insurance
Definition
Risk-transfer mechanism that ensures full or
partial financial compensation for the loss or damage caused by event(s) beyond the
control of the insured party. Under an insurance contract, a party (the insurer) indemnifies the other party (the insured)
against a specified amount of loss, occurring from specified
eventualities within a specified period, provided a fee called premium is paid. In general insurance, compensation is normally
proportionate to the loss incurred, whereas in life insurance usually a fixed sum is paid. Some types of insurance (such as product liability insurance) are an
essential component of risk management, and are mandatory in several countries. Insurance, however, provides protection only against tangible losses. It cannot ensure
continuity of business, market share, or customer confidence, and cannot provide knowledge, skills, or resources to resume the operations after a disaster.
insurance
company
Definition
A business that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment or hardship in exchange for premium payments. The company calculates the risk of occurrence then determines
the cost to replace (pay for) the loss to determine the
premium amount.
insurance
company rating
System developed by the US firm A. M. Best &
Company to rate life, general (non-life), and reinsurance companies on the basis of their strength and weaknesses. These are: A++ or
A+ (Superior), A or A- (Excellent), B++ or B (Very good), B or B-
(Fair), C++ or C (Marginal), C or C- (Weak), D
(Poor), E (Under regulatory supervision), D (In liquidation), S (Rating suspended). An insurance company must have the rating of
B+ or better to indicate that it is secure in four critical areas: (1) underwriting, (2) expense control, (3) reserve adequacy, and (4) investments. Also called Best's rating
insurance cover
note
Document evidencing issuance of an insurance policy and gives a summary of the information given in a certificate of insurance.
insurance
adjuster
A person charged with investigating a claim to establish whether the company is liable and to what extent. The
investigation can include interviews of the parties involved, property inspections, and reviewing hospital records or police reports.
insurance
carrier
Definition
A company that offers and/or underwrites insurance policies.
insurance
commissioner
The individual who heads the state's agency for insurance regulation. This person may also be referred to as the Director or Superintendent, depending on the state.
insurance
department
A department charged administrating the laws that govern the insurance business. This also includes licensing, examining, and regulating insurance professionals. In the United States, this is a government bureau, or a division of another government bureau. In
Canada, this is done by the federal government. In India this is done by
IRDA India (Insurance Regulatory & Development Authority of India).
insurance
expense
The amount that is recorded as payment of insurance, during an accounting period. This expense can also be accounted for in future
years if the payment remains the same.
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