Ains 21 Session A Chapter 3

Front 1

Loss adjustment expense (LAE)

Back 1

The expense that an insurer incurs to investigate, defend, and settle claims according to the terms specified in the insurance policy.

Front 2

Paid losses

Back 2

Losses that have been paid to, or on behalf of, insureds during a given period.

Front 3

Incurred losses

Back 3

The losses that have occurred during a specific period, no matter when claims resulting from the losses are paid.

Front 4

Incurred but not reported (IBNR) losses

Back 4

Losses that have occurred but have not yet been reported to the insurer.

Front 5

Dividends

Back 5

The portion of an organization's profits that is paid to shareholders.

Front 6

Assets

Back 6

Types of property, both tangible and intangible, owned by an entity.

Front 7

Admitted assets

Back 7

Assets meeting minimum standards of liquidity that an insurer is allowed to report on its balance sheet in accordance with statutory accounting principles.

Front 8

Nonadmitted assets

Back 8

Types of property, such as office furniture and equipment, that regulators do not allow insurers to show as assets on financial statements because these assets cannot readily be converted to cash at or near their market value.

Front 9

Liabilities

Back 9

Financial obligations, or debts, owed by a company to another entity, usually the policyholder in the case of an insurer.

Front 10

Loss reserve

Back 10

An estimate of the amount of money the insurer expects to pay in the future for losses that have already occurred and been reported, but are not yet settled.

Front 11

Unearned premium reserve

Back 11

An insurer liability representing the amount of premiums received from policyholders that are not yet earned.

Front 12

Policyholders' surplus

Back 12

Under statutory accounting principles (SAP), an insurer's total admitted assets minus its total liabilities.

Front 13

Loss ratio

Back 13

A ratio that measures losses and loss adjustment expenses against earned premiums and that reflects the percentage of premiums being consumed by losses.

Front 14

Expense ratio

Back 14

An insurer's incurred underwriting expenses for a given period divided by its written premiums for the same period.

Front 15

Combined ratio

Back 15

A profitability ratio that indicates whether an insurer has made an underwriting loss or gain.

Front 16

Investment income ratio

Back 16

Net investment income divided by earned premiums for a given period.