Cyber Insurance Glossary

A complete glossary of essential Insurance terms.

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  • Policy
    A written contract ratifying the legality of an insurance agreement.
  • Policy Dividend
    A refund of part of the premium on a participating life insurance policy. Amount of payment is determined by subtracting the actual premium expense from the premium charged. The payment can be taken as cash, applied to a purchase an increment of paid-up insurance, left on deposit with the insurance company or applied to purchase term insurance for one year.
  • Policy Period
    Time period during which insurance coverage is in effect.
  • Policy Reserve
    The amount of money allocated specifically for the fulfillment of policy obligations by a life insurance company; reserves are in place to safeguard that the company is able to pay all future claims.
  • Policyholders Surplus
    Assets in excess of the liabilities of a company or net income above any monies indebted to legal obligation.
  • Preferred Provider Organization (PPO)
    Arrangement, insured or uninsured, where contracts are established by Health Plan Companies (typically, commercial insurers, and, in some circumstances, by self-insured employers) with health care providers. The Health Plans involved will often designate these contracted providers as "preferred" and will provide an incentive, usually in the form of lower deductibles or co-payments, to encourage covered individuals to use these providers. Members are allowed benefits for non-participating provider services on an indemnity basis with significant copayments and providers are often, but not always, paid on a discounted fee for service basis.
  • Preferred Risk
    Insured, or applicant for insurance, who presents likelihood of risk lower than that of the standard applicant.
  • Premium
    Money charged for the insurance coverage reflecting expectation of loss.
  • Premiums Earned
    The portion of premium for which the policy protection or coverage has already been given during the now-expired portion of the policy term.
  • Premiums Net
    Is the amount calculated on the basis of the interest and mortality table used to calculate the reporting entity's statutory policy reserves.
  • Premiums Written
    Total premiums generated from all policies (contracts) written by an insurer within a given period of time.
  • Primary Insurance
    Coverage that takes precedence when more than one policy covers the same loss.
  • Prior Approval Law
    A state regulatory requirement for pre-approval of all insurance rates and forms.
  • Producer
    An individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.
  • Product Liability
    Insurance coverage protecting the manufacturer, distributor, seller, or lessor of a product against legal liability resulting from a defective condition causing personal injury, or damage, to any individual or entity, associated with the use of the product.
  • Professional Errors and Omissions Liability
    Coverage available to pay for liability arising out of the performance of professional or business related duties, with coverage being tailored to the needs of the specific profession. Examples include abstracters, accountants, insurance adjusters, architects, engineers, insurance agents and brokers, lawyers, real estate agents, stockbrokers.
  • Property
    Coverage protecting the insured against loss or damage to real or personal property from a variety of perils, including but not limited to fire, lightening, business interruption, loss of rents, glass breakage, tornado, windstorm, hail, water damage, explosion, riot, civil commotion, rain, or damage from aircraft or vehicles.
  • Protected Cell
    An insurance-linked security retained within the insurance or reinsurance company and is used to insulate the proceeds of the securities offering from the general business risks of the insurer, granting an additional comfort level for investors of the securitized instrument.
  • Provisions
    Contingencies outlined in an insurance policy
  • Proximate Cause
    Event covered under insured's policy agreement.
  • Public Adjuster
    Independent claims adjuster representing policyholders instead of insurance companies.
  • Pure Premium
    That portion of the premium equal to expected losses void of insurance company expenses, premium taxes, contingencies, or profit margin.
  • Pure Risk
    Circumstance including possibility of loss or no loss but no possibility of gain.
  • Qualified Actuary
    A person who meets the basic education, experience and continuing education requirements (these differ by line of business) of the Specific Qualification Standard for Statements of Actuarial Opinion, NAIC Property and Casualty Annual Statement, as set forth in the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States, promulgated by the American Academy of Actuaries, and is in good standing of the American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries.
  • Rate
    Value of insured losses expressed as a cost per unit of insurance.
  • RBC Ratio
    Ratio used to identify insurance companies that are poorly capitalized. Calculated by dividing the company's capital by the minimum amount of capital regulatory authorities have deemed necessary to support the insurance operations.
  • Rebate
    A refund of part or all of a premium payment.
  • Reinsurance
    A transaction between a primary insurer and another licensed (re) insurer where the reinsurer agrees to cover all or part of the losses and/or loss adjustment expenses of the primary insurer. The assumption is in exchange for a premium. Indemnification is on a proportional or non-proportional basis.
  • Reinsurer
    Company assuming reinsurance risk.
  • Renewable Term Insurance
    Insurance that is renewable for a limited number of successive terms by the policyholder and is not contingent upon medical examination.
  • Reported Losses
    Includes both expected payments for losses relating to insured events that have occurred and have been reported to the insurance company, but not yet paid.
  • Reserve
    A portion of the premium retained to pay future claims.
  • Reserve Credit
    Reduction of reserve amounts for reinsurance ceded. Reductions may include the claim reserve and/or the unearned premium reserve.
  • Residual Market Plan
    Method devised for coverage of greater than average risk individuals who cannot obtain insurance through normal market channels.
  • Retention
    A mechanism of internal fund allocation for loss exposure used in place of or as a supplement to risk transfer to an insurance company.
  • Retrocession
    The portion of risk that a reinsurance company cedes or amount of insurance the company chooses not to retain.
  • Retrospective Rating
    The process of determining the cost of an insurance policy based on the actual loss experience determined as an adjustment to the initial premium payment.
  • Rider
    An amendment to a policy agreement.
  • Risk
    Uncertainty concerning the possibility of loss by a peril for which insurance is pursued
  • Risk Based Capital Ratio
    Ratio used to identify insurance companies that are poorly capitalized. Calculated by dividing the company's capital by the minimum amount of capital regulatory authorities have deemed necessary to support the insurance operations.
  • Risk Retention Act
    A 1986 federal statute amending portions of the Product Liability Risk Retention Act of 1981 and enacted to make organization of Risk Retention Groups and Purchasing Groups more efficient.
  • Risk Retention Group
    Group-owned insurer organized for the purpose of assuming and spreading the liability risks to its members.
  • Salvage
    Value recoverable after a loss.
  • Securitization of Insurance Risk
    A method for insurance companies to access capital and hedge risks by converting policies into securities that can be sold in financial markets.
  • Separate Account
    Segregated funds held and invested independently of other assets by an insurer for the purpose of a group retirement fund.
  • Situs of Contract
    The jurisdiction in which the contract is issued or delivered as stated in the contract.
  • Soft Market
    A buyer's market characterized by abundant supply of insurance driving premiums down.
  • Standard Risk
    A person who, according to a company's underwriting standards, is considered a normal risk and insurable at standard rates. High or low risk candidates may qualify for extra or discounted rates based on their deviation from the standard.
  • State of Domicile
    The state where a company's home office is located.
  • State Page
    Exhibit of Premiums and Losses for each state a company is licensed. The state of domicile receives a schedule for each jurisdiction the company wrote direct business, or has amounts paid, incurred or unpaid.
  • Statement Type
    Refers to the primary business type under which the company files its annual and quarterly statement, such as Life, Property, Health, Fraternal, Title.