p&c basics

eArbitrator - individual responsible for resolving a claim settlement dispute between an insured and insurer

credibility - an actuarial term describing the degree of accuracy in forecasting future events based on statistical reporting of past events

earned premium - the portion of premium paid in advance that now belongs to the insurer for providing coverage for a specified period of time

exposure units - used as a measure of the rating units or the premium base of a risk (exposure units multiplied by the rate results in the premium)

homogeneity - the degree to which items are similar

inception - the date at which the insurance policy goes into effect

void - cancelled or declared invalid

ISO (Insurance Services Office - part of the obligation of state government to the public is making sure policies are quality, understandable products and rates are reasonable. regulatory authority that reviews the forms for compliance with minimum standards and approves or declines the form and makes recommendations.

American Association of Insurance Services (AAIS) - national advisory and statistical organization that develops standardized policy forms and rating information used by persona commercial and inland marine insurers

other rate filing and form services organizations include, but are not limited to:

• surety and fidelity association of america (SFAA)

• National COuncil on Compensation Insurance (NCCI)

• Other state rate-making entities

Independent Rating Services

the financial strengrth of an insurance company is based on prior claims experience, investment earnings, levels of reserves (amount of money kept in a sperate account to cover debts to policyholders) and management.

guides to insurance companies financial integrity are published regularly by the folloqing various independent rating services:

• AM Best

• Fitch

• Standard and Poor’s

• Moody’s

• Weiss

California Workers' Comp Inspection Rating Bureau (WCIRB) unincorporated nonprofit association

main functions:

• provide statistics and rating information regarding workers compensation and employer’s liability insurance

• collect and tabulate information and statistics for the purpose of developing pure premium rates to be submitting to the commissioner for issuance or approval

• Inspect risks for classification or rate purposes and furnish this information to the insurer (and employer upon request)

Association for Cooperative Operations Research and Development (ACORD)

ACORD - association for cooperative operations research and development is gloabal nonprofit organization formed by insurance carriers and agents focused on building efficiencie in the p&c insurance marketplace

Property vs Casualty Insurance

Property insurance pays for losses to belonging possessions or assets, in which the insured has financial interest. a property insurance contract is between the insurance company and the insured, known as a two-party contract

Liability or casualty insurance exists to pay damages to third party for reasons such as bodily injury, property damage, personal injury, or advertising injury.

1. Accident vs. Occurrence

   an accident is a sudden, unplanned and unexpected event, not under the control ofthe insured resulting in injury or damage that is neither expected nor intended.

   an occurrence is broader definition of loss than accident because it includes those losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected

2. Loss

Loss is defined as the reduction, decrease or disappearance of vlaue ofthe person or property insured in a policy

3. direct vs. indirect property loss

two types of property losses are direct and indirect

property insurance only covers direct losses.

indirect losses are related to the direct loss and insurance coverage to protect against these indirect losses often is added to property insruance policies

diredct loss also includes other damage where the insured peril was the proximate cause of loss

consequential losses (indirect losses) most common are loss of rental value and/or the additional living expenses

All-risk - old term. damage or loss must be caused by a peril that is named or listed in the contract

Open Peril and Named Peril

named peril - is a term used in property insurance to describe the breadth iof coverage provided under an insurance policy form that lists specific covered perils . no coverage is provided for unlisted perils

open peril is a term used in a property insurance to describe the breadth of coverage provided under an insurance policy form that insurers