Life and Health Insurance

Actuarial Department

This is the department that calculates policy rates, reserves, and dividends.

Adjuster

This is the person who investigates claims and arranges for them to be settled or denied.

Alien Insurer

In the United States, this is an insurer whose principal office and domicile location is outside this country.

Admitted Insurer

This is an insurer who has received a certificate of authority from a state’s department of insurance which authorizes them to conduct insurance business in that state.

Agent

This is an individual or organization that’s authorized to solicit, sell, and transact (bind) coverage for specific insurance providers under the terms of one or more agent contracts.

Authorized Insurer

This is an admitted insurer.

Broker

This is a person who represents himself and the insured (i.e., the client or customer). A broker cannot bind coverage on behalf of an insurance carrier because a broker is not appointed as an agent.

Captive Insurer

This is an insurer that’s established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure.

Certificate of Authority

This is a license that’s issued to an insurer by an insurance department (or equivalent state agency) that authorizes that company to conduct insurance business in that particular state.

Claims Department

This is the department that’s responsible for processing, investigating, and paying claims.

Divisible Surplus

This is the amount of earnings that are paid to policy owners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes.

Domestic Insurer

This is an insurer with its principal or home office in the state in which it’s authorized.

Foreign Insurer

This is an insurer whose principal office or domicile location is in a state that’s different from the state in which it’s transacting insurance business.

Fraternal Benefit Society

This is a non-profit benevolent organization that provides insurance to its members.

Independent Insurance Agency

This is an agency that relies on contractual agreements with any number of insurance companies.

Insurance

This is the transfer of risk through the pooling or accumulation of funds.

Insured

This is the customer who receives insurance protection under an insurance policy.

Insurer

This is an insurance company.

Lloyds of London

This is NOT an insurer but a group of individuals and companies that underwrite unusual insurance policies.

Marketing Division

This is the division that’s responsible for acquiring prospective applicants through various advertising media.

Monoline Insurer

This is an insurance carrier that only sells one line of insurance.

Multi-Line Insurer

This is an insurance company or independent agent that provides coverage for all of an individual's or business's insurance needs.

Mutual Insurance Company

This is an insurance company that’s owned by its policy owners.

Non-Admitted (Unauthorized) Insurer

This is an insurer that has not received a certificate of authority from a state’s department of insurance.

Nonparticipating Policy

This is a policy that doesn’t allow policy owners to participate in dividends.

Participating Policy

This is a policy that pays policy dividends to policy owners.

Personal Producing General Agency (PPGA)

This is an agency that represents one or more specific insurers.

Policy owner

This is the person responsible for the payment of premiums and who possesses all ownership rights of the contract.

Private (Commercial) Insurer

This is an insurer owned by private citizens or groups that offer one or more insurance lines.

Producer

This is an individual licensed to sell, solicit, or transact insurance in a given state.

Proposed Insured

This is the person whose life will be covered by an insurance policy.

Public Adjuster

This person acts on behalf of a consumer who’s settling an insurance claim.

Reciprocal Insurer

This is an unincorporated organization in which all members insure one another.

Reinsurance

This is the acceptance by insurers of a portion of the risk being underwritten by another insurer.

Reinsurer

This is a company that provides financial protection to insurance companies.

Risk Retention Group

This is a group-owned liability insurer that spreads product liability and other risks among its members.

Sales Department

This department acquires clients through one-on-one meetings.

Self-Insurer

This is a company that establishes a self-funded plan to cover potential losses.

Service Representatives

These are customer service employees not required to obtain a license.

Solicitors

These individuals schedule sales meetings between consumers and producers.

Stock Insurance Company

This is an insurance company owned by stockholders.

Surplus Lines Insurance

This is non-traditional insurance available from surplus lines insurers.

Unauthorized Insurer

This is a non-admitted insurer.

Underwriting Department

This is the department responsible for reviewing and approving applications.

Adverse Selection

The tendency for people with higher risks to seek insurance more than those with lower risks.

Hazard

This is any factor that creates an increased possibility of loss.

Homogeneous Exposure Units

Similar objects of insurance exposed to the same group of perils.

Indemnify

The act of restoring insureds to their financial condition prior to a loss.

Indemnity

This is the amount needed to restore an individual to their financial position before a loss.

Indemnity Contract

A contract that attempts to return the insured to their original financial position.

Law of Large Numbers

The principle that predicts loss based on a larger number of individual risks.

Loss

An unintentional decrease in the monetary value of an asset due to a peril.

Loss Exposure

The risk of a possible loss.

Loss Exposure Unit

Each individual, organization, or asset exposed to potential financial loss.

Moral Hazard

A type of hazard due to an insured’s personal reputation or character.

Morale Hazard

A hazard arising from an insured’s indifference to loss due to the existence of insurance.

Peril

The immediate, specific event that causes loss.

Physical Hazard

A physical condition that increases the likelihood of a loss.

Primary Insurance Company

The first policy to pay in a claim when multiple policies cover it.

Pure Risk

A type of risk involving the chance of loss only; no opportunity for gain.

Reinsurance

The acceptance of a portion of the risk underwritten by one insurer by others.

Risk

The uncertainty regarding loss.

Risk Avoidance

The act of not participating in activities that could cause a loss.

Risk Management

The process of analyzing exposures and designing programs to address them.

Risk Reduction

Strategies to decrease the chances of a loss occurring.

Risk Retention

Determining that the potential loss is acceptable and retaining the risk.

Risk Selection

The insurance company’s process for determining whether to cover a new loss exposure.

Risk Sharing

Managing an individual’s risk by spreading the cost over a large number of individuals.

Risk Transfer

Exchanging the responsibility for a potential loss to another party.

Self-Insurance

A risk retention process where reserves are maintained to cover potential costs.

Speculative Risk

A type of risk that involves the chance of both loss and gain; it’s not insurable.