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103 Cards in this Set
- Front
- Back
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Risk (p. 1.3)
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The uncertainty about outcomes, some of which can be either negative or positive.
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Hazard Risk (p. 1.5)
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Risk from accidental loss, including the possibility of loss or no loss.
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Business Risk (p. 1.5)
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Risk the is inherent in the operation of a particular organization, including the possibility of loss, no loss or gain.
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Retention (p. 1.6)
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A risk management technique by which losses are retained by generating funds within the organization to pay for losses.
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Noninsurance transfer (p. 1.7)
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A risk management technique by which the risk of loss is transferred to a person or an organization that is not an insurer.
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Insurance (p. 1.7)
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A system for transferring risk from people and organizations to insurers that reimburse those people and organizations for covered losses.
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Insured (p. 1.7)
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A person or an organization whose property, life, or legal liability is covered by an insurance policy.
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Law of large numbers (p. 1.7)
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A matematical principle stating, as the number of similar but independent exposure units increases, the relative accurancy of predictions about future outcomes (losses) based on these exposure units also increases.
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Principle of indemnity (p. 1.8)
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The principle that insurance policies should provide a benifit no greater than the loss suffered by the insured.
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Insurable interest (p. 1.8)
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An exposure that a party has to financial loss.
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First-party claim (p. 1.8)
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A demand by an insured person or organization seeking to recover from it's insurer for a loss that it's insurance policy may cover.
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Third-party claim (p. 1.8)
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A demand by a third party against an insured based on the legal duties the insured owes to the third party; it seeks to recover from the insureds insurer for a loss that the issuing policy may cover.
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Moral hazard (p. 1.11)
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A condition that may lead a person to intentionally cause or exaggerate a loss.
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Morale hazard or attitudinal hazard (p. 1.11)
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A hazard that includes carelessness about or indifferance to potential loss on the part of an insured.
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Third-party administrator (p. 1.12)
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A frim that contracts to provide administrative services to other businesses and that is often hired to handle claims by organizations that have self insurance plans.
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Independant adjuster (p. 1.14)
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An independant claim representative who handles claims for insurers for a fee.
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Insurance agent (p. 1.15)
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A legal representative of one or more insurers for which the representative has a contractual agreement to sell insurance.
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Insurance broker (p. 1.15)
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An independent business owner or firm that sells insurance by representing customers rather than insurers.
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Public adjuster (p. 1.15)
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An organization or a person hired by an insurer to represent the insured in a claim.
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Incurred loss (p. 1.16)
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The amount equal to paid losses an losses for which the insurer is liable but has not yet paid.
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Loss Ratio (p. 1.16)
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An insurers incurred losses (including loss adjustment expenses) for a given period divided by its earned premiums for that same period.
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Loss reserves (p. 1.16)
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Estimates of the amount of money the insurer expects to pay in the future for losses that have already occured and have been reported.
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Combined ratio (p. 1.16)
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A profitability measurement calculated by adding loss and expenses ratios.
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Reinsurer (p. 1.21)
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The insurer that assumes all or part of the insured risk exposures of the primary insurer in a contract agreement.
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Insurance guaranty funds
(p. 1.31) |
State funds that pay the claims of insolvent licensed insurers in the particular state.
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Unfair trade practices acts (p. 1.33)
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State laws that specify certain prohibited business practises.
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Unfair claim practises acts (p. 1.35)
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State laws that prohibit unethical and illegal claim practises.
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Bad faith (p. 1.35)
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A breach of the duty of good faith and fair dealing.
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The McCarran-Ferguson Act
(p. 1.24) |
Clarifies the federal governments power to assume insurance regulatory functions in the absence of state regulation.
It states that insurers are exempt from federal antitrust laws, if the states maintain their own regulatory system. |
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The Insurance Fraud Protection Act (p. 1.24)
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Part of a federal anti-crime bill that protects consumers and insureds against insurer insolvencies resulting from fraud. The act also prhibits insurers, reinsurers, producers, and others from employing anyone who has been convicted of a felony involving breach of trust or dishonesty.
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Gramm-Leach-Bliley Act
(p. 1.24) |
This act states that each segment of the financial services industry is regulated seperately. States continue to have primary regulatory authority for all insurance activities. The act also addresses privacy concerns through a provision requiring banks to disclose to customers their information-sharing policies and practises.
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Possibility (p. 1.4)
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Something could happen
Possibility is not measurable. |
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Probability (p. 1.4)
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The Mathematical likelihood that an event will occur.
Probability is measurable |
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Manuscript Policies (p. 2.6)
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Nonstandard custom policies developed for one specific insured or for a small group of insureds, such as a business association, with unique coverage needs.
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Insuring Agreement (p. 2.8)
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A statement in an insurance policy that the insurer will, under described circumstances, make a loss payment or provide a service.
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Policy Condition (p. 2.10)
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Any provision that qualifies an otherwise enforceable promise made in the policy.
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Specified causes of loss coverage (p. 2.15)
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A named perils coverage that covers loss caused only by the specifically listed perils.
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Special Form Coverage
(p. 2.15) |
Property insurance coverage covering all causes of loss not specifically excluded.
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Direct Loss (p. 2.17)
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A reduction in property value resulting immediately and proximately from damage caused by a covered cause of loss.
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Indirect Loss (p. 2.17)
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A loss that arises as a result of damage to property, other than the direct loss to the property.
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Compensatory Damages
(p. 2.18) |
Compensation to claimants for their bodily injury or property damage.
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Special Damages (p. 2.18)
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A monetary award to compensate a victim for specific, out of pocket expenses incurred because of a loss, such as medical expenses, wage loss, funeral expenses, or repair bills.
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General Damages (p. 2.18)
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A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific measurable expenses.
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Punitive Damages (p. 2.18)
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A payment awarded by a court to punish a wrongdoer for a reckless, malicious, or decitful act and to deter similar conduct.
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Reserve (p. 2.23)
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The amount the insurer estimates and sets aside to pay on an existing claim that has not been settled.
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Individual Case Method
(p. 2.23) |
A method of setting reserves based on the claims circumstances and the claim representative's experiance in handling similar claims.
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Roundtable Method (p. 2.25)
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A method of setting reserves by using the consensus of two or more claim personnel who have independently evaluated the claim file.
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Average Value Method
(p. 2.25) |
A method of setting claim reserves by using a predetermined dollar amount that is set aside for a particular type of claim when it is reported.
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Formula Method (p. 2.25)
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A method for setting claim reserves by using a mathematical formula.
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Expert System Method
(p. 2.26) |
A method of setting claim reserves with a software application that estimates losses and loss adjustment expenses.
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Loss Ratio Method (p. 2.26)
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A method of setting reserves by establishing aggregate reserves for all claims within a type of insurance or a class of loss exposures.
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Waiver (p. 2.30)
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The intentional or voluntary relinquishment of a known right.
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Estoppel (p. 2.31)
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A legal bar to asserting a certain contractual condition because of that party's previous actions or words to the contrary.
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Nonwaiver Agreement (p. 2.32)
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A signed agreement indicating that during the course of investigation, neither the insurer nor the insured waives rights under the policy.
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Reservation of Rights Letter
(p. 2.32) |
An insurer's letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it.
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Subrogation (p. 2.35)
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An insurer's right to recover payment from a neglegent third party who caused a property or liability loss that the insurer has paid to or on behalf of an insured.
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Alternative Dispute Resolution (ADR)
(p. 2.44) |
Methods for settling disputes outside of the traditional court system.
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Mediation (p. 2.44)
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An alternative dispute resolution method by which disputing parties use a neutral outside party to examine the issues and develope a mutually agreeable settlement.
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Arbitration (p. 2.45)
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An alternative dispute resolution method by which the disputing parties use a neutral outside party to examine the issues and develope a settlement, which can be final and binding.
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Appraisal Provision (p. 2.45)
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A policy condition that provides appraisal as a mechanism for resolving disputes between inurers and insureds over the amount owed on a covered loss.
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Mini-Trial (p. 2.45)
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An alternative dispute resolution method by which a case undergoes an abbreviated version of a trial before a panel or an advisor who poses questions and offers opinions on the outcome of a trial, based on the evidence presented.
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Summary Jury Trial (p. 2.46)
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An alternative dispute resolution method by which disputing parties participate in an abreviated trial, presenting the evidence of a few witnesses to a panel of mock jurors who decide the case.
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Legal Liability (p. 3.4)
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A person or an organizations status as legally responsible for injury or damage suffered by another person or organization.
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Constitutional Law (p. 3.4)
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The Constitution itself and all the decisions of the Supreme Court that involve the Constitution.
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Statutory Law (p. 3.4)
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The formal laws, or statutes, enacted by federal, state, or local legislative bodies.
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Common Law, or Case Law (p 3.5)
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A body of principles and rules established by courts on a case by case basis.
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Tort (p. 3.6)
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A wrongful act or omission, other than a crime or breach of contract, committed by one party against another, that causes harm and may lead to a civil lawsuit for damages.
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Torfeasor (p. 3.6)
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A person or an organization that commits a tort for which a civil remedy may be sought.
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Negligence (p. 3.6)
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The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others.
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Vicarious Liability (p.3.7)
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The legal responsibility that arises when one party is held liable for another parties actions.
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Contributory negligence (p. 3.7)
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A common-law principle that prevents a person who has been harmed from recovering damages if that person's own negligence contributed in any way to the harm.
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Comparative negligence (p. 3.8)
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A common-law principle that requires both parties to a loss to share the financial burden of the bodily injury or property damage according to their respective degrees of fault.
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Strict Liability (p. 3.8)
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Liability that arises from inherently dangerous activities resulting in harm to another regardless of the degree of care taken.
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Intentional tort (p. 3.8)
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A tort committed with intent to cause harm or with intent to do the act that causes harm.
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Contractual Liability (p. 3.9)
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Liability imposed on a party by the terms of a contract.
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Statutory Liability (p. 3.9)
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Legal liability imposed by a specific statute or law.
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Coinsurance (3.16)
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An insurance-to-value provision in many property insurance policies providing that if the property is underinsured, the amount the inurer pays for a covered loss is reduced.
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Catastrophe serial number (p. 3.17)
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A number assigned by ISO's Property Claim Services unit to a single event that causes more than $25 million in insured damage for the purpose of tracking and aggregating loses resulting from a catastrophe.
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Sworn Statement (p. 3.23)
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A signed record of events surronding an event as told by the interviewee that contains language attesting that it is true.
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Direct Question (p. 3.30)
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A question that seeks specific information and that can often be answered with a short phrase or a yes or no answer.
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Open-ended question (p.3.32)
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A question that seeks an answer that explains or elaborates on the circumstances under consideration.
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Leading Question (p. 3.33)
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A question that seeks or suggests a particular answer.
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Scope (p. 3.49)
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A list of the areas damaged that includes the type of damage, a description of the proposed action to take reguarding the damaged property (such as repair, replace, remove or demolish), and the area's measurements.
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Replacement Cost (p. 3.50)
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The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation.
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Actual Cash Value (p 3.50)
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A method of valuation of property calculated as the replacement cost minus depreciation.
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Fair Market Value (p. 3.52)
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That amount at which a knowledgeable buyer, under no unusual pressure would be willing to buy property; and a knowledgeable seller, under no unusual pressure, would be willing to sell it.
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Advance Payment (p. 3.53)
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Payment to the insured to cover the immediate expenses resulting from the loss.
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Insurance Fraud (p. 4.3)
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Any deliberate deception committed against an insurer or an insurance producer for the purpose of unwarranted financial gain.
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Hard Fraud (p. 4.5)
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Actions that are undertaken deliberatly to defraud.
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Soft Fraud, or opportunity fraud (p. 4.5)
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Fraud that accurs when a legitimate claim is exaggerated.
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Material Fact (p 4.5)
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In Insurance, a fact that would affect the insurer's decision to provide or maintain insurance or to settle a claim.
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Misrepresentation (p.4.5)
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A false statement of a material fact on which a party relies.
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Concealment (p 4.5)
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The intentional failure to disclose a material fact.
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Staged Accident (p. 4.6)
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An accident deliberately caused by a person who intends to feign injury and collect on the ensuing claim.
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Immunity Statute (p. 4.25)
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A law that allows insurers and law enforcement officials to share information about fraudulent activity without facing potential civil lawsuits for defamation, harrassment, malicious prosecution, bad faith, or breach of privacy.
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Good Faith (p. 5.3)
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In Insurance, consideration given to the insured's interests that is ar least equal to that given to the insurer's interests in handling a claim.
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Breach of contract (p. 5.4)
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The failure, without leagal excuse, to fulfill a contractual promise.
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Defendant (p. 5.8)
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The party (person or entity) against whom relief or recovery is sought in a lawsuit.
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Plantiff (p. 5.8)
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The person or entity who files a lawsuit and is named as a party.
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Contractual Damages (p. 5.17)
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The amounts payable under the contract according to the terms of the contract.
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Consequential damages (p. 5.17)
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A payment awarded by a coourt to indemnify an injured party for losses that result indirectly from a wrong such as breach of contract or a tort.
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Statue of limitations (p. 5.20)
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A statue that imposes time limits on when a cause of action can be brought, starting from the time the cause of action accrues.
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Summary judgement (p. 5.22)
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A judgement granted by the court when it determines that no factual issue exists.
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