Insurance and Risk Management Vocabulary

Flashcards of key vocabulary and concepts from the lecture notes.

Insurer

The company providing the insurance.

Insured

The person covered by the insurance policy.

Premium

Another name for payment in the context of insurance.

Face Amount

The amount payable in the event of the death of the insured.

Risk

Uncertainty of a loss.

Pure Risk

Insurable, with chance of only loss.

Speculative Risk

Not insurable, with a chance of loss or gain, related to gambling.

Hazards

Events or conditions that increase chance of a loss.

Physical Hazard

A preexisting physical condition that could increase the chance of loss.

Moral Hazard

A straight up lie.

Morale Hazard

Doing really unsafe things.

Sharing (Risk Management)

A method of dealing with risk for a group of people to share the losses that occur within that group, often related to pension plans offered through an employer.

Transfer (Risk Management)

The most effective way to handle a risk by passing it to another party, often through buying insurance.

Avoidance (Risk Management)

Eliminating exposure to a loss, such as never flying on an airplane to avoid the risk of a plane crash.

Retention (Risk Management)

Being self-insured, able to cover the cost of the loss yourself.

Reduction (Risk Management)

Lessening the possibility or severity of a loss, such as installing smoke detectors or eating healthy and exercising regularly.

Exposure

A unit of measure used to determine rates charged for insurance coverage.

Tort

A private, civil, noncontractual wrong for which a remedy through legal action may be sought.

Unintentional Tort

Any deliberate act that causes harm to another person.

Intentional Tort

Negligence.

Peril

The cause of a loss.

Law of Large Numbers

Predicts the number of deaths that will happen in a similar group of people, related to statistics.

Agent

A person who aids in the selling of insurance and legally represents a company; also called a producer.

Captive Agent

An agent who works for one company and only sells that company's product; also called a career agent or exclusive agent.

Independent Agent

An agent who works for themself and can sell for many companies.

Domestic Agent

An agent who is licensed in the same state that they are going to conduct business in.

Foreign Agent

An agent who gets licensed in another state (foreign) from where they're conducting business.

Alien Agent

Term for an agent licensed in another or different country.

Fiduciary

A person of financial trust in charge of money, responsible for collecting premiums and submitting them to the insurance company.

Appointment

When an agent is authorized to represent a specific insurance company.

Authorized/Admitted

Licensing for All companies to conduct business in a state.

Certificate of Authority

A license granted by the state's insurance authority, giving an insurance company permission to operate in that state.

Expressed

Written.

Implied

Assumed.

Commissioner

The main or top person of the state's department of insurance, responsible for regulating and enforcing insurance laws.

Conditional Receipt

A receipt given with conditions, showing proof of conditional coverage that will be effective either the day of application or the day of the medical exam, whichever is later.