Term
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Definition
| A nongovernment insurance provider. |
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Term
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Definition
| An insurer that is owned by its stockholders and formed as a corporation for the purpose of earning a profit for the stockholders. |
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Definition
| An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them. |
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Term
| Reciprocal insurance exchange (interinsurance exchange) |
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Definition
| An insurer owned by its policyholders, formed as an unincorporated association for the purpose of providing insurance coverage to its members (called subscribers), and managed by an attorney-in-fact. Members agree to mutually insure each other, and they share profits and losses in the same proportion as the amount of insurance purchased from the exchange by that member. |
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Term
| Captive insurer, or captive |
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Definition
| A subsidiary formed to insure the loss exposures of its parent company and the parent’s affiliates. |
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Term
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Definition
| The transfer of insurance risk from one insurer to another through a contractual agreement under which one insurer (the reinsurer) agrees, in return for a reinsurance premium, to indemnify another insurer (the primary insurer) for some or all of the financial consequences of certain loss exposures covered by the primary’s insurance policies. |
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Definition
| The process of selecting insureds, pricing coverage, determining insurance policy terms and conditions, and then monitoring the underwriting decisions made. |
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Term
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Definition
| An insurer employee who evaluates applicants for insurance, selects those that are acceptable to the insurer, prices coverage, and determines policy terms and conditions. |
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Term
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Definition
| A demand by a person or business seeking to recover from an insurer for a loss that may be covered by an insurance policy. |
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Term
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Definition
| A conscious act or decision not to act that reduces the frequency and/ or severity of losses or makes losses more predictable. |
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Term
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Definition
| 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. |
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Term
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Definition
| The ability of an insurer to meet its financial obligations as they become due, even those resulting from insured losses that may be claimed several years in the future. |
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Term
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Definition
| An insurer doing business in the jurisdiction in which it is incorporated. |
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Term
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Definition
| An insurer licensed to operate in a state but incorporated in another state. |
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Term
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Definition
| An insurer domiciled in a country other than the United States. |
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Term
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Definition
| An insurer to which a state insurance department has granted a license to do business within that state. |
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Term
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Definition
| An insurer not authorized by the state insurance department to do business within that state. |
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Term
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Definition
| State laws that permit producers with a surplus lines license to write business for an acceptable “nonadmitted insurer when protection from admitted insurers is not available.” |
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Term
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Definition
| 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. |
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Term
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Definition
| 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. |
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Term
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Definition
| An insurance rating law in which the insurer must file rates and supporting rules with the state insurance department prior to their use, but the rates can then be used immediately without specific approval. |
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Term
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Definition
| An insurance rating law in which the rates must be filed with the state insurance department within a specified period after they are put into use. |
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Term
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Definition
| An insurance rating law under which prior approval is required only if the new rates exceed a certain percentage above (and sometimes below) the rates previously filed. |
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Term
| Open competition (no-file law) |
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Definition
| An insurance rating law that allows insurers to develop and use rates without having to file with or get approval from the state insurance department. |
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Term
| Market conduct regulation |
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Definition
| Regulation of the practices of insurers in regard to four areas of operation: sales practices, underwriting practices, claim practices, and bad-faith actions. |
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Term
| Unfair trade practices law |
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Definition
| State law that specifies certain prohibited business practices. |
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Term
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Definition
| The process, conducted by state insurance regulators, of verifying the solvency of insurers and determining whether their financial condition enables them to meet their financial obligations and to remain in business. |
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Term
| National Association of Insurance Commissioners (NAIC) |
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Definition
| An association of insurance commissioners from the fifty U.S. states, the District of Columbia, and the five U.S. territories and possessions, whose purpose is to coordinate insurance regulation activities among the various state insurance departments. |
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Term
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Definition
| The primary financial statement prepared by insurers and required by every state insurance department. |
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Term
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Definition
| The amount the insurer estimates and sets aside to pay on an existing claim that has not been settled. |
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Term
| Insurance Regulatory Information System (IRIS) |
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Definition
| An information and early-warning system established and operated by the NAIC to monitor the financial soundness of insurers. |
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Term
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Definition
| A state-established fund that provides a system for the payment of some of the unpaid claims of insolvent insurers licensed in that state, generally funded by assessments collected from all insurers licensed in the state. |
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Term
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Definition
| Collectively, insurers who voluntarily offer insurance coverages at rates designed for customers with average or better-than-average loss exposures. |
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Term
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Definition
| Insurance obtained from nonadmitted insurers when protection is not available from admitted insurers. |
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Term
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Definition
| A nonadmitted insurer that is eligible to insure risks that have been exported by a surplus lines licensee in accordance with a surplus lines law. |
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