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| The difference between a company's assets and liabilities. |
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| Premiums & investment income |
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| costs; adjusting claims and paying for losses |
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| says that continued regulation and taxation of the insurance industry by the states are in the public interest |
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| it brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression.[2][3][4][5] It made changes in the American financial regulatory environment that affected all federal financial regulatory agencies and almost every part of the nation's financial services industry.[6][7] |
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| Incurred Losses + Loss Adjustment Expenses / Premiums Earned |
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| Underwriting Expenses / Premiums Written |
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| Net Investment Income / Earned Premiums |
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| Combined Ratio – Investment Income Ratio |
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| a summary of what a company owns (assets) and what it owes (liabilities), and the difference between total assets and total liabilities (owners’ equity/policyholders surplus) |
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| a financial statement that reports a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. |
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| the insurer agrees to pay for the loss but no more than the actual amount of the loss (the insured should not profit from a loss) |
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| Principle of insurable interest |
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| insured must be in a position to lose financially if a loss occurs |
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| basically having your insurance pay for someone else's wrongdoing and letting them sort it out with another company |
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| Principle of utmost good faith |
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| Everyone that enters into an insurance contract is legally obligated to act in good faith |
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| the insured may pay a certain amount of losses before the insurer is obligated the make a payment (common in auto insurance) |
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| an insurer does not pay any money until a certain amount of losses occur in a year |
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| the injured person cannot collect damages if his or her care falls below the standard of care required for his or her protection; the injured cannot collect damages if his or her conduct caused in any way to the injury |
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| If both the plaintiff and the defendant were responsible for the injury, the financial burden falls on both parties |
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| A person that is notified and knows of a risk, they cannot receive compensation for an injury |
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| a plaintiff can still receive damages from a defendant if they find out that the defendant had a clear last chance to avoid the accident but failed to do so |
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| the parties must have the legal capacity to enter into a binding contract |
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| Essential element of an agreement in contract law whereby an agreement is legal and enforceable only if it complies with the law of the land and public policy |
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| situations where one person, the principal, authorizes a second person, the agent, to deal with a third person on the principal’s behalf. |
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| a type of insurance in which the insured pays a share of the payment made against a claim |
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| intentional failure to provide a material fact |
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| part of a contract that guaranteed to be true in all aspect |
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| statements that provide information about the particular property or activity to be insured |
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| summarizes the major promises of the insurer |
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The total rate of return on an investment before the deduction of expenses or fees
Pure Premium/ 1-exposure unit |
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| The portion of the rate needed to pay losses and loss adjustment expenses |
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| price per unit of insurance. |
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| unit of measurement used in insurance pricing |
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| consists of the gross rate multiplied by the number of exposure units |
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| the amount that must be added to the pure premium for other expenses, profit, and a margin for contingencies |
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| hazardous condition that can attract and injure children |
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| a violation of a person’s legal rights, or a failure to perform a legal duty owed to a certain person or to society as a whole |
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| non-contractual, legal wrong for which the court allows a remedy – typically money damages. |
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| if plaintiff is successful in proving negligence, then they'll compensate the victim for losses actually incurred |
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| provide compensation for medical expenses |
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| provide compensation for pain and suffering |
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| each insurer’s share of the loss is based on the proportion that its insurance bears to the total amount of insurance on the property |
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| Financial Modernization Act |
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| changed federal law that had prevented banks, insurers, and investment firms from competing outside their core area |
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| Incurred losses and loss adjustment expenses / Number of exposure units |
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| Pure premium / 1-expense ratio |
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