A ratio that measures an insurer's overall pretax operational profitability from underwriting and investment activities, calculated by subtracting the investment income ratio from the combined ratio.
What is Operating Ratio?
100
The most often-cited measure of underwriting success.
What is Combined Ratio?
100
An organization that provides administrative services associated with risk financing and insurance.
What is Third Party Administrator?
100
A subsidiary formed to insure the loss exposures of its parent company and the parent’s affiliates.
What is captive insurer?
100
The amount of business an insurer is able to write, based on a comparison of the insurer’s written premiums to its policyholders’ surplus.
What is capacity?
200
This is an optional insurance pricing approach that uses a premium base other than the one specified in the rating manual to price an entire account.
What is Composite Rating?
200
An internal document that sets out an organization’s long-term corporate goals, objectives, and strategic initiatives and that is used by the organization to align its budget structure with its organizational priorities, missions, and objectives.
What is Strategic Plan?
200
An adjustment to loss data for a change in general economic conditions, such as inflation.
What is Trend Factor?
200
A ratemaking technique that adjusts the insured’s premium for the upcoming policy period based on the insured’s experience for the current period.
What is Experience Rating?
200
An amount paid by the reinsurer to the primary insurer to cover part or all of the primary insurer's policy acquisition expenses.
What is Ceding Commission?
300
The reasons the insurance market begins hardening
What are insurers increasing premiums and limiting the risks they will insure?
300
These statistical and analytical techniques are used to develop models that predict future events or behaviors.
What is Predictive Analytics?
300
An estimate of a commercial account’s future expected losses for the upcoming policy period based on past losses.
What is Loss Pick?
300
The primary purpose of a large deductible plan.
What is lower premiums?
300
A type of insurance-linked security that is specifically designed to transfer insurable catastrophe risk to investors.
What is Catastrophe Bond?
400
An extension of the insurer’s mission statement that translates the mission statement into a strategy that determines the insurer’s book of business.
What is Underwriting Policy?
400
The formula for calculating underwriting profit or loss
What is Earned Premium – Incurred Losses – Underwriting Expenses?
400
The final paid amount for all losses in an accident year.
What is Ultimate Loss?
400
A type of retention in which an organization pays for losses with its cash flow and/or current assets and generally keeps no record of losses.
What is Informal Retention?
400
A group of insurers or reinsurers involved in joint underwriting to insure major risks beyond the capacity of a single insurer or reinsurer. Each member accepts predetermined shares of premiums, losses, expenses, and profits.
What is Reinsurance Syndicate?
500
This guide enables underwriting management to control coverage limits accepted by underwriters.
What is Line Authorization Guide?
500
This is a type of group marketing that targets various groups based on profession, association, interests, hobbies, and attitudes.
What is affinity marketing?
500
This loss development method provides a more complete picture of losses by including an amount estimated for IBNR losses.
What is Bornhuetter-Ferguson (B-F)?
500
A licensed insurer that issues an insurance policy and reinsures the loss exposures back to a captive insurer owned by the insured organization.
What is Fronting Company?
500
A limited-existence Special Purpose Vehicle, often formed as an independent company, that provides a primary insurer additional capacity to write property catastrophe business or other short-tail lines through a quota share agreement with private investors.