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Definition
| A group of policies with a common characteristic, such as territory or type of coverage, or all policies written by a particular insurer or agency. |
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| In general, the tendency for people with the greatest probability of loss to be the ones most likely to purchase insurance. |
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| The amount of business an insurer is able to write, usually based on a comparison of the insurer’s written premiums to its policyholders’ surplus. |
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| Underwriting guidelines (underwriting guide) |
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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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| The scope of decisions that an underwriter can make without receiving approval from someone at a higher level. |
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| Underwriter who is primarily responsible for implementing the steps in the underwriting process. |
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| Underwriter who is usually located in the home office and who assists underwriting management with making and implementing underwriting policy. |
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| Underwriting policy (underwriting philosophy) |
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Definition
| A guide to individual and aggregate policy selection that supports an insurer’s mission statement. |
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Definition
| An independent organization that works with and on behalf of insurers that purchase or subscribe to its services. |
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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 such 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
| Reinsurance of individual loss exposures in which the primary insurer chooses which loss exposures to submit to the reinsurer, and the rein- surer can accept or reject any loss exposures submitted. |
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Definition
| A review of underwriting files to ensure that individual underwriters are adhering to underwriting guidelines. |
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Term
| Expert systems, or knowledge-based systems |
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Definition
| Computer software programs that supplement the underwriting decision-making process. These systems ask for the information necessary to make an underwriting decision, ensuring that no information is overlooked. |
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Definition
| A condition that increases the frequency or severity of a loss. |
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Definition
| A tangible characteristic of property, persons, or operations that tends to increase the frequency or severity of loss. |
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Definition
| A condition that increases the likelihood that a person will intentionally cause or exaggerate a loss. |
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Term
| Morale hazard (attitudinal hazard) |
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Definition
| A condition of carelessness or indifference that increases the frequency or severity of loss. |
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Definition
| A condition of the legal environment that increases loss frequency or severity. |
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Definition
| The balance that underwriters must maintain between the hazards presented by the account and the information needed to underwrite it. |
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Definition
| Statistical and analytical techniques used to develop models that predict future events or behaviors. |
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Definition
| A 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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Definition
| A type of computer program that estimates losses from future potential catastrophic events. |
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Definition
| A proposal an offeree makes to an offeror that varies in some material way from the original offer, resulting in rejection of the original offer and constituting a new offer. |
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Term
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Definition
| A ratemaking technique that adjusts the insured’s premium for the upcoming policy period based on the insured’s experience for the current period. |
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Term
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Definition
| A rating plan that awards debits and credits based on specific categories, such as the care and condition of the premises or the training and selection of employees, to modify the final premium to reflect factors that the class rate does not include. |
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Term
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Definition
| A ratemaking technique that adjusts the insured’s premium for the current policy period based on the insured’s loss experience during the current period; paid losses or incurred losses may be used to determine loss experience. |
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Term
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Definition
| The distribution of individual policies that compose the book of business of a producer, territory, state, or region among the various lines and classifications. |
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Term
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Definition
| A temporary written or oral agreement to provide insurance coverage until a formal written policy is issued. |
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Term
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Definition
| A brief description of insurance coverage prepared by an insurer or its agent commonly used by policyholders to provide evidence of insurance. |
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Term
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Definition
| The price per exposure unit for insurance coverage. |
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Term
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Definition
| A resource for classifying accounts and developing premiums for given types of insurance; includes necessary rules, factors, and guidelines to apply those rates. |
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Term
| Exposure unit (unit of exposure) |
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Definition
| The unit of measure (for example, area, gross receipts, payroll) used to determine an insurance policy premium. |
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Term
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Definition
| The process insurers use to calculate insurance rates, which are a premium component. |
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Term
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Definition
| A person who uses mathematical methods to analyze loss data and develop insurance rates. |
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Definition
| The price per exposure unit determined by adjusting the prospective loss costs for expenses, profits, and contingencies. |
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Term
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Definition
| The portion of the rate that covers projected claim payments and loss adjusting expenses. |
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Term
| Insurance advisory organization |
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Definition
| An independent corporation that works with and on behalf of insurers that purchase or subscribe to their services, which include developing prospective loss costs and standard policy forms. |
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Term
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Definition
| A mathematical principle stating that as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes (losses) also increases. |
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Term
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Definition
| A provision in an insurance rate for losses that could not be anticipated in the loss data. |
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Term
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Definition
| A rating approach that uses rates reflecting the average probability of loss for businesses within large groups of similar risks; the predominant method used for rating commercial properties. |
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Term
| Individual rate, or specific rate |
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Definition
| A type of insurance rate that reflects the unique characteristics of an insured or the insured’s property. |
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Term
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Definition
| Rating used by underwriters to rate one-of-a-kind risks. |
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Term
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Definition
| The price per exposure unit determined by adjusting the prospective loss costs for expenses, profits, and contingencies. |
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