The Institutes Glossary


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Artificial intelligence in which computers continually teach themselves to make better decisions based on previous results and new data.
A court ruling extending a manufacturer’s liability beyond the immediate purchaser of an article to any user and to those who would likely be affected by the article’s use and who suffered harm from its use.
A diagnostic imaging tool that uses a super­conductive magnet, electromagnetic waves, and a sophisticated computer system to create detailed images of the body’s interior.
Form that covers a financial institution against loss of securities and other negotiable instruments while in transit through specified types of mail.
The delay from the time a check is placed in the mail until it is received by the payee.
Companies that pre-underwrite and do not use producers.
A remedy for injured sailors and crew members to receive food and lodging at least for the duration of the voyage.
A vessel owner's legal obligation to pay the costs of (1) lodging and food for a sick or an injured crew member during his or her medical care and (2) medical care until maximum medical cure is achieved.
A contract bond guaranteeing that the work will be free from defects in materials and workmanship for a specified period after the project is completed.
A contract provision that guarantees the fitness of the work.
Coverage, contained in European-type "construction all risks / erection all risks" policies, that provides indemnity for various types of loss occurring after the construction is complete.
An umbrella liability policy condition that obligates the insured to maintain all required underlying coverages in full force and effect during the policy period.
The time after completion during which the contractor guarantees the fitness of the work.
Insurance that covers medical expenses resulting from illness or injury that are not covered by a basic medical expense plan.
An award designed to increase awareness of continuous improvement techniques among businesses in the United States.
The intentional wrongful performance of duty.
The intent to do a wrongful act without justification or excuse.
The use of civil or criminal procedures for a purpose for which they were not designed.
A tort involving intentional interference with another’s business, or with another’s expected economic advantage.
The improper institution of legal proceedings against another.
A behavior characterized by feigning symptoms.
A complication in a healing fracture in which the bone heals in an unacceptable position, causing an impairment.
Malicious software, such as a virus, that is transmitted from one computer to another to exploit system vulnerabilities in the targeted computer.
Programs, procedures, or practices designed to control medical care costs while ensuring the delivery of appropriate and timely medical care.
A company that does not provide medical care but contracts with a medical network to provide treatment for members and coordinate the medical aspects of workers’ compensation claims with employers, providers, or insurers.
A type of healthcare plan that provides members with comprehensive services and encourages them to use providers belonging to the plan.
The set of functions, including planning, organizing, leading, and controlling resources, that enable organizations to achieve their goals efficiently and effectively.
A management concept wherein management monitors plans and may respond to results that differ from standards and/or parameters defined by the organization’s goals and objectives.
A system of specified standards or objectives against which an organization’s management measures performance.
A compensation system in which the intermediary waives the normal percentage commission and negotiates a minimum annual fee with each client.
Information that assists managers and supervisors in planning, budgeting, and staffing the agency’s functions.
An internal audit report that identifies a company’s procedural weaknesses or vulnerable areas.
Insurance that covers organizations and their directors, officers, and other employees against liability claims from damages resulting from various wrongful acts that are not covered under other liability policies.
Insurance that covers organizations and in some cases their directors, officers, and other employees against liability claims for damages resulting from various wrongful acts that are not covered under other commercial liability policies; common examples are directors and officers liability insurance, employment practices liability insurance, employee benefits liability insurance, and fiduciary liability insurance.
A report that presents operational information, enabling managers to monitor and control organizational efforts.
A narrative section of the Form 10-K report that contains a description of a publicly traded company’s activities for the year, including comments about its financial condition and results of operations, and supplementary statements such as a listing of legal proceedings against the company.
The process of developing and reporting financial and economic information for internal planning and budgeting purposes.
A person's or an entity's managerial abilities that develop as the business ages.
An independent business or organization that appoints and supervises independent agents for insurers that use the independent agency system.
An authorized agent of the primary insurer that manages all or part of the primary insurer's insurance activities, usually in a specific geographic area.
Independent business organizations that function almost as branch offices for one or more insurers and that appoint and supervise independent agents and brokers for insurers using the independent agency and brokerage system.
State law under which insurance rates are set by a state agency or rating bureau and all licensed insurers are required to use those rates.
Meetings required in most states before a case becomes very involved. The parties meet in front of the judge, who seeks agreement and compromise to obtain a settlement.
A mood disorder characterized by fluctuating moods, from a manic, or elevated and expansive mood, to a depressive mood during which the person is withdrawn and feels inferior.
The rule stating that occurrence takes place at the time the injury or property damage is discovered.
A physical treatment varying from gentle stretching of joints to forceful rotation of the spine that can “unlock” or mobilize a facet, release muscle spasms, or realign subluxed joints.
A bulletin issued by the National Council on Compensation Insurance (NCCI) and state rating bureaus informing the user of workers compensation manuals of pending changes in the manual.
Lifting, pulling, dragging, pushing, and transferring objects or materials by human power, with or without some mechanical assistance.
The premium developed from applying the manual rate to the number of exposure units.
The rate found in a rating manual or a computerized rate table.
A commercial property endorsement that values finished stock manufactured by the insured at selling price, less any discounts and expenses that the insured otherwise would have had.
A package policy combining property, inland marine, and often auto physical damage and boiler and machinery, with a flexible rating plan
Endorsement that covers reduction in value of undamaged property due to physical loss to other property.
An insurance form that is drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer.
An insurance policy that is specifically drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer.
An insurance policy or endorsement that is specifically drafted according to terms negotiated between a specific insured (or group of insureds) and an insurer.
An amount paid to the insurer under a finite risk insurance plan to compensate it for each type of risk it incurs and for its administrative expenses.
A clause added to a blanket insurance policy to limit the amount recoverable for each building or contents at each premises to an agreed percentage of the value shown for that property on the most recent statement of values submitted to the insurer.
Clauses in an open cargo policy that restate the Deviation Clause and the Warehouse to Warehouse Clause and add some additional liberalizations of coverage.
Insurance on vessels and their cargoes.
Insurance that, in the U.S., includes both ocean and inland marine coverage and, in the rest of the world, is limited to insurance for vessels and cargo.
A trust that takes advantage of the marital deduction to reduce estate taxes.
Endorsement that amends the Workers Compensation and Employers Liability Insurance Policy to cover an employers liability for injury or death of crew members.
Those employees engaged in longshoring, harbor work, ship repair, shipbuilding, and ship-breaking in navigable waters of the U.S. except the master or members of the crew of a vessel.
A court-conferred interest in a watercraft (to the extent of the determined liability), given to an injured party such as an unpaid supplier or unpaid crew member.
A type of pricing on an outstanding futures contract that is adjusted daily to reflect current futures market conditions.
A collection of sellers and buyers of products and/or services that can be subdivided into different groups.
Actions an organization performs to develop an understanding of a potential new market, including: (1) assess the alternative markets, (2) evaluate the costs, benefits, and risks of entering each market, and (3) select the market or markets that hold the most potential for expansion and profitability.
A method for valuing an intermediary that reconstructs the intermediary as if it were a publicly owned company.
The percentage of the overall market that is participating in the market’s up or down move.
An analysis of an insurer's practices in four operational areas: sales and advertising, underwriting, ratemaking, and claim handling.
Regulation of the practices of insurers in regard to four areas of operation: sales practices, underwriting practices, claims practices, and bad-faith actions.
Present value of the future profits from in-force business and the value of surplus based on market values of liabilities and assets.
The ability of the market to handle a large number of securities transactions without a significant effect on prices.
A situation in which a market fails to allocate resources efficiently, so that buyers cannot purchase as much of particular products and services as they would like at a given price, or sellers cannot sell as much of their products and services as they would like at a given price.
In the context of international trade, a company that follows its customers into foreign countries.
A statistic reflecting the composite value of a selection of securities.
Information gathered and analyzed regarding a company’s markets to improve competitive decision-making.
See Imperfect competition.
Uncertainty about an investment’s future value because of potential changes in the market for that type of investment.
In the context of international trade, a company that seeks new markets outside its own boundaries.
Specifically defined portion of a market.
The process of identifying and dividing the groups within a market that share needs and characteristics and that will respond similarly to a marketing action.
An expanded liability concept that applies when a product that has harmed a consumer cannot be traced to a single manufacturer; all manufacturers responsible for a substantial share of the market are named in the lawsuit and are liable for their proportional share of the judgment.
The price at which a particular piece of property could be sold on the open market by an unrelated buyer and seller.
A form of loss settlement based on the market value or sale price of similar property.
The fair value of assets minus the fair value of liabilities.
An asset classification that includes temporary investments that can easily be converted into cash.
The set of business activities, including planning, pricing, and promotion, that directs the exchange of goods and services in an effort to meet the needs and goals of individuals and organizations.
Assumes that an organization’s objectives can best be met by completely satisfying the end user.
A department in an insurance company that is responsible for identifying new marketing opportunities, developing new products, and measuring success in reaching those markets.
The combination of marketing attributes that an organization offers to a customer in hopes of solving the customer's problem.
A detailed document that summarizes the potential marketplace and how an organization intends to reach its marketing goals.
An insurer employee who visits agents representing the insurer, develops and maintains sound working relationships with those agents, and motivates the agents to produce a satisfactory volume of profitable business for the insurer.
The system that directs and facilitates the design, development, sale, and support of a product or service.
Information printed on the container or carton of an ocean shipment that helps to identify the shipment.
The value of an asset or liability based on its current market price.
An adjustment in an asset’s valuation to reflect changes in its actual or estimated market price.
The valuation of an asset based on financial models instead of market price.
Gross profit expressed as a percentage of cost of goods sold.

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