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Definition
| The process of selecting insureds, pricing coverage, determining insurance policy terms and conditions, and then monitoring the decisions made |
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Definition
| The tendency for people with the greatest probability of loss to be the ones most likely to purchase insurance |
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Term
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Definition
| Under statutory accounting principles (SAP)an insurer's total admitted assets minus total liabilities |
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Definition
| The amount of business an insurer is able to write, generally based on a comparison of the insurer's written premiums to itss policyholder's surplus |
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Term
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Definition
| A written manual that communicates an insurer's underwriting policy and that specifies the attributes of an account that an insurer is willing to insure |
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Definition
| Underwriter who is primarily responsible for implementing the steps in the underwriting process |
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Definition
| Underwriter who is usually located in the home office and who assists underwriting management with making and implementing underwriting policy |
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Definition
| An insurance policy that is specifically drafted according to terms negotiated between a specific insured and an insurer |
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Definition
| A guide to individual and aggregate policy slection that supports an insurer's mission statement |
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Definition
| An independent organization that works with and on behalf of insurers that purcahse or subscribe to its services. |
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Term
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Definition
| Loss data that are modified by loss development, trending and credibility processes but without considerations for profit and expenses |
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Definition
| The increase or decrease of incurred losses over time |
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Definition
| A statistical technique for analyzing environmental changes and projecting changes into the future |
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Definition
| A reinsurance agreement that covers an entire class or portfolio of loss exposures and provides that the primary insurer's individual loss exposures that fall within the treaty are automatically reinsured |
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Term
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Definition
| A review of underwriting files to ensure that the individual underwriters are adhering to underwriting guidelines |
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Term
| Premium-to-surplus ration or capacity ratio |
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Definition
| A capacity ratio that indicates an Insurer's financial strength by relating net written premiums to policyholders' surplus |
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Term
| Statutory Accounting Principles (SAP) |
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Definition
| The accounting principles and practices that are prescribed or permitted by an insurer's domiciliary state and that insurers must follow |
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Term
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Definition
| A profitability ratio expressed as a percentage by dividing a company's net income by its net worth (book value). Depending on the context, net worth is sometimes called shareholders' equity, owners' equity, or policyholders' surplus. |
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Term
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Definition
Net income
____________________
Average policyholders' surplus |
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Term
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Definition
Net income
__________
Average Owners' equity |
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Term
| Market conduct examination |
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Definition
| an analysis of an insurer's practices in four operational areas: sales and advertising, underwriting, ratemaking, and claim handling |
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Term
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Definition
| Process in which historical data based on behaviors and events are blended with multiple variables and used to construct models of anticipated future outcomes. |
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Term
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Definition
| Any condition or situation that presents a possibility of loss, whether or not an actual loss occurs. |
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Term
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Definition
| A condition that increases the frequency or severity of a loss |
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Term
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Definition
| the balance between the hazards presented by the account and the information needed to underwrite it |
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Term
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Definition
1. evaluate
2. develop alternatives
3. select alternative
4. premium
5. implement
6. monitor |
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Term
| Estimated Loss Potentials (ELP) |
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Definition
| multiplied by loss cost multipliers to develop rates when there are unique characteristics or inadequate statistical data |
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Term
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Definition
| adjusts insured's premium for future period based on experience during current period |
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Term
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Definition
| awards debits & credits in specific categories to modify final premium to reflect factors not included in class rate |
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Term
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Definition
| adjusts insured's current policy premium based on loss experience during current period |
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Term
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Definition
| reinsurance of individual loss exposures |
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Term
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Definition
| loss&loss adjustment expenses incurred/premiums earned + underwriting expenses incurred/premiums written. every premium dollar used to pay claims & cover op costs = 100%, underwriting loss when >100%, underwriting profit when <100% |
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