LOMA 290 Master Set

complaint team

A work group dedicated to resolving customer complaints. Also known as a problem resolution team.

agency contract

A written agreement between an agent and an insurance company that outlines the agent's role, compensation, and responsibilities to the insurance company.

budgeting

An accounting process that creates a flnancial plan of action designed to help an organization achieve its goals.

claim fraud

An action by which a person intentionally uses false information in an unfair or unlawful attempt to collect beneflts under an insurance policy.

career agent

An agent who is under a fulltime contract with one insurance company and sells primarily that company's life insurance products.

affiliated agent

An agent who sells primarily the products of a single insurance company. Also known as an agencybuilding agent.

arbitration

An alternative dispute resolution method in which impartial third parties, known as arbitrators, evaluate the facts in a legal dispute and render a decision that usually is binding on the parties.

commission

An amount of money, typically a percentage of the premiums paid for the sale of an insurance policy, that an insurer pays for selling and servicing an insurance or annuity policy.

accounting conservatism

An approach to financial reporting that typically understates the values for a company's assets, overstates the value of a company's liabilities and expenses, and projects a lower level of net income than would be the case if the company used a less conservative reporting method.

collateral

An asset that is pledged as security for a loan until the debt is paid.

classroom training

An employee training method in which an instructor lectures to a group of employees, leads the group in discussion, or directs the group members as they do various exercises, such as roleplaying.

basic accounting equation

An equation which states that a company's assets equal the sum of its liabilities and its capital and surplus.

arbitrator

An impartial third party who evaluates the facts in a legal dispute and renders a decision that is binding on the parties.

broker

An independent agent who does not have an exclusive contract with any single insurer or speciflc obligations to sell a single insurer's products. Also known as an agentbroker.

agent

An independent sales representative or company employee who is authorized under the terms of an agency contract to act on behalf of an insurance company in selling insurance products.

chief operating officer (COO)

An individual who manages the daytoday operations of a company.

chief flnancial officer (CFO)

An individual who oversees an insurer's flnancial management policies and functions.

claim analyst

An insurance company employee who is trained to review individual claims and determine the company's liability under each claim. Also known as a claim examiner, claim adjustor, claim approver, or claim specialist.

buy-and-hold strategy

An investment strategy under which investment staff carefully select securities and expect to hold them for long periods, or until they mature, are prepaid, or default.

active management strategy

An investment strategy under which investment staff view any investment in a portfolio as potentially tradable, if trading the investment would improve the investment portfolio's performance.

centralized organization

An organization in which top management retains most of the decisionmaking authority for the entire company.

business intelligence (BI)

An organized collection of hardware, software, databases, and procedures that uses information taken from a company's transaction processing systems and databases to support decision making.

churning

An unfair sales practice in which a producer induces a customer to replace one life insurance policy or annuity contract with another product, multiple times, so that the producer can earn a series of flrstyear commissions on the replacements.

asset

Any item of value owned by a company.

cash flow

Any movement of cash into or out of an organization.

advertising

Any paid form of non-personal communication or promotion about a company or its products or services that an identified sponsor generates and transmits through any type of media.

claimant's statement

See claim form.

alternative dispute resolution (ADR) method

Formal or informal negotiations to resolve a legal dispute.

application software

Computer programs that help users perform specific tasks or solve particular problems.

antivirus software

Computer software that detects computer viruses and works to prevent them from destroying data and other computer programs.

claimant

A person—usually a beneflciary or policyowner—who submits a life insurance policy claim to the insurance company.

Canadian Securities Association (CSA)

A Canadian association whose mission is to develop a national system of harmonized securities regulation throughout Canada.

call provision

A bond provision that states the conditions under which the bond issuer has the right to require the bondholder to sell the bond back to the issuer at a date earlier than the maturity date.

collateralized mortgage obligation (CMO)

A bond secured by a pool of residential mortgage loans.

automatic call distributor (ACD)

A computer telephony integration device that, at the most basic level, answers telephone calls and directs them to a specifled employee or work group, or to a recorded message.

agent's statement

A portion of an insurance application in which a producer may report additional information that he thinks could affect the underwriting decision.

automatic payment plan

A premium payment plan under which the policyowner designates a bank account from which the insurer will make regular withdrawals and either use the withdrawn funds to pay the policyowner's life insurance premiums or deposit the withdrawn money as additional contributions into the policyowner's annuity.

claim form

A document containing information about a loss under an insurance policy that is submitted to an insurer to begin the claim evaluation process. Also known as a claimant's statement.

certificate of insurance

A document that describes (1) the coverage that the master group insurance contract provides and (2) the group insured's rights under the contract.

certificate of authority

A document that grants an insurer the right to conduct an insurance business and sell insurance products in the jurisdiction that grants the certiflcate. Also known as a license.

annual report

A financial document that the management of a company sends to interested parties—such as stockholders and investors—to report on the company's financial performance during the preceding year; helps users assess a company's profitability and financial strength.

aggressive financial strategy

A financial management strategy that emphasizes taking risks to enhance a company's profitability.

Annual Statement

A financial statement that every insurer in the United States must file with the National Association of Insurance Commissioners (NAIC) and the insurance regulatory organization in each state in which the insurer conducts business; helps regulators assess a company's solvency.

balance sheet

A flnancial document that lists the values of a company's assets, liabilities, and capital and surplus as of a speciflc date.

broker-dealer

A flnancial institution that buys and sells securities either for itself or for its customers and provides information and advice to customers regarding the purchase and sale of securities.

budget

A flnancial plan of action, expressed in monetary terms, that covers a specifled period, such as one year.

cash flow statement

A flnancial statement that provides information about a company's cash receipts (inflows), cash disbursements (outflows), and the net change in cash (the difference between cash inflows and cash outflows) during a specifled accounting period.

code of conduct

A formal statement of a company's values and its expectations for how its employees should behave in the course of business. Also known as a code of business conduct or a code of ethics.

board of directors

A group of individuals who are responsible for overseeing the management of a corporation; the top level of management.

committee

A group of people chosen to consider, investigate, or act on matters of a speciflc type.

advanced underwriting

A group of specialists who will assist a producer in preparing sales proposals, and will accompany the producer, if requested, to sales presentations on how to use insurance products in a financial plan or estate planning.

bond rating

A letter grade that a bond rating agency assigns to indicate the quality of a bond issue.

cash inflow

A movement of cash into an organization. Also known as a source of funds.

cash outflow

A movement of cash out of an organization. Also known as a use of funds.

benchmarking

A process by which a company compares its own performance, products, or services with those of other organizations that are recognized as the best in a particular category in order to identify areas for organizational improvement.

attending physician's statement (APS)

A report by a physician who has treated or is currently treating a proposed insured. Also known as a medical attendant's report (MAR).

bond

A security that represents a debt that a borrower (the issuer of the bond) owes to the bondholder (the person or company that buys the bond).

capital and surplus ratio

A solvency ratio that describes the relationship between an insurer's capital and surplus and its liabilities.

claim philosophy

A statement of the principles the insurer will follow when conducting claim administration.

cloud computing

A subscriptionbased or payperuse service that, in real time over the Internet, provides access to networks, platforms, applications, or other IT elements that can extend an IT department's existing capabilities.

accidental death benefit

A supplementary life insurance policy benefit under which the insurer pays an amount of money in addition to the basic death benefit if the insured dies as a result of an accident.

accounting

A system or set of rules and methods for collecting, recording, analyzing, summarizing, and reporting financial information.

audit

A systematic examination and evaluation of a company's records, procedures, and controls.

clickwrap

A technology in which an insurance applicant clicks a secure webbased "I agree" or "I accept" button on an electronic insurance application.

ad hoc committee

A temporary committee that company executives establish for a specific purpose. Also known as a project team or task force.

bancassurance

A term used, outside of the United States, to describe the distribution of insurance products to bank customers through a bankafflliated insurer.

company limited by shares

A type of company in which the owners' liability is limited to the investment they made when they purchased shares of the company's stock.

company limited by guarantee

A type of company whose owners agree to pay the obligations of the company up to a stated amount if the company is liquidated.

aptitude test

A type of preemployment test that attempts to determine a job candidate's intelligence level and reasoning ability by evaluating how well the candidate can do such things as remembering details, solving problems, and understanding and using words correctly. Also known as a cognitive abilities test.

behavioral tendencies test

A type of preemployment test that attempts to discover a job applicant's typical job behaviors, such as: Is the person a team playerfl Can the person remain calm under pressurefl Is the person honestfl Also known as a personality test.

common stock

A type of stock that entitles its owners to share in the company's dividend payments.

business analytics

Business intelligence tools that combine technologies, applications, and processes as well as statistical and quantitative analysis to help management make decisions or solve problems.

accountability

In a company, the obligation of employees to answer to the employer for how well they carry out their responsibilities.

authority

In a company, the right of an employee to make decisions, take action, and direct others to fulflll responsibilities.

Buyer's Guide

In the United States, a publication that explains to customers how to determine how much life insurance coverage they need, describes the various types of life insurance policies, and educates customers about how to compare the costs of similar types of policies.

admitted asset

In the United States, an asset whose full value can be reported on the Assets page of the Annual Statement.

audit log

In underwriting, a record of the work completed on a case.

collaborative software

Software programs that provide a work team, that may be geographically dispersed, with the tools to communicate, collaborate, and problemsolve over the Internet.

claim practices

Statements that guide claim department employees in the daytoday handling of claims.

capital loss

The amount by which the selling price of an investment is less than its purchase price.

capital gain

The amount by which the selling price of an investment is more than its purchase price.

account

The basic tool that a company uses to record, group, and summarize similar types of financial transactions.

annuity date

The date on which an insurer begins to make periodic income payments under an annuity contract.

capital

The excess of a company's assets over its liabilities.

chief executive officer (CEO)

The head of a company who is appointed by the company's board of directors.

claim administration

The insurance function that is responsible for evaluating, processing, and paying valid claims for contractual beneflts that policyowners or beneflciaries present. Also known as claim adjudication, claim handling, claim processing, or claim servicing.

antiselection

The tendency of people who believe they have a greaterthanaverage likelihood of loss to seek insurance protection to a greater extent than do those who believe they have an average or a lessthanaverage likelihood of loss. Also known as adverse selection.

chain of command

The organizational structure that identifles who reports to whom in the company, and supports the delegation of authority.

compensation

The payment of money by an employer to an employee for work performed.

chief auditor

The person within a company who oversees audits and internal controls for the company's flnancial operations.

chief compliance officer (CCO)

The person within an insurance company who is responsible for overseeing and managing the company's compliance with regulatory requirements and internal policies and procedures.

assetliability manager

The position within an insurance company responsible for monitoring the investments for a specific line of the insurer's business and making sure funds are available when needed to support that line. Also known as an asset manager.

assetliability management (ALM)

The practice of coordinating the administration of an insurer's asset portfolio (its investments) with the administration of its liability portfolio (its obligations to customers) so as to manage risk and still earn an adequate level of return.

appoint

The process by which an insurer officially notifies regulators that it is authorizing a person to sell insurance on its behalf.

asset valuation

The process of calculating the monetary values for assets.

claim investigation

The process of obtaining the additional information necessary to make an appropriate claim decision.

cold calling

The process of telephoning or visiting prospects with whom a producer has had no prior contact.

complaint management system

The processes and procedures for recording, evaluating, and taking action on complaints.

amortization

The reduction of a debt by regular payments of principal and interest that result in full payment of the debt by the maturity date.

chief technology officer (CTO)

Within a company, the individual who is responsible for developing and implementing a technology strategy for the entire organization, including its processes, information, and information technology assets. Also known as a chief architect or enterprise architect.