Term
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Definition
| A risk managemnt technique that transfers some of or all of the loss resulting from a pure risk. |
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Term
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Definition
| As the number of events increase, the accuracy about the probability of an occurence increases. Used ato accurately predict loss exposures. |
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Term
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Definition
| organized to earn a profit for their owners |
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Term
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Definition
companies formed with the goal of providing low cost insurance to their members. Example: mutual insruance companies |
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Term
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Definition
| formed to handle exposures that insurers may not be willing to insure individually because the losses are either too frequent or too severe. |
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Term
| Fair Access to Insurance Requirement (FAIR) plans |
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Definition
| required by law in 28 states and exist to provide property insurance for applicants who cannot obtain coverage in the standard market. |
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Term
| Licensed (admitted) insurer |
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Definition
| an insurance company that is licensed by a particular state to engage in the business of insurance in that state. |
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Term
| unlicensed (nonadmitted) insurer |
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Definition
| an insurance company that is allowed to conduct an insurance business in a state where it has not been licensed to do so. May operate legally only if it operates entirely through the mail in the state in question, or sells only types of insurance that cannot be purchased there from an admitted insurance company. the insurer must be financially acceptable to the state insurance department, the buyer of the coverage must have made a diligent but unsuccessful effort to buy the coverage through admitted insurers, and the broker in the transaction must be specially licensed to place the coverage with a nonadmitted insurer. |
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Term
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Definition
measures efficiency and is calculated by dividing the underwriting expenses for a given period by the written premiums for the same period. |
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Term
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Definition
| derived from dividing incurred losses + loss adjustment expenses by earned premiums and is a measure of the ability of an insurer to control losses. |
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Term
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Definition
loss ratio + underwriting expense ratio a combined ratio of less than 100% indicates an opertaing profit. if greater than 100%, the company is losing money from its insurance operations. |
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Term
| financial basis combined ratio |
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Definition
(incurred losses+loss adjustment expenses+incurred expenses)/earned premiums |
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Term
| trade basis combined ratio |
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Definition
(incurred losses+loss adjustment expenses)/earned premiums and underwriting expenses/written premiums |
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Term
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Definition
| sum of operating profits OR losses from two sources: insurance operations and investment operations. Insurers of all types must make a reasonable profit to insure long-term stability and solvency. |
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