Unaffiliated Investments: The Meaning And History

What are Unaffiliated Investments? Unaffiliated investments refer to investments made by a company or individual in entities that are not affiliated with them. These investments are typically made in companies or organizations that operate in different industries or sectors. Unlike affiliated investments, where the investor has some form of control …

Transfer of Risk Definition and Meaning in Insurance

What is Transfer of Risk? The transfer of risk is a fundamental concept in the insurance industry. It refers to the process of shifting the financial burden of potential losses from one party to another. In insurance, this transfer typically occurs through the purchase of an insurance policy. When an …

Open Cover Meaning Overview Requirements

What is Open Cover? Open Cover is a type of insurance policy that provides coverage for multiple shipments or goods over a specified period of time. It is commonly used in international trade and is particularly beneficial for businesses that regularly import or export goods. Unlike traditional insurance policies that …

Occurrence Policy Explained: How it Works, Pros and Cons

How the Occurrence Policy Works Unlike other types of insurance policies, such as claims-made policies, the occurrence policy provides coverage for claims based on when the incident occurred, rather than when the claim is made. This can be beneficial for policyholders, as it provides a greater level of certainty and …

Net Premium Definition Calculation vs Gross Premium

Net Premium Definition Calculation Net premium is a term used in the insurance industry to refer to the amount of money that an insurer charges a policyholder for coverage after deducting any expenses, such as commissions and administrative costs, from the gross premium. It represents the actual cost of insurance …

National Association of Insurance and Financial Advisors (NAIFA) – Empowering Professionals in the Insurance and Financial Industry

About NAIFA The National Association of Insurance and Financial Advisors (NAIFA) is a professional organization dedicated to empowering professionals in the insurance and financial industry. With a rich history spanning over a century, NAIFA has been at the forefront of advocating for the interests of its members and promoting ethical …

Mutual Insurance Company Definition and How They Invest

Mutual Insurance Company Definition A mutual insurance company is a type of insurance company that is owned by its policyholders. Unlike stock insurance companies, which are owned by shareholders, mutual insurance companies are operated for the benefit of their policyholders. In a mutual insurance company, policyholders are also considered members …

Mortality Table Definition Types and Uses

Mortality Table Definition Types of Mortality Tables There are different types of mortality tables, each designed for specific purposes: 1. Static Mortality Tables: These tables are based on historical data and provide mortality rates for a specific period of time. They are commonly used for pricing life insurance policies and …

Loss Development and its Working Mechanism

The Process and Mechanics of Loss Development in Corporate Insurance In the world of corporate insurance, loss development is a crucial aspect that insurers and risk managers need to understand. Loss development refers to the changes in the estimated cost of a claim over time. It is a dynamic process …

Loss Adjustment Expense (LAE) Definition How It Works and Types

Loss Adjustment Expense (LAE) Definition Loss Adjustment Expense (LAE) refers to the costs incurred by an insurance company in investigating, evaluating, and settling insurance claims. It is an essential component of the overall claims process and is separate from the actual claim payment made to the policyholder. When an insured …

Insurable Interest Explained: What It Is and Why It Matters

What is Insurable Interest? Insurable interest is a fundamental concept in the insurance industry. It refers to the financial or monetary stake that a person or entity has in the insured property or person. In simple terms, it means that you would suffer a financial loss if the insured property …

Gross Net Written Premium Income (GNWPI) Overview

Gross Net Written Premium Income (GNWPI) Overview [CORPORATE INSURANCE catname] Corporate Insurance is a specialized category of insurance that provides coverage for businesses and organizations. It includes various types of insurance policies such as property insurance, liability insurance, and employee benefits insurance. There are several factors that can affect the …

Gross Leverage Ratio Explained: And Calculating

Gross Leverage Ratio Explained The gross leverage ratio is a financial metric that is used to assess the financial health and risk of a company. It is calculated by dividing the company’s total debt by its total assets. The ratio provides insight into how much debt a company has relative …

Expected Loss Ratio ELR Method Overview Calculation Formulas

Expected Loss Ratio (ELR) Method Overview The Expected Loss Ratio (ELR) method is a commonly used approach in the insurance industry to estimate the potential losses that an insurer may incur. It is a key component in determining the premium rates for insurance policies. The ELR method involves calculating the …

Chances of Dying Each Year: How to Determine

Chances of Dying Each Year: How to Determine [CORPORATE INSURANCE catname] Factors Affecting Chances of Dying There are several risk factors that can influence an individual’s chances of dying each year. These factors include: Age: As individuals get older, the likelihood of experiencing health issues and mortality increases. Gender: Statistically, …

Carriage and Insurance Paid to CIP Definition and Example

What is CIP? CIP, or Carriage and Insurance Paid to, is an international trade term that defines the responsibilities and obligations of the seller and the buyer in a transaction. It is commonly used in contracts for the sale of goods, especially in international trade. Carriage and Insurance Paid to …

Both-To-Blame Collision Clause Meaning Overview Example

What is Both-To-Blame Collision Clause? The Both-To-Blame Collision Clause is a provision commonly found in marine insurance policies. It is designed to protect shipowners and charterers in the event of a collision between two vessels where both parties are partially at fault. This clause is particularly relevant in cases where …

Aleatory Contract Definition and Its Use in Insurance Policies

Aleatory Contract Definition and Its Use in Insurance Policies In the context of insurance policies, aleatory contracts are commonly used. Insurance policies are essentially contracts between an insurance company and an individual or business. The insurance company agrees to provide financial compensation or coverage in the event of a specified …

Administrative Services Only (ASO) – Definition, Pros and Cons

What is ASO? ASO, or Administrative Services Only, is a type of insurance arrangement where an employer self-funds their employee benefits plan and hires a third-party administrator (TPA) to handle the administrative tasks associated with the plan. Under an ASO arrangement, the employer takes on the financial risk of providing …

Actuarial Science: Definition and Examples of Application

What is Actuarial Science? Actuarial Science is a field of study that combines mathematics, statistics, and finance to assess and manage risk in various industries, particularly in the insurance sector. Actuaries, who are professionals trained in actuarial science, use mathematical models and statistical techniques to analyze and predict the likelihood …