Absolute Liability -
liability for damages even though fault or negligence cannot be proven. For example, in such situations as occupational injury of employees under a workers’ compensation law.
Accident -
a loss-causing event that is sudden, unforeseen, and unintentional.
Actual Cash Value -
value of property at the time of its damage or loss, determined by subtracting depreciation of the item from its replacement cost.
Admitted Facilities -
allow surplus lines intermediaries to offer admitted insurance to their customers.
Admitted Insurer -
licensed (authorized) to do insurance business in the insured’s home state.
Adverse Selection -
occurs when individuals or organizations with high risks of loss are more likely to purchase insurance than those with low risks of loss.
Agent -
someone who legally represents the insurers, has the authority to act on the insurer’s behalf, and can bind the principal by expressed powers, by implied powers, and by apparent authority.
Aggregate Deductible -
deductible in some property and health insurance contracts in which all covered losses during a year are added together and the insurer pays only when the aggregate deductible amount is exceeded.
“All-risks” Policy -
coverage by an insurance contract that promises to cover all losses except those losses specifically excluded in the policy.
Appraisal Clause -
used when the insured and insurer agree that the loss is covered, but the amount of the loss is in dispute.
Assumption-of-risk -
defense against a negligence claim that bars recovery for damages if a person understands and recognizes the danger inherent in a particular activity or occupation.
Alien Insurer -
formed according to the requirements of a foreign country and is domiciled in that foreign country.
Allocated Loss Adjustment Expenses (ALAE) -
the expenses paid by an insurer to adjust a claim, such as legal fees, appraisal fees and independent adjuster fees.
A.M. Best Company -
an insurance company rating service that publishes ratings for life and property-liability insurers. It includes quantitative and qualitative reviews on an insurer’s financial and operating performance.
Authorized Control Level (ACL) -
the minimum desirable capitalization level calculated for an insurer by multiplying the RBC by a scaling factor.
Balance Sheet -
lists the admitted assets, liabilities and net worth (referred to as policyholders’ surplus).
Binder -
a written or oral contract issued temporarily to place insurance in force immediately prior to issuance of a new policy or endorsement of an existing one.
Broker Responsibility -
the broker determines the surplus lines eligibility of the particular surplus lines insurer.
Capacity -
the amount of capital an insurer can commit to underwriting a portfolio of loss exposures.
Capital Gains (losses) -
the result of selling a capital asset at more or less than its cost basis for tax purposes.
Realized -
result from the actual sale of bonds, stocks, real estate, or other invested assets.
Unrealized -
the difference between the market value and book value of securities that could be realized if those securities were sold.
Cargo Insurance -
type of ocean marine insurance that protects the shipper of the goods against financial loss if the goods are damaged or lost.
Casualty Insurance -
field of insurance that covers whatever is not covered by fire, marine, and life insurance. Includes automobile, liability, burglary and theft, workers’ compensation, glass and health insurance.
Cede -
to transfer all or part of a risk written by an insurer to a reinsurer.
Claims Department -
receives loss notices when claims are reported and investigates, evaluates, negotiates, and settles claims.
Claim-made Policy -
a liability insurance policy that only covers claims that are first reported during the policy period, provided the event occurred after the retroactive date (if any) stated in the policy.
Claims-paying Ability Rating -
a system of Standard & Poor’s that assigns a letter rating at the request of the insurers to insurance companies.
Clash Cover -
a form or per occurrence excess of loss reinsurance that applies to liability insurance.
Class rating -
rate-making method in which similar insureds are placed in the same underwriting class and each is charged the same rate. Also called manual rating.
Coinsurance Provision -
common provision in commercial property insurance contracts that requires the insured to maintain insurance on the property at a stated percentage of its actual cash value.
Commercial General Liability Policy (CGL)- commercial liability policy drafted by the Insurance Services Office containing two coverage forms -
an occurrence form and a claims-made form.
Commercial Package Policy (CPP) -
a commercial policy that can be designed to meet the specific insurance needs of business firms. Property and liability coverage forms are combined to form a single policy.
Company Adjuster -
claims adjustor who is a salaried employee representing only one company.
Conditions -
provisions inserted in an insurance contract that qualify or place limitations on the insurer’s promise to perform.
Consequential Loss -
financial loss occurring as the consequences of some other loss. Often called an indirect loss.
Contract Bond -
type of surety bond guaranteeing that the principal will fulfill all contractual obligations.
Covariance Adjustment -
used when calculating an insurer’s RBC because it is unlikely that all RBC elements will adversely affect the insurer’s financial position simultaneously.
Cover Note -
serves as the interim contract while the actual contract is drafted and sent out for signatures.
Declarations -
statements in an insurance contract that provide information about the property or life to be insured and used for underwriting and rating purposes and identification of the property or life to be insured.
Diligent Effort -
seeking coverage from and having been rejected by at least three authorized insurers currently writing this type of coverage and documenting these rejections.
Direct Placement -
the principal alternative to surplus lines that is available to consumers for accessing the unauthorized market.
Direct Writer -
insurance company in which the salesperson is an employee of the insurer, not an independent contractor, and which pays all selling expenses, including salary.
Diversification -
finding new buyers for new products.
Domestic Insurer -
insurance company domiciled and licensed in the state in which it does business.
Eligibility List (white list) -
the state regulator identifies insurers who meet the state’s standards for eligibility.
Eligible Surplus Lines Insurer -
An unauthorized insurer made eligible by the Department of Insurance to issue insurance coverage under the Surplus Lines Law.
Endorsement -
Written provision that adds to, deletes, or modifies the provisions in the original contract.
Errors and omissions insurance -
liability insurance policy that provides protection against loss incurred by a client because of some negligent act, error, or omission by the insured.
Essential insurance -
includes those coverages required by law or by contract, such as workers’ compensation insurance.
Excess insurance -
under an excess insurance plan, the insurer does not participate in the loss until the actual loss exceeds a certain amount.
Excess of Policy Limits (XPL) -
a loss where the claim is covered under the policy, but it exceeds the policy limits.
Exhibit of Premiums and Losses (referred to as the “state page”) -
a page that varies by individual states and reports direct coverage by line, showing premiums written, premiums earned, dividends paid or credited to policyholders, unearned premiums, losses paid, losses incurred, and losses unpaid.
Exclusions -
listing in an insurance contract of the perils, losses, and property excluded from coverage.
Export -
means to place, with an unauthorized insurer under the Surplus Lines Law, insurance covering a subject of insurance resident, located or to be performed in this state.
Extra-Contractual Obligations (ECO) -
the loss is not a result of the coverage provided under the policy, but it arises from the claims-handling process itself.
Facultative Certificate -
defines the terms of the reinsurance contract
Fair Acces to Insurance Requirements (FAIR plan) -
federal property insurance plan that provides basic property insurance to property owners in areas where they are unable to obtain insurance in the normal markets. Each state with such a plan has a central placement facility.
Federal surety bond -
type of surety bond required by federal agencies that regulates the actions of business firms. It guarantees that the bonded party will comply with federal standards, pay all taxes or duties accrued, or pay any penalty if the bondholder fails to pay.
File-and-use law -
law for regulating insurance rates under which companies are required only to file the rates with the state insurance department before putting them into effect.
Foreign Insurer -
U.S.-domiciled unauthorized insurer not licensed in the insured’s home state but licensed in another U.S. state.
Fortuitous Loss -
unforeseen and unexpected loss that occurs as a result of chance.
Franchise Deductible -
deductible found in some marine insurance contracts in which the insurer has no liability if the loss is under a certain amount, but once this amount is exceeded, the entire loss is paid in full.
Free Trade Zone (FTZ) -
a special licensing status for New York admitted insurers that requires higher capital and surplus amounts than are imposed on other insurers.
Fundamental Risk -
a risk that affects the entire economy or large numbers of persons or groups within the economy.
Funded Catastrophe Covers -
provide ceding insurers with a method of self-insuring their own catastrophe losses while smoothing their underwriting results as the catastrophe self-insurance fund is growing.
General Interrogatories -
used to ascertain compliance with laws and regulations and to disclose specific information not reflected in or readily ascertainable from the financial statements.
General Average -
in ocean marine insurance, a loss incurred for the common good that is shared by all parties to the venture.
Generally Accepted Accounting Principles (GAAP) -
refers to the conventions, rules and procedures developed by accountants from experience. It uses the earnings of a company as a concern from one period to the next.
Grace Period -
period of time during which a policyowner may pay an overdue premium without causing the policy to lapse.
Gross Premium -
amount paid by the insured, consisting of the gross rate multiplied by the number of exposure units.
Gross Rate -
the sume of the pure premium and a loading element.
Guaranteed Replacement Cost -
in the event of a total loss, the insurer agrees to replace the home exactly as it was before the loss even though the replacement cost exceeds the amount of insurance stated in the policy.
Hazard -
condition that creates or increases the chance of loss.
Hull insurance (1) -
class of ocean marine insurance that covers physical damage to the ship or vessel insured. Typically written on an “all-risks” basis. (2) Physical damage insurance on aircraft -
similar to collision insurance in an automobile policy.
Indemnification -
compensation to the victim of a loss, in whole or in part, by payment, repair or replacement.
Independent Adjustor -
claims adjustor who offers his or her services to insurance companies and is compensated by a fee.
Independently Procured Coverage (IPC) -
principal alternative available to consumers for accessing the non-admitted market.
Ineligibility List (black list) -
the state regulator identifies insurers considered unqualified for surplus lines placements.
Inland Marine Insurance -
transportation insurance that provides protection for goods shipped on land including imports, exports, domestic shipments, means of transportation, personal property floater risks, and commercial property floater risks.
Insurance -
pooling of fortuitous losses by transfer of risks to insurers who agree to indemnify insureds for such losses, to provide other pecuniary benefits on their occurrence, or to render services connected with the risk.
Insurance Guaranty Funds -
state funds that provide for the payment of unpaid claims of insolvent insurers.
Insurance Service Office (ISO) -
major rating organization in property and liability insurance that drafts policy forms for personal and commercial lines of insurance and provides rate data on loss costs for property and liability insurance lines.
Insurance Regulatory Information System (IRIS) -
a screening device that gives state insurance regulators some useful information in their regulatory task of monitoring insurer solvency.
Insuring Agreement -
that part of an insurance contract that states the promises of the insurer.
International Insurance Department (IID) -
(formerly known as the Nonadmitted Insurers Information Office) -
collects and reviews information from nonadmitted alien insurers about their financial condition, trust funds and deposits.
Investment Income -
The income generated by a company’s portfolio of investments (such as bonds, stocks or other financial ventures).
Joint Underwriting Association (JUA) -
a state program that provides essential insurance coverage to insureds that have been unable to obtain insurance, individually or through MAPs, from the admitted insurers in the market.
Jurat Page -
the first page of the Annual Statement and shows the insurer name, home office address, names of directors and officers, and name of a contact person for additional information. It also contains a sworn statement signed by three responsible officers of the insurer who certify the accuracy and completeness of the data.
Leverage -
the use of the firm’s assets to borrow funds or obtain credit to finance the pursuit of corporate goals.
Licensees -
Surplus Lines -
licensed individuals who make placements with a surplus lines insurer.
Retail -
agents that deal directly with insurance buyers.
Wholesale -
usually either independent wholesale agents or wholesale agents owned by a surplus lines insurer.
Liquidity -
refers to an insurer’s ability to meet obligations as they become due.
Lloyd’s Broker -
an insurance broker in London, England who procures coverage on behalf of insureds at the Lloyd’s market.
Loading -
the amount that must be added to the pure premium for expenses, profit and a margin for contingencies.
Loss Control -
risk management activities that reduce both the frequency and severity of losses for a firm or organization.
Loss Frequency -
the probable number of losses that may occur during some given time period.
Loss Reserve -
amount set aside by property and liability insurer for claims reported and adjusted but not yet paid, claims reported and filed but not yet adjusted, and claims incurred but not yet reported to the insurer.
Loss Severity -
the probable size of the losses that may occur.
McCarran-Ferguson Act -
federal law passed in 1945 stating that continued regulation of the insurance industry by the states is in the public interest and that federal antitrust laws apply to insurance only to the extent that the industry is not regulated by state law.
Market Assistance Plans (MAPs) -
a voluntary state program designed to help insureds find insurance when they have difficulty obtaining it themselves.
Market Conduct Regulation -
tries to ensure that insurers treat insureds, applicants for insurance, and claimants fairly; offer reasonable products at fair and justifiable prices; and sell these products through proper market and trade practices.
Merit Rating -
rate-making method in which class rates are adjusted upward or downward based on individual loss experience.
Moody’s Investors Service -
an insurance company rating service rates the debt securities and assigns financial strength ratings of insurers. Their ratings reflect quantitative and qualitative analyses based on industry regulatory trends and business fundamentals, incorporating financial factors.
NAIC Annual Statement (also known as the convention statement, convention blank, or yellow peril) -
a uniform financial report filed annually, on or before March 1, by all insurers with each state insurance department in which the insurer is authorized to transact business.
Named Insured -
the person(s) named in the declarations section of the policy, as opposed to someone who may have an interest in the policy but is not named as an insured.
Named-perils Policy -
coverage by an insurance contract that promises to pay only for those losses caused by perils specifically listed in the policy.
National Association of Insurance Commissioners (NAIC) -
group founded in 1871 that meets periodically to discuss industry problems and draft model laws in various areas and recommends adoption of these proposals by state legislatures.
Negligence -
failure to exercise the standard of care required by law to protect others from harm.
Niche Marketing -
a focused marketing program targeting specific types of insurance buyers.
Objective Risk -
relative variation of actual loss from expected loss, which varies inversely with the square root of the number of cases under observation.
Occurrence -
an accident, including continuous or repeated exposure to substantially the same general, harmful conditions, which results in bodily injury or property damage during the policy period.
Ocean Marine Insurance -
type of insurance that provides protection for all types of oceangoing vessels and their cargoes as well as legal liability of owners and shippers.
Unauthorized Insurer -
not licensed (unauthorized) to do insurance business in the insured’s home state.
Unauthorized Market Risks -
Distressed Risk -
characterized by unfavorable underwriting problems that have made it unacceptable to the admitted market.
Unique Risk -
too difficult to evaluate because no policy form meets its peculiar needs and no previous loss experience can be analyzed.
High-Capacity Risk -
requires very high limits, which might be beyond the underwriting criteria of the admitted market.
Open Market Placements -
the insurer decides whether to accept the particular risk before it is bound.
Paul v. Virginia -
landmark legal decision of 1869 established the right of the states, and not the federal government, to regulate insurance. Ruled that insurance was not interstate commerce.
Peril -
cause or source of loss
Policy -
an insurance policy, contract, cover note, certificate or any other detailed evidence of coverage, including policy jacket, endorsements and coverage parts.
Policy Forms -
the actual components of the policy, such as declaration pages, endorsements, coverage parts, etc.
Policyowners’ Surplus -
difference between an insurance company’s assets and its liabilities.
Program Business -
offering a policy or combination of policies with special coverages, prices, or both to risks with similar characteristics.
Program Marketing -
A group approach to combining insurance coverage’s that satisfy all individual members.
Public Adjustor -
claims adjustor who represents the insured rather than the insurance company and is paid a fee based on the amount of the claim settlement. A public adjustor may be employed in those cases where the insured and insurer cannot resolve a dispute over a claim, or if the insured needs technical assistance in a complex loss situation.
Public Official Bond -
type of surety bond guaranteeing that public officials will faithfully perform their duties for the protection of the public.
Qualified Solvency Ratings -
a system of Standard & Poor’s to assign ratings to insurers that have not requested in-depth claims-paying ability ratings and are based on a quantitative evaluation of public information only.
Quantitative Review -
compares an insurer’s profitability, leverage and liquidity for the past five years against the insurance company rating service’s norms of the industry peer group developed over the past 20 years.
Rates -
the price per unit of insurance.
Rate-making -
process by which insurance pricing or premium rates are determined for an insurance company.
Ratios -
Combined -
sum of the loss ratio and the expense ratio.
Loss -
it has several versions, but the most common version is incurred losses plus loss adjustment expenses (LAE) divided by earned premium.
Expense -
all other underwriting expenses divided by written premium.
Net Investment Income -
the insurer’s net investment income divided by the earned premium for the period.
Operating -
reflects the effect of investment income on an insurer’s underwriting performance.
Loss Reserves to PHS -
examines the susceptibility of an insurer’s net worth to reserving errors.
Net Premium to Surplus -
measures the adequacy of an insurer’s surplus to absorb adverse underwriting results.
Gross Premium to Surplus -
measures an insurer’s total insurance exposure before reinsurance.
Change in Writings -
measures the rate of change in written premium between the current year and the preceding year.
Surplus Aid to Surplus -
Normally less than 15 percent, it is the surplus aid divided by surplus.
Overall Operating -
a combination of three ratios -
the loss ratio, the expense ratio, and the investment income ratio. It is based on the current and prior years’ data to reduce fluctuations caused by interperiod revenue and cost allocations.
Investment Yield -
net investment income expressed as a percentage of the average invested assets during the year.
Change in Surplus -
measures how much better or worse off the insurer is at the end of the current accounting period compared to the previous year-end.
Liabilities to Liquid Assets -
measures an insurer’s ability to meet its obligations on a timely basis.
Agents’ Balances to Surplus -
represents the amount of agents’ balances in the course of collection as a percent of surplus.
One-Year Reserve Development to Surplus -
measures both the accuracy of loss reserves established one year ago and management’s general opinion about the adequacy of surplus.
Two-Year Reserve Development to Surplus -
calculated similarly to the one-year development to surplus ratio, except that it considers loss reserves that have matured over a two-year period.
Estimated Current Reserve Deficiency to Surplus -
the difference between the estimated reserves required by the insurer and the actual reserves maintained.
Rebating -
a practice -
illegal in virtually all states -
of giving a premium reduction or some other financial advantage to an individual as an inducement to purchase the policy.
Reciprocity Arrangements -
insurers sharing exposure to risk by reinsuring a part of the business of another insurer.
Redlining -
the refusal to insure or renew a policy solely because of the geographic location of the risk.
Reinsurance -
a contractual agreement under which the insurer issuing the original policy, known as the ceding insurer or primary insurer, transfers to another insurer, called the reinsurer, some or all of the losses incurred by the ceding insurer under insurance contracts it issued or will issue in the future.
Facultative -
the ceding insurer negotiates a separate reinsurance agreement for each policy it wants to reinsure.
Treaty -
the ceding insurer and reinsurer agree to share losses arising from more than one risk, usually a whole line or book of business.
Surplus Relief -
reinsurance that reduces the premium to surplus ratio.
Pro Rata -
One of two kinds whereby the ceding insurer and reinsurer proportionately share the original premium, limits and losses.
Quota Share -
the ceding insurer shares the limits, premium and losses proportionately with the reinsurer and the retention is stated as a percentage.
Surplus Share -
the retention is stated as a dollar amount and the percentage of the reinsurer’s risk varies depending on the size of the ceding insurer’s policy.
Excess of Loss -
the reinsurer responds to a loss only when the loss exceeds the ceding insurer’s retention.
Per Policy Excess of Loss -
applies to liability insurance and defines the retention and limit by policy. The retention is stated as a dollar amount of loss and the reinsurer is liable for all or part of a loss covered by any one policy in excess of the retention and up to the reinsurance limit.
Per Risk Excess of Loss -
covers property policies on either a facultative or a treaty basis and the retention is stated as a dollar amount of loss. The reinsurer is liable for all or part of a loss to any one risk in excess of the retention and up to the reinsurance limit.
Per Occurrence Excess of Loss -
generally used for liability insurance. The retention and limit apply on a per occurrence basis no matter how many separate policies sustain a loss in a single occurrence.
Stop Loss Ratio -
coverage where the retention is stated as a loss ratio percentage.
Catastrophe -
an aggregate excess of loss property reinsurance treaty that responds only when the sum of all losses suffered by a ceding insurer arising from a single property catastrophe exceeds the retention of the treaty.
Finite Risk -
describes several reinsurance products that meet risk transfer and financing needs of ceding insurers.
Reinsurer -
An arrangement which one insurer transfers all or a portion of its risk under a policy or group of policies to another insurer (reinsurer).
Admitted professional -
an insurer that specializes in reinsurance and is licensed to write reinsurance in at least one state of the United States.
Unauthorized alien -
domiciled outside the U.S. and is not authorized in any U.S. state.
Reinsurance pools and associations -
consist of several reinsurers, not otherwise related, that have joined to insure risks the individual resinsurers are unwilling to cover.
Broker-market -
distribute their products through reinsurance intermediaries.
Lead -
negotiates the terms of the contract and generally takes a large percentage of the risk.
Following -
follows the lead reinsurer and take percentages of the risk on the same terms and conditions.
Direct-writing -
directly solicits ceding insurer clients and competes with reinsurance intermediaries representing broker markets in soliciting reinsurance business.
Representations -
statements made by an applicant for insurance regarding, for example, occupation, state of health and family history.
Residual Market -
shared market mechanism among admitted insurers to satisfy the consumer’s demand for essential insurance coverages.
Retention -
risk management technique in which the firm retains part or all of the losses resulting from a given loss exposure. Used when no other method is available, the worst possible loss is not serious, and losses are highly predictable.
Retention Limit -
amount of insurance retained by a ceding company for its own account in a reinsurance operation.
Retrocession -
an arrangement between two reinsurers to share exposure to risk.
Retrospective Rating -
type of merit-rating method in which the insured’s loss experience during the current policy period determines the actual premium paid for that period.
Return of Equity (ROE) -
comparison of total return to policyholders’ surplus (PHS)
Risk -
chance of loss with respect to person, liability or the property of the insured.
Fixed-Income Investment -
represents the risks associated with market volatility that can affect the value of an insurer’s invested assets.
Off-Balance Sheet -
represents risk associated with abnormal premium and reserve growth, investments in affiliates, and financial guarantees made on behalf of affiliates.
Equity Investment -
the effect of market volatility on the value of an insurer’s invested assets.
Receivables (also called the credit risk) -
the collectibility of the insurer’s receivables, including reinsurance recoverables and agents’ balances due to the insurer.
Net Loss Reserve and LAE -
refers to the possibility that reserves might be inaccurate.
Net Written Premium -
reflects the possibility of inadequate rate levels that negatively affect an insurer’s capital position.
Risk-Based Capital (RBC) -
a model that develops an insurer capitalization requirement based on the risk characteristics inherent to that insurer’s unique operations.
Risk Management -
systematic process for the identification and evaluation of pure loss exposures faced by an organization or individual, and for the selection and implementation of the most appropriate techniques for treating such exposures.
Risk Purchasing Groups (RPGs) -
use their collective power to negotiate favorable terms and conditions for the group members that would not normally be available to individual members.
Securities Valuation Office (SVO) -
Established by the NAIC, it establishes uniform accounting values for the securities investments of insurers.
Self-Procurement -
insurance buyers who fully understand available insurance coverages and who directly access the unauthorized insurance market.
Short-rate Table -
schedule used by insurers to refund premiums on policy cancellation. It refunds less than a pro rata amount to cover insurer’s expenses in issuing and printing the policy and to offset adverse selection.
SLIP – Surplus Lines Information Portal which is FSLSO’s web-based policy submission mechanism.
Slip -
a short document summarizing the terms of the treaty and indicating the percentage the lead reinsurer has assumed.
Solvency Regulation -
attempts to minimize the policyholder’s risk that the insurer will be unable to meet its financial obligations when required to do so.
Southeastern Underwriters Association (SEUA) case -
legal landmark decision of 1944 overruling the Paul vs. Virginia ruling and finding that insurance was interstate commerce when conducted across state lines and was subject to federal regulation.
Stamping Offices -
created in 15 states to facilitate and encourage compliance with state laws and regulations regarding surplus lines placements.
Standard & Poor’s -
an insurance company rating service that rates fixed income securities, including long-term debt, commercial paper and preferred stock issued by insurers, and the claims-paying ability and financial strength of insurers.
State Guaranty Fund Associations -
established in every state to protect policyholders, claimants and beneficiaries against financial losses due to an insurer’s insolvency.
Statement of Actuarial Opinion -
provides the actuary’s opinion about loss and loss adjustment expense reserves.
Statement of Cash Flow -
reports the cash flow from operations separately from the cash flow from investment purchases and sales/maturities and others sources and uses of funds.
Statement of Income -
reports net underwriting gain or loss, investment income, other income, dividends to policyholders, federal and foreign income taxes, and net income.
Statutory Accounting Principles (SAP) -
A form of solvency regulation that are set forth by statute or regulation. A conservative approach to accounting that focuses on an insurer’s ability to satisfy its obligations at all times.
Surety -
party who agrees to answer for the debt, default, or obligation of another in the purchase of a bond.
Surety Bond -
bond that provides monetary compensation if the bonded party fails to perform certain acts.
Surplus Aid -
consists of commissions to the ceding insurer on the premiums that are ceded to nonaffiliated admitted reinsurers.
Surplus Lines Agent -
an individual licensed and appointed as provided in the Surplus Lines Law to handle the placement of insurance coverage with eligible unauthorized insurers or to place such coverage with authorized insurers for which the licensee is not appointed as an agent.
Surplus Lines Insurance -
a mechanism that allows U.S. consumers to buy property-liability insurance from unauthorized insurers when consumers are unable to purchase the coverage they need from admitted insurers.
Surplus Lines Intermediary -
An agent who negotiates contracts on behalf of surplus lines insurers.
Surplus Lines Market -
a way of gaining access to the unauthorized market and provides regulators the opportunity to protect policyholders through regulation.
Syndicate -
A group of insurers or underwriters which join to insure certain property that may be of such value or high hazard, or so expensive to underwrite, that it can be covered more safely and efficiently on a cooperative basis.
Target Market -
a homogenous market segment to which a marketer directs a specific marketing program.
Triennial Financial Examination -
a comprehensive on-site financial examination that occurs at least once every three years to insurers.
Underwriter -
An employee of an insurance company who is a selector of risks.
Underwriting -
the selection and classification of applicants for insurance through a clearly stated company policy consistent with company objectives.
Underwriting Cycle -
the tendency of insurance premiums, insurers’ profits and coverage availability to rise and fall with some regularity.
Underwriting Rules -
outline the insurer’s risk acceptance criteria and certain processing criteria by specifying the forms and rates used for a program.
Waiver -
voluntary relinquishment of a known legal right.
Warranty -
statement of fact or a promise made by the insured, which is part of the insurance contract and which must be true if the insurer is to be liable under the contract.