Cyber Insurance Glossary

A complete glossary of essential Insurance terms.

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  • Credit- Credit Default
    coverage purchased by manufacturers, merchants, educational institutions, or other providers of goods and services extending credit, for indemnification of losses or damages resulting from the nonpayment of debts owed to them for goods or services provided in the normal course of their business.
  • Credit- Involuntary Unemployment
    makes loan/credit transaction payments to the creditor when the debtor becomes involuntarily unemployed.
  • Date of Issue
    date when an insurance company issues a policy
  • Declarations
    policy statements regarding the applicant and property covered such as demographic and occupational information, property specifications and expected mileage per year
  • Deductible
    Portion of the insured loss (in dollars) paid by the policy holder
  • Deferred Annuity
    annuity payment to be made as a single payment or a series of installments to begin at some future date, such as in a specified number of years or at a specified age
  • Demutualization
    conversion of a mutual insurance company to a capital stock company.
  • Derivative
    securities priced according to the value of other financial instruments such as commodity prices, interest rates, stock market prices, foreign or exchange rates.
  • Direct Incurred Loss
    loss whereby the proximate cause is equivalent to the insured peril.
  • Direct Loss
    Damage to covered real or personal property caused by a covered peril.
  • Direct Writer
    an insurance company that sells policies to the insured through salaried representatives or exclusive agents only; reinsurance companies that deal directly with ceding companies instead of using brokers
  • Direct Written Premium
    total premiums received by an insurance company without any adjustments for the ceding of any portion of these premiums to the Reinsurer.
  • Directors and Officers Liability
    liability coverage protecting directors or officers of a corporation from liability arising out of the performance of their professional duties on behalf of the corporation.
  • Dividend
    a refund of a portion of the premium paid by the insured from insurer surplus.
  • Domestic Insurer
    an insurance company that is domiciled and licensed in the state in which it sells insurance.
  • Dual Interest
    Insurance that protects the creditor's and the debtor's interest in the collateral securing the debtor's credit transaction. "Dual Interest" includes insurance commonly referred to as "Limited Dual Interest."
  • Dwelling Property/Personal Liability
    a special form of package policy composed of dwelling fire and/or allied lines, and personal liability insurance.
  • Early Warning System
    a system designed by insurance industry regulators of identifying practices and risk-related trends that contribute to systemic risk by measuring insurer' financial stability
  • Earned but Not Reported (EBNR)
    premium amount insurer reasonably expects to receive for which contracts are not yet final and exact amounts are not definite.
  • Earned Premium
    portion of insured's prepaid premium allocated to the insurance company's loss experience, expenses, and profit year- to -date
  • EDP Policies
    coverage to protect against losses arising out of damage to or destruction of electronic data processing equipment and its software
  • Effective Date
    date at which an insurance policy goes into force.
  • Employee Benefit Liability
    liability protection for an employer for claims arising from provisions in an employee benefit insurance plan provided for the economic and social welfare of employees. Examples of items covered are pension plans, group life insurance, group health insurance, group disability income insurance, and accidental death and dismemberment
  • Employers Liability
    employers' liability coverage for the legal liability of employers arising out of injuries to employees. This code should be used when coverage is issued as an endorsement, or as part of a statutory workers' compensation policy.
  • Employment Practices Liability Coverage
    liability insurance for employers providing coverage for wrongful termination, discrimination, or sexual harassment of the insured's current or former employees.
  • Endorsement
    an amendment or rider to a policy adjusting the coverages and taking precedence over the general contract
  • Enrollment
    The total number of plans, not the total number of covered lives, providing coverage to the enrollee and their dependents.
  • Equity Indexed Annuity
    a fixed annuity that earns interest or provides benefits that are linked to an external reference or equity index, subject to a minimum guarantee.
  • Errors and Omissions Liability/ Professional Liability Other than Medical
    liability coverage of a professional or quasi professional insured to persons who have incurred bodily injury or property damage, or who have sustained any loss from omissions arising from the performance of services for others, errors in judgment, breaches of duty, or negligent or wrongful acts in business conduct.
  • Excess and Umbrella Liability
    liability coverage of an insured above a specific amount set forth in a basic policy issued by the primary insurer; or a self insurer for losses over a stated amount; or an insured or self insurer for known or unknown gaps in basic coverages or self insured retentions
  • Excess of Reinsurance
    loss sharing mechanism where an insurer pays all claims up to a specified amount and a reinsurance company pays any claims in excess of stated amount.
  • Excess Workers’ Compensation
    either specific and/or aggregate excess workers' compensation insurance written above an attachment point or self-insured retention.
  • Expense Ratio
    percentage of premium income used to attain and service policies. Derived by subtracting related expenses from incurred losses and dividing by written premiums
  • Experience Rating
    rating system where each group is rated entirely on the basis of its own expected claims in the coming period, with retrospective adjustments for prior periods. This method is prohibited under the conditions for federal qualification.
  • Exposure
    risk of possible loss
  • Extra Expense Insurance
    a type of property insurance for extraordinary expenses related to business interruption such as a back-up generator in case of power failure.
  • Face Amount
    the value of a policy to be provided upon maturity date or death.
  • Facultative Reinsurance
    reinsurance for a specific policy for which terms can be negotiated by the original insurer and reinsurer
  • Fair Value
    the amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available. If a quoted market price is available, the fair value is the product of the number of trading units times market price.
  • Farm Owners Insurance
    farmowners insurance sold for personal, family or household purposes. This package policy is similar to a homeowners policy, in that it has been developed for farms and ranches and includes both property and liability coverage for personal and business losses. Coverage includes farm dwellings and their contents, barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.
  • Fees Payable
    fees incurred but not yet paid
  • Fidelity
    a bond or policy covering an employer's loss resulting from an employee's dishonest act (e.g., loss of cash, securities, valuables, etc.).
  • Financial Guaranty
    a surety bond, insurance policy, or an indemnity contract (when issued by an insurer), or similar guaranty types under which loss is payable upon proof of occurrence of financial loss to an insured claimant, obligee or indemnitee as a result of failure to perform a financial obligation or any other permissible product that is defined as or determined to be financial guaranty insurance.
  • Financial Reporting
    insurance companies are required to maintain records and file annual and quarterly financial statements with regulators in accordance with statutory accounting principles (SAP). Statutory rules also govern how insurers should establish reserves for invested assets and claims and the conditions under which they can claim credit for reinsurance ceded.
  • Financial Responsibility Law
    a statute requiring motorists to show capacity to pay for automobile-related losses.
  • Financial Statement
    balance sheet and profit and loss statement of an insurance company. This statement is used by the NAIC, and by State Insurance Commissioners to regulate an insurance company according to reserve requirements, assets, and other liabilities.
  • Foreign Insurer
    an insurance company selling policies in a state other than the state in which they are incorporated or domiciled.
  • Foreign Investment
    an investment in a foreign jurisdiction, or an investment in a person, real estate or asset domiciled in a foreign jurisdiction. An investment shall not be deemed to be foreign if the issuing person, qualified primary credits source or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction, unless: a) The issuing person is a shell business entity; and b) The investment is not assumed, accepted, guaranteed or insured or otherwise backed by a domestic jurisdiction or a person, that is not a shell business entity, domiciled in a domestic jurisdiction.
  • Foreign Jurisdiction
    a jurisdiction outside of the United States, Canada or any province or political subdivision of the foregoing.
  • Fronting
    an arrangement in which a primary insurer acts as the insurer of record by issuing a policy, but then passes the entire risk to a reinsurer in exchange for a commission. Often, the fronting insurer is licensed to do business in a state or country where the risk is located, but the reinsurer is not.