Insurer

Annual Statement

A detailed financial report that an insurance company must submit every year to the insurance department of state(s) in which it conducts business.

Certificate of Authority

A document that authorizes a company to start conducting business and specifies the kind(s) of insurance a company can transact. It is illegal for an insurance company to transact insurance without this certificate.

Surrender

An act of giving up a life policy, in which the insurer will pay the insured the cash value the policy has built up.

Fiduciary

An agent/broker who handles insurer's funds in a trust capacity.

Coinsurance

An agreement between an insurer and insured in which both parties are expected to pay a certain portion of the potential loss and other expenses.

Reserve

An amount representing actual or potential liabilities kept by an insurer in a separate account to cover debts to policyholders.

Insurer

An entity that indemnifies against losses, provides benefits, or renders services (also known as "company" or "insurance company").

Agent

An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer.

Admitted (Authorized) Insurer

An insurance company authorized and licensed to transact business in a particular state.

Authorized (Admitted) Insurer

An insurance company authorized and licensed to transact business in a particular state.

Domestic Insurer

An insurance company that conducts business in the state of incorporation.

Nonadmitted (Nonauthorized)

An insurance company that has not applied for, or has applied and been denied a Certificate of Authority and may not transact insurance in a particular state.

Nonauthorized (Nonadmitted)

An insurance company that has not applied for, or has applied and been denied a Certificate of Authority and may not transact insurance in a particular state.

Foreign Insurer

An insurance company that is incorporated in another state.

Alien Insurer

An insurance company that is incorporated outside the United States.

Agency

An insurance sales office or company.

Rate Service Organization

An organization that is formed by, or on behalf of, a group of insurers to develop rates for those insurers, and to file the rates with the insurance department on behalf of its members. They may also act as a collection point for actuarial data.

Coercion

An unfair trade practice in which an insurer uses physical or mental force to persuade an applicant to buy insurance.

Defamation

An unfair trade practice in which one agent or insurer makes an injurious statement about another with the intent of harming the person's or company's reputation.

Domicile of Insurer

Insurer's location of incorporation and the legal ability to write business in a state.

Legal Reserve

The accounting measurement of an insurer's future obligations to pay claims to policy owners.

Apparent Authority

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Commission

The payment made by insurers to agents or brokers for the sale and service of policies.

Underwriting

The process of reviewing, accepting or rejecting applications for insurance.

Persistency

The tendency or likelihood of insurance policies not lapsing or being replaced with insurance from another insurer.

Reinsurance

A form of insurance whereby one insurance company (the reinsurer) in consideration of a premium paid to it, agrees to indemnify another insurance company (the ceding company) for part or all of its liabilities from insurance policies it has issued.

Certificate of Insurance

A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided.

Policy Loan

A nonforfeiture value in which an insurer loans a part or all of the cash value of the policy assigned as security for the loan to the policy owner.

Underwriter

A person who evaluates and classifies risks to accept or reject them on behalf of the insurer.

Errors and Omissions Policy (E&O)

A professional liability insurance that protects the insurer from claims by the insured for errors or oversights on the part of the insurer.

Physical Exam and Autopsy

A provision that allows an insurer, at its own expense, to have an insured physically examined when a claim is pending or to have an autopsy performed where not prohibited by law.

Notice of Claim

A provision that spells out an insured's duty to provide the insurer with reasonable notice in the event of a loss.

Coinsurance Clause

A provision that states that the insurer and the insured will share the losses covered by the policy in a proportion agreed upon in advance.

Nonrenewal

A termination of a policy by an insurer on the anniversary or renewal date.