The Institutes Glossary


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A

A variable that describes a characteristic of an instance within a model.
A standard defining the attributes of organizations and individuals performing internal auditing.
The process of assigning or ascribing a characteristic or quality to a person or an object.
Employment for an indefinite duration that can be terminated by either party for whatever reason or no reason at all.
A medical specialist who evaluates, diagnoses, and treats patients for hearing loss.
A systematic investigation of records, documents, systems, and operations.
A board committee that, in conjunction with the corporation's external auditors, oversees preparation and dissemination of the corporation's financial statements.
A report prepared by an independent certified ­public accountant (CPA) that expresses a professional opinion as to the fairness of the company’s financial statements; accompanies a company’s audited financial statements.
The probability of generating inaccurate audit reports because of the failure to detect or properly interpret properly material factors in the premium base.
The documentation of the flow of information from the original source to the general ledger; is used to validate or invalidate accounting entries.
An auditing method for determining the appropriate payroll-based exposure amounts and classifications (gross payroll minus payroll of exceptions); used when most employees are in the same classification.
A standard issued by the Public Company Accounting Oversight Board that applies when an auditor is engaged to audit management’s assessment of the effectiveness of internal control over financial reporting.
A technology that integrates a digital experience into a user’s physical environment.
A designated dollar amount assigned to claims personnel to limit the reserve amounts they can set and the payment amounts they can make.
The reinsurer's offer to reinsure the loss exposure at a certain premium and under specific terms and conditions.
The amount of capital determined using a risk-based capital formula.
An insurer to which a state insurance department has granted a license to market and service particular lines of insurance in that state.
The manual rate or any other rate that has been authorized by the appropriate insurance regulatory authority for use by the carrier.
A reinsurer that is authorized to do business in the primary insurer's state of domicile.
As defined in commercial general liability and auto forms, a land motor vehicle, trailer, or semitrailer designed for travel on public roads, including attached machinery or equipment; or any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged.
An insured in the business of selling new or used vehicles.
The ISO coverage form designed to meet the auto, general liability, and errors and omissions liability insurance needs of auto and trailer dealers.
Laws enacted to ensure that motorists have the financial ability to pay for any property damage or bodily injury they might cause as a result of driving or owning an auto.
Insurance that covers an insured's legal liability arising out of the ownership, maintenance, or use of an automobile.
Coverage for medical expenses incurred by occupants of a covered auto, regardless of whether the auto’s driver was at fault in the accident.
The endorsement to the Business Auto Coverage Form that covers medical expenses of the named insured (if an individual) and other persons injured in auto accidents, regardless of legal liability.
State statutes that require motorists to purchase (or require insurers to make available) insurance that provides minimum first-party benefits to injured persons regardless of fault.
Coverage for damage to or theft of a covered auto that can include both collision coverage and other than collision (comprehensive) coverage.
Coverage for damage to or theft of a covered auto that can include both collision coverage and other than collision (comprehensive) coverage.
The lowest temperature to which a substance must be heated for it to ignite without a separate ignition source.
An electronic payment network used by individuals and businesses.
Automatic coverage changes made to an account at renewal to bring it up to minimum standards.
An automatic sixty-day period following a policy’s expiration date during which the insured can report claims events that occurred before policy expiration.
A fire detection system that consists of mechanical or electronic detectors that sense the presence of smoke or fire and sound an alarm.
A system that uses water, chemicals, carbon dioxide, and foam as extinguishing agents.
The insurer automatically borrows enough money from the cash value of the policy to keep the policy in force, should the owner be unable to make the premium payment.
Fire sprinkler systems with a series of interconnected valves and pipes with sprinkler heads. Each sprinkler head usually contains a heat-sensing element that responds individually to the heat generated by a fire.
Plan for insuring high-risk drivers in which all auto insurers doing business in the state are assigned their proportionate share of such drivers based on the total volume of auto insurance written in the state.
An insurance management organization and service provider for insurance industry groups responsible for administering the shared automobile insurance market.
Factors that affect loss statistics in the form of modifying credits, such as driver education credits and good-student discounts.
Classes of exposures such as age, gender, geographic location, type of use, and marital status.
A scientifically detailed examination of the body of the deceased in an effort to determine the cause of death.
A type of signaling system that is connected to an existing municipal fire alarm system on the same circuits that carry signals from the street fire alarm boxes.
A social goal of insurance that states that insurance is accessible to those who want or need it.
The delay between when a company receives a check and when it is cleared at the bank.
The amount of funds in an account that can earn interest, compensate for bank services, or be withdrawn.
A term used to describe a body part that does not have blood vessels or that has a poor blood supply.
A partial loss of vessel or cargo.
A professional who specializes in handling general average adjustments.
The long-term average loss expected in any one year that represents the loss cost for the in-force polices for the cause of loss being modeled.
The rate of return on an investment calculated by dividing the total rate of return by the number of years the investment is held.
A method to establish a case reserve by using an average amount for specific categories of claims.
A calculation in the development of hired auto premium under a Motor Carrier Coverage Form that represents the average premium for all owned and leased autos.
A group of provisions in an open cargo policy that state the extent to which the policy covers particular average losses.
A case reserving method that establishes a predetermined dollar amount of reserve for each claim as it is reported.
A case reserving method that establishes a predetermined monetary amount of reserve for each claim as it is reported.
An average of a statutory period of earnings to determine an employee’s workers compensation disability benefits.
A risk control technique that involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated.
A technique that involves ceasing or never undertaking an activity so that the possibility of future gains or losses occurring from that activity is eliminated.
An examination to detect symptom magnification or fabrication of pain. The examiner places both hands on the standing patient’s shoulders and lightly presses down.

B

An examination to observe nerve function in response to an external stimulus. The examiner runs a pointed object along the bottom of the patient’s foot and observes how the great toe extends when the foot is stroked. A great toe that flexes backward may indicate a lesion.
A mutual fund that imposes a sales charge when funds are redeemed.
The process of putting earth back against the foundation after the foundation is completed.
Transporting goods for others when the motor carrier would otherwise be operating an empty vehicle during a return trip.
The gross profit that remains in the backlog and contributes to future earnings.
A financial backlog relativity guideline for bonding credit extensions. Bonding companies prefer a shareholders (owners) equity ratio equal to approximately 10 percent of backlog.
A financial backlog relativity guideline for bonding credit extensions. Alternatively expressed as a ratio of working capital or as a percentage of backlog.
The balance of work to be performed on uncompleted contracts, or the estimated cost to complete the work outstanding, or the amount yet to be billed. Alternatively referred to as unfinished work.
A Perl function that can manage strings of data that change slightly from one instance to another.
Any account receivable that is considered uncollectible.
An insurer's denial of coverage without cause, which can result in extracontractual damages, punitive damages, or both.
An intentional or reckless act, extreme or outrageous in nature, causing severe emotional distress that results in physical injury; generally applied in suits for breach of insurance contracts.
A claim that implies or involves actual or constructive fraud, a design to mislead or deceive another, or a neglect or refusal to fulfill some good-faith duty or some contractual good-faith obligation.
Damages awarded for a bad-faith cause of action, often when a defendant insurer is found to have engaged in unreasonable conduct either with knowledge that it is unreasonable or with complete disregard of the fact that it is unreasonable.
A bond that guarantees that the accused insured will appear in court at the time designated for the trial or hearing.
The party temporarily possessing the personal property in a bailment.
A policy that covers damage to customers’ goods while in the possession of the insured, regardless of whether the insured is legally liable for the damage.
The temporary possession by one party (the bailee) of personal property owned by another party (the bailor) for a specific purpose, such as cleaning or repair.
The temporary transfer of a property's custody.
A contract that requires the bailee to keep the property in safekeeping for a specific purpose and then to return the property to the bailor when the purpose has been fulfilled.
A bailment in which the bailee owes a high duty of care to safeguard the bailed property from loss or damage.
A bailment in which the bailee owes only a slight duty of care to safeguard the bailed property from loss or damage.
A bailment in which the bailee owes a duty of ordinary care to safeguard the bailed property from loss or damage.
The owner of the personal property in a bailment.
The financial statement that reports the assets, liabilities, and owners' equity of an organization as of a specific date.
A performance measurement tool used in strategic management to establish goals related to strategy implementation.
Debt capital financing that can be converted into equity by the lender as the loan goes into default (also known as mezzanine financing).
A method of construction that uses long wall studs that extend from the ground on up to the second floor.
An amortized loan with payments based on an amortization period longer than the loan period with the remaining loan balance payable on the due date.
A document that specifies the amount and terms of the available line of credit.
The process by which a bank statement is compared to canceled checks and a check register to reveal outstanding checks and to verify the accuracy of the records.
A time draft payable to a seller of goods, with payment guaranteed by a bank.
A life insurance policy purchased to insure the life of certain employees, usually officers and other highly compensated employees, in order to fund employee pension and benefit plans for noninsured employees.
An insurer’s financial situation when its liabilities exceed the market value of its assets.
The body of federal law that allows debtors who are unable to pay their creditors to divide their assets among their creditors to discharge the debts.
A policy provision stating that the insurer is obligated to pay claims on behalf of an insured who is bankrupt.
Legislation that defines creditors' rights and provides relief to debtors who, with or without fault, have contracted debts beyond the ability to pay.
A charterer that agrees to be responsible for actually operating and insuring the vessel.
A concept of condominium ownership in which the association has no ownership interest within the bare walls of each unit.
A deed that transfers real property to a buyer for valuable consideration but that lacks any guarantee from the seller about the validity of the title.

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