risks on ocean cargoes. The reinsurance facilities established by this organization permitted member companies to provide automatic cargo coverage to importers and exporters even during the worst part of World War II. Headquarters: New York, NY.

[A176]

American College, The

(Formerly The American College of Life Underwriters.) Founded in 1927, The American College is a private, nonprofit educational institution for the advancement of learning and professionalism in life insurance and related financial sciences. Those properly qualified persons who successfully pass the examinations this college prepares are awarded the designation "Chartered Life Underwriter" (CLU), or the graduate degree of "Master of Science in Financial Services." Headquarters: Bryn Mawr, PA.

[A177]

American Council of Life Insurance

A public relations organization representing legal reserve life insurance in legislative and administrative matters at federal, state and municipal levels of government. Conducts economic and social research programs, compiles statistics, and publishes pamphlets and consumer booklets. Headquarters: Washington, DC.

[A178]

American Hull Insurance Syndicate

An association of insurance companies writing hull, war risk and builders risk coverage on larger commercial vessels. Formed to provide a ready and sufficient market for American and foreign ships. Management issues its own policies and settles losses on behalf of subscriber companies. Headquarters: New York, NY.

Inc. Inc.

[A179]

American Institute for Property and Liability Underwriters, Inc.

An insurance educational organization which establishes insurance educational standards and fosters educational work. Those properly qualified persons who successfully pass the examinations this body prepares are awarded the designation "Chartered Property and Casualty Underwriter" (CPCU). Headquarters: Malvern, PA.

American Institute Hull Clauses

Ocean marine’s version of the Standard Fire Clause. It consists of more than 200 lines of text that includes coverages, conditions and exclusions that may be used to insure large vessels. The original clauses were introduced by the American Institute of Marine Underwriters in 1977.

[A360]

American Institute of Marine Underwriters (AIMU)

A trade association representing marine insurers and related organizations. It also acts as a lobbyist on marine insurance issues and provides support services, such as inspections, claims, loss control, and tracking legal and industry trends and news. Headquarters: New York, NY.

[A181]

American Insurance Association (AIA)

A trade association of primarily stock property and casualty insurers that performs numerous functions, such as fire and accident prevention, reviews of insurance legislation, research, setting of building and fire department standards, arson and fraudulent claims investigations, etc. Headquarters: Washington, DC.

[A182]

American International Underwriters Corporation (AIU)

Acting as foreign manager for a group of American stock insurance companies, this corporation underwrites all classes of insurance on properties and risks outside the United States and Canada. Headquarters: Lloyd's, New York, NY.

[A183]

American Lloyd's

Associations of individual underwriters operating in a limited number of states. Separate organizations from Lloyd's of London.

(See Lloyd's.)

[A184]

American Mutual Insurance Alliance

(See Alliance of American Insurers.)

[A185]

American Nuclear Insurers

A syndicate of stock property and casualty companies formed to write material damage and liability insurance on industry-operated nuclear reactors and related operations. Headquarters: Farmington, CT. Formerly known as Nuclear Energy Liability-Property Insurance Association (NEL-PIA).

American Risk and Insurance Association

An association that promotes the advancement of knowledge of risk management and the career advancement of its members. The organization sponsors annual educational meetings and sponsors a variety of publications including the Journal of Risk Management and the Risk Management Insurance Review. Headquarters: Malvern, PA.

[A187]

American Society of Insurance Management, Inc. (ASIM)

(See Risk and Insurance Management Society, Inc. (RIMS).)

[A189]

Americans with Disabilities Act (ADA)

A federal act designed to set standards to remove the barriers to employment, transportation, public accommodations, public services, and telecommunications that exist for those members of our society who have physical disabilities of many types. The act encompasses many aspects of everyday life and generates wide-ranging implications for almost every commercial business or service.

[A322]

AMIM

Associate in Marine Insurance Management designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

[A190]

Amortization

Periodical write-down of premium paid on purchase of a bond or write-up of discount received on purchase of a bond so as to reach par value at maturity date.

[A361]

Amortization period

Used in reinsurance rating to describe the number of years it would take for a policy's premium to equal the amount of indemnification.

[A362]

Authorized reinsurer

Describes reinsurance that is written (placed) with a company that is licensed (authorized) in the state where the transaction is made.

[A191]

Amortized value

The current appraised worth of any bond not yet matured and which was either bought at a discount (less than its face value) or at a premium (more than its face value). For example, a bond bought today at $1,050 to mature in 10 years would have an amortized value one year hence of $1,045, two years hence of $1,040, etc.

[A192]

Amount at risk

A life insurance term to express the amount the insurer would pay in benefits in case of death on a whole life policy. It is calculated using the difference between the face amount of the policy and the cash value that has been accumulated.

[A193]

Amount of insurance

Based on the terms of a specific policy, the most an insurer will pay for any single loss. The maximum amount an insured can collect.

[A194]

Amount subject

Also known as maximum possible loss (MPL). The largest percentage of the insured property which could possibly be destroyed by the insured perils. Normally this amount would be all the property within the four walls of a structure plus loss to adjacent property due to its proximity. An amount subject or MPL estimate is invariably the ultimate in pessimism, but it is a most important concept in underwriting large risks in order to compute rates and to understand the need for capacity, as well as to appreciate all exposures. Maximum foreseeable loss (MFL) is used periodically and has substantially the same meaning.

[A195]

Analytic System for the Measurement of Relative Fire Hazards

Also known as Dean Schedule. A method (now obsolete) of rating fire insurance risks developed by A. F. Dean (Chicago, 1901). Geographically, much of the country is rated under this schedule. Dean described a standard unoccupied risk for which a base rate was named depending on overall territorial factors. Each individual hazard or factor (construction, area, damageability, occupancy, exposure, etc.) that appeared in the risk added or subtracted a percentage of the base rate to produce the specific rate. A successful, logical method which has contributed much to insurance thinking and practice.

Analytics

A term that formerly referred to the science of logical analysis. However, the term is now used to describe certain types of business or operational information that facilitate decision-making via the close examination of such information and activities.

[A196]

Ancillary benefits

Benefits in a health insurance policy that are available to pay for unscheduled service and miscellaneous charges such as medication, bandages, etc.

[A197]

Animal insurance

Life and health insurance for animals or livestock.

(See poultry insurance (chickens).)

[A198]

Animal mortality insurance

A type of animal life insurance that provides benefits for the death of the specified animal for any cause unless otherwise excluded. Coverage is normally very broad and the exclusions few, if any at all.

(See livestock mortality insurance.)

[A199]

Anniversary date

The anniversary date of policy inception as listed in the policy Declarations, and each subsequent expiration and renewal.

[A200]

Annual aggregate deductible

The total amount an insured is responsible to retain for the sum of all losses up to a specified deductible during an annual policy period. Once the annual aggregate deductible has been reached by the accumulation of payment by the insured, the insurer responds to the remaining claims up to the policy limits.

[A350]

Annual form

A transportation policy used by organizations that frequently ship property.

[A201]

Annual renewal agreement

Certain policy forms contain a clause whereby the company agrees to renew the policy for a certain number of times at some specified rate.

[A202]

Annual report

The formal financial report issued by an insurer or other corporation that provides the year's financial information to its shareholders, stockholders, and/or policyholders.

[A203]

Annual statement

A summary of an insurance company's operations for the year and a balance sheet at the end of the year, supported by detailed exhibits and schedules, and filed with the insurance department of each state where the company is licensed to conduct an insurance business. Details and the precise form of the annual statement are prescribed by the NAIC. Also known as convention blank.

[A323]

Annual (yearly) renewable term insurance

A term life insurance policy that the insured can renew for a specific number of years without proving insurability. Each year the policy’s premium increases.

(See also yearly renewable term.)

[A204]

Annualization

A provision in multi-year policies giving the insurer the option to re-rate the policy on each subsequent renewal or anniversary date, using the rates in effect as of the anniversary date.

(See adjustable premium.)

[A205]

Annuitant

The owner or beneficiary of an annuity.

[A206]

Annuity

A popular device used in retirement planning, it refers to any type of periodic (generally monthly) payments made to an individual (called the annuitant). The payments may be arranged to last for a defined period of time or may be paid until the annuitant's death. In the latter case, remaining funds may continue to a new annuitant or be paid in a lump sum to a beneficiary.

[A207]

Annuity certain

An annuity that guarantees to pay income for a specified period of time, whether or not the annuitant is still alive.

[A208]

Annuity due

An annuity in which the income benefits are paid at the start of the annuity period instead of the end.

[A209]

Annuity period

With respect to the scheduled payments of income for an annuity, this is the amount of time between each payment.

[A210]

Annuity table

The mortality table used to set rates for annuity policies.

[A211]

Annuity with period certain

An annuity that pays income benefits for the life of the insured, but with an additional built-in guarantee committing the payment of income benefits for a minimum number of years, whether or not the insured survives for that minimum number of years.

[A212]

Anti-arson application forms

Specially designed fire and property insurance forms for territories or areas that have a high arson rate.

[A213]

Anti-coercion laws

State laws making the use of coercion illegal, falling into the category of unfair labor practice.

Anti-concurrent causation

Refers to a type of insurance exclusion that bars coverage for a loss from a given cause (such as flood or earthquake), even when that cause is preceded, followed or occurred at the same time as another, normally eligible cause of loss (such as fire or lightning).

[A214]

Antidiscrimination laws

State laws that prohibit an insurer from offering any type of preferential terms or rates to one class of insured over another, when such treatment is not warranted by the company's normal and usual underwriting standards and is not actuarially credible. Also known as antidiscriminatory laws.

[A216]

Anti-rebate law

State insurance regulations making it illegal for an agent to offer any part of the commission from a policy to an insured as an enticement to purchase the policy.

[A217]

Anti-selection

The adverse impact on an insurer when risks are selected that have a higher chance of loss than that contemplated by the applicable insurance rate. Also known as adverse selection. The selection of such risks is adverse because the rate is inadequate.

[A219]

Antitrust laws

Federal and state laws that attempt to prevent price fixing or price discrimination, prevent monopolies, and as a result, also prevent illegal restraints in commerce.

Anti-compact laws which forbid companies from agreeing on prices, products, and other business conditions to the detriment of competition, except under conditions stated in the laws.

Any occupation

A level of disability, meaning that an injured person is unable to perform any job that he or she has the training and/or skill to do, if they were not disabled.

[A324]

APA

Associate in Premium Auditing designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

[A220]

Apartment package policy

A package policy forming part of the special multiperil policy (SMP) program combining the various coverages applicable to the ownership and operation of an apartment house. Basically, it covers fire, allied lines and liability. It can be extended for other coverages, such as boiler and machinery, glass, fidelity, etc. The SMP has been replaced in most jurisdictions by the commercial package policy (CPP).

[A325]

APM

Associated Professional Member designation sponsored by the American Society of Pension Actuaries. Fairfax, VA.

[A326]

Apparent authority

Under agency law, apparent authority occurs when an agent exceeds express (actual) authority in an action but the person dealing with the agent has a justifiable belief that the agent is authorized to do the act in question. For example, an agent tells the customer she can bind coverage on her Corvette. The agent forgot that she cannot bind coverage on a Corvette but the customer does not know this and believes the agent is able to place insurance on the car.

[A327]

Applicant

The person in a life insurance policy who actually applies for the insurance. The applicant does not have to be the insured if he or she has an insurable interest in the insured at the time the application is taken.

[A221]

Application

In all types of insurance requiring it, a written statement by a prospective policyholder which gives the information the company relies upon when underwriting, rating and issuing the insurance. In England this is called a proposal.

[A222]

Appointment

The process by which an insurance company authorizes an agent to act on that company's behalf.

[A223]

Apportionment

The process which determines how much each policy on a risk must pay when there is more than one policy involved in a loss. Apportionment refers directly to the proportioning or splitting of the loss amount.

[A351]

Appraisal

(See appraisal clause or arbitration clause.)

[A225]

Appraisal clause

The clause in a policy that sets forth the conditions under which a disputed loss is decided by appraisers.

(See arbitration clause.)

[A226]

Appraisal inventory

The inventory or list that details each item and its value, as determined by an appraiser, with respect to either the property owned by an insured or the property to be covered by a policy.

[A227]

Appraiser

1) A person who determines the value of property.

2) A party who determines the amount of a disputed loss.

[A228]

Appreciation

The amount by which property has increased in value.

(See depreciation.)

[A229]

Approved

A term rather loosely used to mean something which meets the standards set up by insurers, e.g., approved roof or approved cargo.

[A230]

Approved roof

Usually a roof made of fire-resistive material as distinguished from wood.

[A231]

Appurtenant structures

Other structures or real property of lesser value that are located on the same premises as the main building insured under a property insurance policy. Common examples are small metal service buildings or storage sheds.

[A232]

"A rates"

Rates that are not actuarially credible because there are inadequate statistics or loss experience to set forth class or general rates; therefore, the underwriter or insurer must complete an evaluation of the exposures posed by the individual risk and determine a judgment rate. Rates should be equitable to the exposure retained by the insurer.

Arbitrage

Regarding the alternative risk transfer area, refers to dealing in rapid transactions (purchase and resale) in similar financial assets in different markets and making a profit by taking advantage of short term price differences (discrepancies).

[A233]

Arbitration clause

Language in most policies of insurance providing that, in the event the company and the claimant are unable to agree on the amount due after loss, the matter shall be submitted to disinterested parties for solution. One party is appointed by the insured, one by the company, and the two appointed arbitrators then pick a third, the "umpire."

(See appraisal clause and reference.)

[A234]

Arbitrator

One chosen to decide disputes out of court.

[A378]

Architects and engineers (A&E) coverage

A shorthand reference to any package of policies that are tailored to handling architectural and engineering operations such as design-build firms, environmental contractors/engineers, project managers, surveyors, etc. Coverage usually encompasses general, professional, business auto, environmental (pollution), and other related liability.

[A235]

Architects and engineers professional liability insurance

Protects architects and engineers against claims arising out of their professional services caused by error, omission or negligent acts.

Architects', Surveyors' and Consulting Engineers' Fees

This coverage responds to loss involving fees related to making structural or equipment repairs when fees for such building experts are not included in a loss settlement.

[A328]

ARe

Associate in Reinsurance designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

ARIA

(See American Risk and Insurance Association.)

[A329]

ARM

Associate in Risk Management designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

[A236]

Armored car and messenger service insurance

Specialty insurance designed specifically to cover the exposures of an armored car or messenger service while loading, transporting, storing, unloading, or otherwise, during the handling of money, gems, precious metals, stock certificates and other highly negotiable instrumentalities by the service.

[A330]

ARP

Associate in Research and Planning designation sponsored by the Insurance Institute of America (headquarters: Malvern, PA) and the Life Office Management Association (headquarters: Atlanta, GA.)
[A237]

Arson

The intentional destruction of property by fire.

[A238]

Arson fraud

Arson that is either committed by the insured or at the direction of the insured solely for the purpose of collecting insurance proceeds by the insured.

[A379]

ART

(See alternative risk transfer.)

[A239]

A.S.--automatic sprinkler

An indication on a diagram that the risk is protected by automatic sprinklers.

[A331]

ASA

Associate of the Society of Actuaries designation sponsored by the Society of Actuaries. Headquarters: Schaumburg, IL.
[A240]

ASIM--American Society of Insurance Management, Inc.

Now known as Risk and Insurance Management Society, Inc. (RIMS). Formed in 1950. A nonprofit association dedicated to the advancement of professional standards of risk management. RIMS sponsors educational programs and maintains relationships with insurers, brokers, rating organizations, and regulatory and governmental bodies. Headquarters: New York, NY.

[A389]

ASLI

(See Associate in Surplus Lines Insurance.)

ASO
(See alternate settlement option.)

[A352]

AS0 plan

Where a self-insurer pays an insurer or other organization to administer its operations, including benefits and claims.

[A369]

ASSA

(See Actuarial Society of South Africa.)

[A241]

Assailing thieves

A term used in ocean marine policies to indicate insurance against theft by physical force from persons other than the ship's officers or crew.

[A242]

Assessable insurance

A type of insurance which may require the policyholder to contribute in the event the insurer becomes unable to pay its losses. Confined to certain mutual companies. Also known as assessable policies.

(See assessment mutual and nonassessable policy.)

[A243]

Assessable policies

A type of insurance which may require the policyholder to contribute in the event the insurer becomes unable to pay its losses. Confined to certain mutual companies. Also known as assessable insurance.

(See assessment mutual and nonassessable policy.)

[A244]

Assessment

The charge levied by an insurer writing an assessable policy (as sold by some mutual insurers), in addition to the policy premium, in the event the insurer becomes unable to pay its total losses.

[A245]

Assessment mutual

A mutual insurance company that has the option or right to assess or charge policyholders additional premiums when losses or expenses have increased beyond the predictions set at policy inception.

(See assessable insurance.)

[A246]

Assets

All the property and resources of a business.

(See admitted assets.)

[A247]

Assigned risk plan

An association of insurers in a given state in which automobile risks unable to get insurance in the voluntary market are shared among subscribing insurers in proportion to the amount of automobile liability insurance each insurer writes in that state. All companies writing this class are required to participate in this activity, currently administered by the Automobile Insurance Plans Service Office, headquartered at Johnston, RI. Also known as automobile insurance plans, these plans sometimes take the form of joint underwriting associations.

[A332]

Assignee

The person to whom life insurance policy proceeds or other (life insurance) contractual rights are assigned. There can be collateral assignees (creditors) and absolute assignees (irrevocable).

(See also assignor.)

[A248]

Assignment

Transferring property rights to another. Insurance policies may thus be assigned or transferred to another, but usually this requires the consent of the insurer.

(See absolute assignment and absolute ownership.)

[A249]

Assignment of benefits

A health insurance benefit payment option where an insured may assign policy benefits directly to the health provider. The provider is paid directly, less any deductible. Any balance is paid by the insured.

[A333]

Assignor

In life insurance, the assignor is the person who possesses ownership rights and who assigns those rights to an assignee.

(See also assignee).

[A390]

Associate in Surplus Lines Insurance

This designation is sponsored by NAPSLO (National Association of Professional Surplus Lines). It was developed in part by the Insurance Institute of America and is awarded after successful completion of its four parts and exams on various key aspects of surplus lines insurance.

[A250]

Associated Aviation Underwriters (AAU)

A multi-company aviation pool writing a substantial volume of most types of aviation business (domestic and international). Founded in 1929. Headquarters: New York, NY.

[A367]

Associated General Contractors of America

An organization consisting of construction contractors and related companies dedicated to industry education and other services. Its goal is to represent the concerns of the industry as an advocate and to enhance its image with the general public. Headquarters: Alexandria, VA.

[A251]

Association captive insurance company

A captive insurance company that is formed by the members of an association to underwrite and provide insurance only for their own association members.

[A043a]

Association for Cooperative Operations Research and Development (ACORD)

A nonprofit insurance facility dedicated to serving the independent agency system in the USA by developing and maintaining standard application forms, providing electronic data interchange standards and other support of agency automation. ACORD is located in Pearl River, NY.

[A252]

Association group insurance

Group insurance offering coverage to an association, much in the same manner that it would be offered to the employee group of an employer.

[A253]

Association of Average Adjusters

Professional organization of persons involved in the adjustment of maritime losses with a specific emphasis on the ancient concept of general average (a loss common to all interests in the voyage). Headquarters: New York, NY.

[A368]

Association of British Insurers

Formed in 1985, this organization consists of hundreds of insurers operating in the United Kingdom. The member companies account for nearly 100 percent of the insurance business written in the UK. The ABI acts to encourage high operating standards among its members and is also an advocate of insurer issues. Headquarters: London, England.

[A347]

Association of Certified Fraud Examiners (ACFE)

An international organization that sponsors the certification of professionals trained to detect, investigate and prevent fraud and white collar crime. Headquarters: Austin, Texas.

[A380]

Association of Insurance Compliance Professionals

Originally called the Society of State Filers, this organization serves members from property, casualty, life and health insurers, regulatory agencies, consultants and other specialty operations who have an active interest in insurance compliance. It provides a host of compliance-related educational and networking opportunities. Headquarters: Reston, VA.

[A254]

Association of Trial Lawyers of America (ATLA)

Also known as Trial Lawyers Association of America. Successor to National Association of Claimants Compensation Attorneys (NACCA). An international association of plaintiffs' lawyers primarily engaged in the field of personal injury law. Through meetings, lectures, seminars, and publications, ideas are exchanged and techniques are developed for the successful prosecution of their cases and the award of higher court judgments. Headquarters: Washington, DC.

[A255]

Association professional liability insurance

Professional liability insurance for the directors, officers, and other members of an association while performing their duties on behalf of the association.

[A256]

Assume

To accept (by an underwriter or other person authorized to act) all or part of a risk or an exposure, at which time insurance "attaches." Also known as accept.

[A257]

Assumed liability

Contractual liability which arises from an agreement between people, as opposed to liability which arises from common or statute law.

[A258]

Assumption endorsement

Also known as a cut-through endorsement, this endorsement is an addition to an insurance policy between an insurance company and a policyholder which requires that, in the event of the company's insolvency, any part of a loss covered by reinsurance be paid directly to the policyholder by the reinsurer. The cut-through endorsement is so named because it provides that the reinsurance claim payment "cuts through" the usual route of payment from reinsured company-to-policyholder and then reinsurer-to-reinsured company, substituting instead the payment route of reinsurer-to-policyholder. The effect is to revise the route of payment only, and there is no intended increased risk to the reinsurer. Similar to the guarantee endorsement.

[A259]

Assumption of risk

A common law defense used by employers in which an employee assumes the risks for the hazards normally associated with a type of employment when that employee accepts employment. This defense is not available with workers compensation laws.

[A334]

Assumption reinsurance

An insurance company may want to eliminate a block of business. It could effectively "sell" that block of business to another company through assumption reinsurance. The assuming company (reinsurer) takes over all responsibility for the policies and the ceding company is no longer a party to the contracts for that block of business.

[A260]

Assurance

Same as "insurance" but used more in England and more often restricted to "life assurance" (insurance).

[A261]

Assured

The person or party protected by a policy of insurance. Same as insured or policyholder.

[A262]

ATLA--American Trial Lawyers Association

Also known as the Association of American Trial Lawyers. Successor to National Association of Claimants Compensation Attorneys (NACCA). An international association of plaintiffs' lawyers primarily engaged in the field of personal injury law. Through meetings, lectures, seminars, and publications, ideas are exchanged and techniques are developed for the successful prosecution of their cases and the award of higher court judgments. Headquarters: Washington, DC.

[A263]

Attach

The commencement of insurance coverage in a policy.

[A264]

Attachment

An attachment is a rider, endorsement, or any other modification made to a policy that in some way changes, broadens, restricts or clarifies the basic coverage provided.

(See rider, and endorsement.)

[A265]

Attachment point

The limit or amount at which reinsurance attaches or comes into play. The limit or amount below that point is retained by the ceding company.

[A335]

Attained age

The age of the insured today.

(See attained age conversion).

[A336]

Attained age conversion

Many term life insurance policies can be converted to other types of insurance (e.g., whole life) before the insured reaches a certain age. In such conversions, the premiums charged for the new policy are according to the insured's current (attained) age and not his original age (age of the person when the term policy took effect).

[A337]

Attending physician's statement

Found in life and health insurance. It is the statement of the physician who treated the patient for a particular illness or accident. Underwriters often ask for an attending physician's statement regarding illnesses and injuries appearing on a life or health insurance application to determine the exact nature of the problem, the duration of the problem and/or the prognosis for recovery. Claims adjusters use attending physician's statements in determining coverage and payments.

[A266]

Attestation clause

The clause in a policy which identifies the required signature of an officer of the insurer authorizing the coverage.

[A267]

Attorney-in-fact

One who has been given specific authority to act for another in certain clearly defined matters. Often used in insurance to refer to the person or entity operating a "reciprocal exchange" or "inter-insurance exchange."

[A268]

Attractive nuisance

A condition which, although normally harmless, may nevertheless attract those (usually children) who do not understand its uses and may cause injury. Although it may be proper to maintain such a condition, the owner is nevertheless required to take such means as may be necessary to prevent its causing injury to innocent people, e.g., an empty swimming pool, an unattended tractor, or an upended ladder.

[A353]

At-will employment

Describes a common situation in which a worker is employed at the will of the employer and the employee may be fired for any reason unless the reason would violate state or federal law (such as the Americans with Disabilities Act).

[A338]

AU

Associate in Underwriting designation sponsored by the Insurance Institute of America. Headquarters: Malvern, PA.

[A269]

Auctioneers errors and omissions insurance

Insurance coverage designed for auctioneers to protect against claims resulting from negligent acts, errors or omissions of auctioneers in the performance of their business-related duties.


[A270]

Audit

Verification of books or accounts to determine their accuracy. Certain policies written on a reporting or adjustable form give the insurer the privilege of auditing the policyholder's records to verify the accuracy of the premiums paid.

(See Adjustable Policy.)


[A271]

Audit bureau

An office which checks rates and forms of issued policies for accuracy of rates and rules. Sometimes called stamping bureau because the daily report is stamped with a rubber stamp if correctly prepared.


[A272]

Audit policies

These are the types of policies that the insurer has the right to audit or examine at the end of each policy term, to determine if the premium charged was adequate based on the actual final exposure experienced by that insured.


[A273]

Audit provision

A policy condition or provision that details the right of the insurer to examine or audit the records of the insured at any time during the term of the insurance policy issued or for up to three years after the expiration of that policy, to determine the actual exposure that insured places on the insurer.


Audited premium
(See auditor.)


[A274]

Auditor

One who checks the accuracy of figures, either the company's or those of its policyholders who are insured by policies permitting or calling for audits. Payroll auditors in workers compensation insurance are a good example.

(See payroll audit.)


[A391]

AUGIE

(See ACORD - User Groups Information Exchange.)


[A274a]

AUS--automated underwriting systems

Systems developed by insurers for use by companies and their agents. The system consists of automatically screening insurance applicants through a grid of questions, scoring the responses and generating an underwriting decision. The theory is that such systems reduce underwriting costs and processing time while introducing greater consistency.


[A275]

Authorization

A statement, written or oral, made by an underwriter to a producer, expressing the underwriter's ability, willingness, and readiness to insure a certain risk for a certain amount on certain terms.


[A276]

Authorized company or insurer

An insurer licensed by the state insurance department to write certain types of insurance in that state. A synonym for licensed or admitted company.


[A276a]

Auto insurance premium discounts

Auto insurance credits given for items that are normally considered to be safety features such as air bags, seat belts, antitheft devices or for good driving records and completion of driver training courses. Credits are also given for non-safety items such as having multiple vehicles on one policy.


[A354]

Automated home

Refers to any residence that contains some level of technology (usually computer) to automate control of its major systems (lighting, sound, plumbing, heating/cooling, electricity). The equipment needed to create the automated environment results in a higher exposure to loss represented by the home and its contents.


[A276b]

Automated underwriting systems (AUS)

Systems developed by insurers for use by companies and their agents. The system consists of automatically screening insurance applicants through a grid of questions, scoring the responses and generating an underwriting decision. The theory is that such systems reduce underwriting costs and processing time while introducing greater consistency.


[A277]

Automatic cover

Policy protection applied simultaneously with the acquisition of new property similar to that already covered by the policy. Certain policies provide that they will assume liability for property other than that covered at the commencement of the contract if and when the policyholder acquires ownership or in the event of some similar happening which the policy describes.


[A339]

Automatic dividend option

A participating life insurance policy often provides several dividend options, i.e., accumulate at interest, paid-up insurance, additional term insurance, etc. The owner of the policy may select among the options at time of application and is also allowed to change the option after the policy is issued by amending the policy.


[A340]

Automatic nonforfeiture option

A whole or cash value life insurance policy will lapse if premiums are not paid. However, the owner is still entitled to (does not forfeit) the cash accumulated by the policy. Three common options are surrender for cash, the purchase of a smaller paid-up whole life policy or a term policy for the same limit of insurance. The owner of the policy may select among the options at time of application and is also allowed to change the option after the policy is issued by amending the policy.


[A341]

Automatic premium loan

Instead of allowing a whole or cash value life insurance policy to lapse, this option permits a company to use accumulated cash value to pay the premiums. If all the cash value is used up by a series of automatic premium loans, the policy lapses.


[A278]

Automatic reinstatement

After a loss has been paid or the damaged property restored, most policies provide that the amount of insurance will automatically return to its original amount. Some policies are reduced by the amount of loss paid but can be reinstated for additional premium.


[A355]

Automatic reinsurance

An agreement between a primary insurer and a reinsurer that obligates the former to pass on (cede) and the reinsurer to accept all risks that fit the guidelines established by the agreement. For instance, an automatic treaty may require Insurer A to automatically cede any homeowner policy with a dwelling limit at or above $300,000.


[A280]

Automatic sprinklers (A.S.)

A system to protect property from severe damage by fire in which water is piped to devices called sprinkler heads, which melt with heat and release water to extinguish a fire. Extensively used to protect valuable properties and property so protected normally is charged a lower fire insurance rate than property not so protected.


[A281]

Automatic treaty

An agreement between a primary insurer and a reinsurer that obligates the former to pass on (cede) and the reinsurer to accept all risks that fit the guidelines established by the agreement. For instance, an automatic treaty may require Insurer A to automatically cede any homeowner policy with a dwelling limit at or above $300,000.


[A282]

Automobile death and disability coverage

A form of accident insurance coverage available under a private passenger automobile liability policy where the insurer pays a principal sum for accidental death, stated benefits for specific injuries (such as loss of limbs, fractures, etc.), and weekly indemnity for total disability. Covers accidents while traveling in an automobile, including getting in and out of, or by being struck by an automobile. An extra premium is charged for this coverage which is available to the policyholder, a spouse, or any other named person.


[A283]

Automobile fleet

A group of automobiles, used commercially and owned or leased by the insured, which may get special rate treatment.


[A284]

Automobile insurance

Any kind of insurance pertaining to the ownership, maintenance, or use of automobiles.


[A285]

Automobile insurance plan

An association of insurers in a given state in which automobile risks unable to get insurance in the voluntary market are shared among subscribing insurers in proportion to the amount of automobile liability insurance each insurer writes in that state. All companies writing this class are required to participate in this activity, currently administered by the Automobile Insurance Plans Service Office, headquartered at Johnston, RI. Long identified as "assigned risk plans," such plans sometimes take the form of joint underwriting associations.


[A286]

Automobile liability excess policy

Provides excess limits for bodily injury and property damage liability for persons unable to secure more than minimum limits under their basic automobile liability insurance. Primarily purchased by assigned risk plan policyholders, the excess insurance always stipulates that the primary policy must be kept in force.


[A287]

Automobile liability insurance

Protection for loss incurred through legal liability for bodily injury and damage to property of others caused by accidents arising out of ownership, maintenance or use of an automobile.


[A288]

Automobile medical payments insurance

An optional coverage under an automobile liability policy which pays the medical expenses of the policyholder and any of the passengers injured by the insured automobile, irrespective of who was responsible for the accident. This was originally called "basic medical payments." In addition, it pays the medical expenses of the policyholder and members of the immediate family injured while passengers in any other automobile or when struck by an automobile. In some no-fault states, medical payments insurance has been replaced by personal injury protection (PIP); in other states, it may supplement no-fault insurance.

(See personal injury protection (PIP).)


[A289]

Automobile physical damage insurance

Material damage insurance covering loss or damage to the policyholder's automobile.

(See combination automobile policy.)


[A290]

Auxiliary yacht

A pleasure boat propelled both by sail and power.



[A291]

Average

1) The ocean marine underwriter's term for loss.

2) Derived from the French word "avarie," meaning damage to ship or cargo.



[A292]

Average adjuster

An adjuster of marine losses, such as particular or general average.



[A293]

Average clause

Language in an insurance policy which distributes the insurance among several items in proportion to their value or in a similar way. Also known as a coinsurance clause, average distribution clause and pro rata distribution clause.

(See distribution clause, pro rata clause and pro rata distribution clause.)



[A342]

Average indexed monthly earnings (AIME)

The formula used by the Social Security Administration to determine an individual's benefits. The formula takes into account all of the income earned and social security taxes paid during an individual’s working life. Most people do not pay the maximum into social security from the day they enter the workplace, so the formula adjusts benefits for those with lower earnings.



[A294]

Average rate

Since rates generally apply to individual items (e.g., a building or specific contents), when two or more such items are combined in a single "blanket" amount of insurance, the value of each item is multiplied by its own rate. The sum of the premiums thus determined is divided by the total amount of insurance on all the items to produce an average rate for all the insured property.



[A295]

Average risk

The type of risk that an insurer defines as average or standard for class as far as size, quality and acceptability. The baseline set by the insurer as the proverbial company normal.

(See standard risk.)



[A296]

Average weekly wage

1) A calculation which reflects the average rate of remuneration of employees, used as a basis for determining benefits in workers compensation insurance.

2) A type of statistic promulgated by the U.S. Department of Labor on a national level and used for determining benefits under federal compensation acts.



[A297]

Aviation clause

Language in certain policies which describes restrictions in coverage in or on aircraft.



[A298]

Aviation insurance

A broad field of protection covering both domestic and international operations of aircraft owned and used, involving hulls, liability, passenger liability, and airport and hangerkeeper's liability.



[A299]

Aviation passenger liability insurance

Insurance protection for the operators of aircraft, in the event of an accident where a passenger(s) is injured, killed or disabled while on a covered aircraft.



[A300]

Avoidance of risk

One of the tools of the risk management process, where steps are taken by an insured to remove a process, cause of loss or hazard and thus avoid the chance of loss. Steps include changing processes or even ending a specific exposure, if necessary.