Cyber Insurance Glossary

A complete glossary of essential Insurance terms.

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  • Kidnap/Ransom Insurance
    Coverage for ransom or extortion costs and related expenses.
  • Lapse
    termination of a policy due to failure to pay the required renewal premium.
  • Level Premium Insurance
    life insurance policy for which the cost is equally distributed over the term of the premium period, remaining constant throughout.
  • Liability
    a certain or probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or to provide services to other entities in the future as a result of a past transactions(s) or event(s). three essential characteristics: a)    It embodies a present duty or responsibility to one or more other entities that entails settlement by probable future transfer or use of assets at a specified or determinable date, on occurrence of a specified event, or on demand; b)    The duty or responsibility obligates a particular entity, leaving it little or no discretion to avoid the future sacrifice; and c)    The transaction or other event obligating the entity has already happened.
  • Life- Endowment
    Insurance that pays the same benefit amount should the insured die during the term of the contract, or if the insured survives to the end of the specified coverage term or age.
  • Life- Flexible Premium Adjustable Life
    A group life insurance that provides a face amount that is adjustable to the certificate holder and allows the certificate holder to vary the modal premium that is paid or to skip a payment so long as the certificate value is sufficient to keep the certificate in force, and under which separately identified interest credits (other than in connection with dividend accumulation, premium deposit funds or other supplementary accounts) and mortality and expense charges are made to individual certificates while providing minimum guaranteed values.
  • Life Settlements
    A contract or agreement in which a policyholder agrees to sell or transfer ownership in all or part of a life insurance policy to a third party for compensation that is less than the expected death benefit of a policy.
  • Lifetime Disability Benefit
    a provision in some disability income policies to recoup lost wages for the term of disability or remainder of insured's life in case of permanent disability.
  • Limits
    Maximum value to be derived from a policy.
  • Line of Business
    Classification of business written by insurers.
  • Loss Adjustment Expense (LAE)
    Expected payments for costs to be incurred in connection with the adjustment and recording of losses. Can be classified into two broad categories: Defense and Cost Containment (DCC) and Adjusting and Other (AO). Can also be separated into (Allocated Loss Adjustment Expense) and (Unallocated Loss Adjustment Expense for ratemaking purposes.
  • Loss of Frequency
    Incidence of claims on a policy during a premium period.
  • Loss of Payable Clause
    Coverage for third party mortgagee in case of default on insured property, secured by a loan, that has been lost or damaged.
  • Loss of Use Insurance
    Policy providing protection against loss of use due to damage or destruction of property.
  • Loss Ratio
    The percentage of incurred losses to earned premiums.
  • Loss Reserve
    The amount that insurers set aside to cover claims incurred but not yet paid.
  • Loss Reserves
    An estimate of liability or provision in an insurer's financial statement, indicating the amount the insurer expects to pay for losses incurred but not yet reported or reported claims that haven't been paid.
  • Losses Incurred
    Includes claims that have been paid and/or have amounts held in reserve for future payment.
  • Losses Incurred but Not Reported
    An estimated amount set aside by the insurance company to pay claims that may have occurred, but for some reason have not yet been reported to the insurance company.
  • Manufacturers Output Policies
    Provides broad form coverage of personal property of an insured manufacturer including raw material, goods in process, finished goods and goods shipped to customers.
  • Margin Premium
    A deposit that an organization is required to maintain with a broker with respect to the Futures Contracts purchased or sold.
  • Market Value
    Fair value or the price that could be derived from current sale of an asset.
  • Minimum Premium Plan
    An arrangement under which an insurance carrier will, for a fee, handle the administration of claims and insure against large claims for a self-insured group. The employer self-funds a fixed percentage (e.g. 90%) of the estimated monthly claims, and the insurer covers the remainder.
  • Modified Guaranteed
    An annuity that contains a provision that adjusts the value of withdrawn funds based on a formula in the contract. The formula reflects market value adjustments.
  • Moral Hazard
    Personality characteristics that increase probability of losses. For example not taking proper care to protect insured property because the insured knows the insurance company will replace it if it is damaged or stolen.
  • Multi Peril Insurance
    Personal and business property coverage combining several types of property insurance in one policy.
  • Municipal Body Guarantee Insurance
    Coverage sold to municipalities to guarantee the principle payment on bonds issued.
  • Municipal Liability
    Liability coverage for the acts of a municipality.
  • Municipal Obligation Bond
    Any security, or other instrument, including a state lease but not a lease of any other governmental entity, under which a payment obligation is created, issued by or on behalf of a governmental unit to finance a project servicing a substantial public purpose, and 1) Payable from tax revenues, but not tax allocations, within the jurisdiction of such governmental unit; 2) Payable or guaranteed by the United States of America or any agency, department or instrumentality thereof, or by a state housing agency; 3) Payable from rates or charges (but not tolls) levied or collected in respect of a non-nuclear utility project, public transportation facility (other than an airport facility) or public higher education facility; or 4) With respect to lease obligations, payable from future appropriations.
  • Mutual Insurance Company
    A privately held insurer owned by its policyholders, operated as a non-profit that may or may not be incorporated.
  • Mutual Insurance Holding Company
    A company organized as a mutual and owning a capital stock insurer or insurers for the benefit of pooling risk for many people, typically those in the same industry.
  • Named Insurance
    the individual defined as the insured in the policy contract
  • Named Peril Coverage
    Insurance for losses explicitly defined in the policy contract.
  • National Association of Insurance Commissioners (NAIC)
    The U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.
  • Nationally Recognized Statistical Rating Organization (NRSRO)
    Refers to rating organizations so designated by the SEC whose status has been confirmed by the Securities Valuation Office. Examples are: Moody's Investors Service, Inc., Standard & Poor's (S&P), A.M. Best Company (A.M. Best) and Fitch Ratings and Dominion Bond Rating Service (DBRS).
  • Negligence
    failure to exercise reasonable consideration resulting in loss or damage to oneself or others
  • Net Admitted Assets
    Total of assets whose values are permitted by state law to be included in the annual statement of the insurer.
  • Net Income
    Total revenues from an insurer's operations less total expenses and income taxes.
  • Net Premiums Earned
    Premiums on property/casualty or health policies that will not have to be returned to the policyholder if the policy is cancelled.
  • Non-Admitted Assets
    Assets having economic value other than those which can be used to fulfill policyholder obligations, or those assets which are unavailable due to encumbrances or other third party interests and should not be recognized on the balance sheet.
  • Non-Admitted Insurer
    Insurance company not licensed to do business within a given state.
  • Non-Controlled Stock Insurers
    Insurers in which a parent company has: 1) a financial interest represented by the direct or indirect ownership of less than 50% of voting shares, and 2) does not have the ability to exercise control over the insurer, e.g., through voting stock or management contract.
  • Notional Value
    The principal value upon which future payments are based in a derivative transaction as at a specific period in time (the "as of" reporting date) in the reporting currency.
  • Option
    An agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more Underlying Interests.
  • Other Underwriting Expenses
    Allocable expenses other than loss adjustment expenses and investment expenses.
  • Package Policy
    Two or more distinct policies combined into a single contract.
  • Par Value
    The nominal or face value of a stock or bond.
  • Peril
    The cause of property damage or personal injury, origin of desire for insurance. "Cause of Loss".
  • Personal GAP Insurance
    Credit insurance that insures the excess of the outstanding indebtedness over the primary property insurance benefits in the event of a total loss to a collateral asset.
  • Personal Property
    Single interest or dual interest credit insurance (where collateral is not a motor vehicle, mobile home, or real estate) that covers perils to goods purchased or used as collateral and that concerns a creditor's interest in the purchased goods or pledged collateral either in whole or in part; or covers perils to goods purchased in connection with an open-end credit transaction.