The Institutes Glossary


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Any or all conditions in or on an organization’s premises or arising out of the organization’s ongoing operations that present a possibility of loss for which a liability claim might be made against the organization.
The exposure to liability for bodily injury or property damage due to the ownership, occupancy, or use of the premises.
The exposure to liability for bodily injury or property damage due to the ownership, occupancy, or use of the premises.
The exposure to liability for bodily injury or property damage due to the ownership, occupancy, or use of the premises.
A type of alarm intended to secure a rapid law enforcement response when a trigger, usually a panic button that employees push, is activated.
The civil liability of property owners for the foreseeable criminal acts of third parties.
The price of the insurance coverage provided for a specified period.
The amount by which a bond sells above its par value.
Methodical examination of a policyholder's operations, records, and books of account to determine the actual exposure units and premium for insurance coverages already provided.
An organization that provides services and tools for premium auditors.
A department in an insurance company that is responsible for examining the financial records of insureds whose premiums are based on variable exposure bases, such as payroll or receipts.
A member of the premium audit department of an insurance company who often performs field audits (physical audits) or audits accounts based on voluntary reports.
An insurer receivable consisting of premium amounts due from producers.
The unit in which the exposure is measured, such as gross sales or payroll.
A credit adjustment for policies with total premiums over a certain size, recognizing that, as the premium increases, the portion required to pay certain expenses decreases.
The insured's intentional fraudulent act resulting in underreporting or misclassifying loss exposures.
An arrangement that allows an agency to collect insurer premiums; invest the premiums and generate earnings on the premiums payable to the insurer; and forward premiums, minus any earnings generated, to the insurer when the insurer account is payable.
An employer’s intentional misclassification of workers or understatement of payroll to reduce its workers compensation premium.
A payroll system that increases the regular hourly wage rate for the night shift or other special conditions.
The cost of insurance per exposure unit.
Allows the insured to add separate UIM coverage amounts on separate vehicles when insureds pay separate premium on each vehicle.
A liquidity ratio that measures how quickly premiums are collected from insureds and remitted to insurers.
A capacity ratio that indicates an insurer's financial strength by relating net written premiums to policyholders' surplus.
An asset classification that represents the amount that has already been paid for services that have not been received or used.
Freight paid before the voyage regardless of when the freight is earned by the carrier.
A prepaid expense; the insured pays premiums in advance for the service (insurance coverage) that it receives throughout the policy term.
Evidence supporting the jury's decision that is of greater weight than the evidence against it.
An automatic fire sprinkler system that has water in the risers and horizontal pipes, with head openings plugged with rubber stoppers; when the deluge valve opens, water pressure pushes out the stoppers.
An insurance form that meets the needs of many policyholders and is therefore printed in bulk for future use.
Preliminary approval that is based on factors such as credit strength, competence, and character.
A reinsurance audit that a reinsurer conducts on a primary insurer's operations before committing to a new relationship.
A building code that states in detail the size, type, and installation techniques for all structural and other building components.
The value today of money that will be received in the future.
Practice of ensuring that the value of assets does not decrease.
The corporate officer who is or who has the powers of a chief executive officer, including the power to bind the corporation to any contract made in the corporation’s ordinary course of business.
A form of government in which the citizens directly elect a president.
A type of violent gas expansion that occurs when a pressure vessel (such as a water heater or boiler) cannot contain its internal pressure and bursts.
A sensor that measures pressure, usually of gases or liquids, and subsequently generates a signal based on the amount of pressure applied.
A description of a condition and its various possible causes. Alternatively referred to as a “rule-out” diagnosis or working diagnosis.
A deceptive technique of assuming another’s identity to coerce a targeted victim into willingly surrendering personally identifiable information.
A legal proceeding in which the judge acts as mediator and encourages the litigants to try one last time to resolve their differences before the formal trial begins. The judge might express his or her opinion on the litigants’ positions, indicating the probable trial outcome.
The interest that accrues from the time a creditor properly demands bond payment until a court declares a judgment.
Meeting of the judge and the parties' lawyers in a judge's conference chamber two or three weeks before the trial to narrow the issues to be tried, to stipulate the issues and evidence to be presented at trial, and to help settle the case.
Statistical and analytical techniques used to influence or prevent future events or behaviors.
Controls designed to prevent errors or inconsistencies.
Activities, such as reading assignments or research projects, performed before coming to an organized class that are used to prepare learners for the training.
Offering similar products at different prices.
A contract provision that enables a contractor to make a claim against an owner for increased costs beyond the original bid because of an unforeseen event.
The price of a particular basket of goods and services relative to some base year, when the price index for the base year is set to be 100.
The potential for a change in revenue or cost because of an increase or a decrease in the price of a product or an input.
The price of a stock divided by its earnings per share over the previous year.
The process of setting a price for a product or service and establishing the terms and conditions for the insurance agreement.
A perceptual distortion caused by the influence of first impressions.
An other-insurance provision that specifies that the policy pays the loss amount before other applicable policies until its own limits have been exhausted.
The positive or negative consequences of a random event that affects an organization itself, the value of its resources, and the achievement of its goals.
In reinsurance, the insurer that transfers or cedes all or part of the insurance risk it has assumed to another insurer in a contractual arrangement.
One or more columns that uniquely identify each row in a table.
The first level of insurance coverage above any deductible.
The absolute obligation to pay a negotiable instrument according to its terms.
A mechanism in which new securities are sold, with the proceeds going directly to the issuer.
A “gatekeeper” doctor who controls healthcare use in a health maintenance organization (HMO). HMO members must go through the gatekeeper when seeking care.
The party to a surety bond whose obligation or performance the surety guarantees.
The party in an agency relationship that authorizes the agent to act on that party’s behalf.
The original value of an investment or a debt.
In finance, the amount borrowed under a loan.
A principle of law indicating that every insurance applicant has a duty to disclose to the insurer and its legal agents all material information, which is information that could reasonably affect the insurer’s underwriting decisions about whether and on whether and on what terms to insure the applicant.
A legal principle that requires the parties to an insurance contract to deal fairly with one another.
The principle that insurance policies should provide a benefit no greater than the loss suffered by an insured.
A regulatory approach that specifies desired outcomes and allows the regulated entity broad discretion in achieving that outcome.
An accounting approach that supplements the mortality and interest rate foundation of life insurance with judgment and experience of the insurer.
An extension of coverage for claims that would otherwise not be covered because they occurred prior to the retroactive date of the current claims-made policy and are not covered by the prior claims-made policy.
An insurance rating law in which the rate and supporting rules must be filed with and approved by the state insurance department before they can be used.
A type of insurance rate regulation in which rates and supporting rules must be filed with and approved by the insurance regulator before they can be used.
A witness’s earlier out-of-court statements that can be presented at a trial or hearing if they contradict his or her in-court testimony, casting doubt on the witness’s credibility.
A court record showing a previous court decision that a party was guilty of violations and was convicted. It is admissible when used to establish the lack of credibility of a witness.
An outstanding case loss reserve at the beginning of the period, less net paid losses for the prior accounting period.
An insurance rating law in which the rates and supporting rules must be filed with and approved by the state insurance department before they can be used.
Determining which accounts have the greatest need for use of agency resources.
A carrier that transports their own goods.
A type of corporation that is owned by only a few stockholders, and ownership is usually not open to the public.
A type of Medicare Advantage plan in which a beneficiary may go to any Medicare-approved doctor or hospital that accepts the plan’s payment.
Measures taken by property owners to protect their assets from loss by fire.
A system that consists of equipment and personnel that the insured uses to suppress a fire before the municipal fire service arrives.
A nongovernment insurance provider.
A law that involves disputes between individuals or corporations in different countries.
An unreasonable and unlawful interference with another’s use or enjoyment of his or her real property.
A family-type car such as a sedan, convertible, jeep, station wagon, SUV, and minivan.
As defined by the Truckers Coverage Form, a private passenger or station wagon type "auto"; includes an "auto" of the pickup or van type if not used for business purposes.
A classification appearing in the CLM for four-wheel vehicles used to transport people and nonbusiness-usage pickups, panel trucks, and vans.
A security issue placed with one or a few large institutional buyers.
A rule of law allowing a person to refuse to disclose confidential communications.
The relationship that exists between the parties to a contract.
Insurance that covers financial loss resulting from an obligation to award a prize to a participant in a lawful contest or sporting event.
Estimate to a DOI of when promoters anticipate that an insurer will reach the break-even point, or the point at which premiums and investment earnings equal the costs of doing business.
An income statement that projects anticipated revenues, expenses, and income.
An approach to other insurance by which the insurers contribute to the loss payment in the proportion to which they contribute to the total amount of coverage purchased (their limits of liability).
A reinsurance agreement for individual loss exposures in which the reinsurer shares a pro rata portion of the losses and premiums of the ceding insurer.
The unused premium (based on the pro rata portion of the premium for the number of days remaining in the policy) returned to the insured when a policy is canceled.
A type of reinsurance in which the primary insurer and reinsurer proportionately share the amounts of insurance, policy premiums, and losses (including loss adjustment expenses).
A reinsurance agreement that divides the amount of insurance, the premium, and the losses between the primary insurer and the reinsurer in the same agreed proportions for each risk.

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