The insurance lexicon.

Accelerated underwriting issues fully underwritten life insurance without exams or fluids for applicants whose data — prescription histories, MIB, motor vehicle records — supports a confident assessment. Applicants who do not qualify route into traditional underwriting; the mortality standard is unchanged, only the friction is removed.

An appointment is a carrier's formal authorisation, filed with a state regulator, for a specific producer to sell its products in that state. Appointments must be maintained and renewed; business submitted by an unappointed producer exposes the carrier to regulatory action.

An APS is a report from an applicant's or claimant's doctor summarising their medical history, requested during life or disability underwriting and claims. APS retrieval is a classic cycle-time bottleneck — often weeks — which is why evidence orchestration and AI summarisation target it first.

A binding authority (delegated authority agreement) is the contract in which a carrier grants an MGA or coverholder the power to bind coverage on its behalf, defining permitted classes, territories, limits, exclusions, referral triggers and capacity. Business bound inside the authority is automatically the carrier's risk.

A bordereau (plural bordereaux) is the periodic detailed report a delegated-authority holder delivers to its carrier: premium bordereaux list every risk bound with its premium and commission; claims bordereaux list every claim with reserves and payments. It is how carriers book, reserve and report delegated business.

Bornhuetter-Ferguson is a reserving method that blends an expected loss ratio with actual emerging experience, shifting weight toward experience as an accident year matures. It is the standard choice for immature years, tempering the Chain Ladder's leverage on green data.

Capacity is the maximum amount of premium or exposure a carrier makes available to a programme, treaty or market — the size of the pen. MGAs track written premium against capacity in real time; exceeding it is a serious breach of authority.

A case reserve is the adjuster's estimate of what an individual open claim will ultimately cost, set claim by claim as facts develop. Case reserves plus IBNR make up an insurer's total loss reserves.

A cession is the portion of risk and premium a cedent transfers to a reinsurer under a reinsurance arrangement. The ceding commission flowing back compensates the cedent for acquisition costs; ceded premium and recoveries must be tracked precisely for accounting and capital credit.

The Chain Ladder is a reserving method that computes age-to-age development factors from historical triangles and projects each accident year to its ultimate cost. It is reliable for mature, stable books but highly leveraged for recent years, where small early fluctuations get multiplied through the projection.

The combined ratio is the loss ratio plus the expense ratio: claims and costs as a share of earned premium. Below 100% the underwriting operation is profitable before investment income; above 100% the insurer is paying out more than it earns in premium.

A clawback is the recovery of commission already paid to a producer when the underlying policy lapses or is cancelled within a chargeback period. Clawbacks protect carriers from paying full acquisition compensation on business that never persisted, and reconciling them accurately is a chronic pain point in commission accounting.

The Contractual Service Margin is the unearned profit embedded in a group of insurance contracts under IFRS 17. It sits on the balance sheet at inception and is released to the income statement as the insurer provides coverage, ensuring profit is recognised over time rather than up front.

A development triangle arranges claims by the period the loss occurred (accident year) and tracks their cumulative paid or incurred value at successive evaluation ages. The pattern of how losses mature across the triangle is the empirical basis for most loss-reserving methods.

Dunning is the structured sequence of reminders and notices an insurer sends to collect overdue premium before cancelling for non-payment. Effective dunning balances collection against retention — and must comply with state-specific notice periods before a non-pay cancellation is valid.

Earned premium is the portion of written premium corresponding to coverage already provided: a 12-month policy earns one-twelfth of its premium each month. The unearned remainder sits as a liability, and loss and combined ratios are computed against earned, not written, premium.

An endorsement is an amendment to an in-force policy that changes its terms — coverage, limits, insured property, named parties — effective from a specified date. Endorsement processing is the highest-volume servicing transaction in policy administration, and mid-term endorsements require precise premium proration.

An experience study compares an insurer's actual outcomes — mortality, lapse, morbidity, loss frequency — against the assumptions used in pricing and valuation, usually as actual-to-expected ratios by cohort. Studies are how assumptions stay honest: material deviations feed updated assumption sets for pricing, reserving and valuation.

Facultative reinsurance is negotiated risk by risk: the cedent offers an individual risk — typically large, unusual, or above treaty limits — and the reinsurer underwrites it separately and may accept or decline. Facultative referrals are a routine step in underwriting large cases.

First notice of loss is the initial report to an insurer that a loss has occurred and a claim may follow. It is the moment the claims process starts, and the quality of data captured at FNOL — structured, complete, machine-readable — largely determines how much of the claim can be automated afterwards.

IFRS 17 is the global accounting standard for insurance contracts, effective from 2023, that measures insurance liabilities at current value and releases profit over the coverage period through the Contractual Service Margin. It replaced the inconsistent practices allowed under IFRS 4.

IBNR is the reserve for losses that have already occurred but have not yet been reported to the insurer, plus expected development beyond current case estimates. Because the claims are unknown individually, IBNR is estimated actuarially from development triangles rather than set claim by claim.

The lapse rate is the share of policies terminated by non-payment or surrender in a period. Lapse assumptions drive life insurance profitability in both directions — early lapses forfeit acquisition costs, while on some products low lapses increase long-term liabilities — making persistency one of the most-watched metrics in the industry.

The loss ratio is incurred losses divided by earned premium — the share of premium consumed by claims. It is the core profitability measure of an insurance book; combined with the expense ratio it forms the combined ratio.

An MGA is an intermediary granted delegated authority by a carrier to underwrite, price, bind and administer insurance on the carrier's paper, usually in a specialty niche. The MGA supplies expertise and distribution; the carrier supplies capital and licences — with bordereaux reporting holding the relationship together.

Market conduct is the regulatory oversight of how insurers treat customers — sales practices, underwriting fairness, claims handling, complaints. US state regulators run market conduct exams that demand evidence across these areas; findings drive fines, remediation orders and reputational damage.

A mortality table gives the probability of death at each age for a defined population, and is the foundational input to life insurance pricing and valuation. Carriers start from industry tables (such as the CSO tables used in US statutory valuation) and adjust for their own experience.

The NAIC's model bulletin on the use of artificial intelligence systems by insurers sets state regulators' expectations: a written AI programme with senior accountability, lifecycle controls proportionate to each use's risk, oversight of third-party AI, and evidence available for market-conduct exams. A majority of US states have adopted it or an equivalent.

The Own Risk and Solvency Assessment is an insurer's own forward-looking evaluation of all material risks and the capital needed to support them over its business-planning horizon. Required under Solvency II and the NAIC framework, the ORSA links strategy to capital and is reported to the board and the regulator.

Persistency is the share of policies that remain in force over time — the complement of lapse. Thirteen-month persistency is a standard early-quality measure for new life business, reflecting both the sale's suitability and the effectiveness of onboarding and billing.

A producer is any licensed person or firm that sells or negotiates insurance — agents, brokers and their agencies. Producers must hold a state license for each line they sell and, for most carriers, an active appointment; selling without either is a compliance violation for both producer and carrier.

Reinstatement restores a lapsed or cancelled policy to in-force status, typically requiring payment of outstanding premium and, for life insurance after a longer lapse, fresh evidence of insurability. Reinstatement rules and windows are defined by policy terms and state regulation.

Reinsurance is insurance for insurers: a carrier (the cedent) transfers part of its risk to a reinsurer in exchange for premium. It stabilises results, protects against catastrophes and large losses, and frees capital to write more business.

Retention is the amount of risk an insurer keeps for its own account before reinsurance applies — per risk, per event, or in aggregate. Setting retention is a capital decision: too low wastes margin on reinsurance premium, too high exposes results to volatility.

RBC is the NAIC's US capital adequacy framework: a formula-driven minimum capital reflecting each insurer's asset, underwriting and operational risk profile. An insurer's ratio of actual capital to RBC determines regulatory intervention levels, from company action up to mandatory control.

Salvage is the value an insurer recovers from damaged property it takes ownership of after paying a total-loss claim — a wrecked car sold at auction, recovered stolen goods. Salvage and subrogation together are the recovery side of claims, offsetting incurred losses.

The Solvency Capital Requirement is the amount of capital a Solvency II insurer must hold to withstand a 1-in-200-year loss over one year. It can be computed with the regulator's standard formula or an approved internal model, and falling below it triggers escalating supervisory intervention.

Solvency II is the European Union's prudential regime for insurers, built on three pillars: risk-based capital requirements (Pillar 1), governance and the Own Risk and Solvency Assessment (Pillar 2), and disclosure and reporting (Pillar 3). It requires insurers to hold capital calibrated to a 99.5% one-year confidence level.

The SIU is the insurer's team of investigators who handle claims suspected of fraud. Claims are referred to SIU by adjusters or, increasingly, by fraud-scoring models and network analysis; many jurisdictions require insurers to maintain an SIU and report suspected fraud to authorities.

Straight-through processing settles a claim — or issues a policy — entirely automatically, with no human touch between intake and completion. In claims, STP combines coverage verification, document intelligence and fraud screening behind a confidence gate, so only claims the system can decide safely go straight through.

Subrogation is the insurer's right, after paying a claim, to step into the policyholder's shoes and recover the loss from the third party who caused it — for example, recovering an auto payout from the at-fault driver's insurer. Missed subrogation is one of the largest sources of claims leakage.

Surplus lines insurance is coverage placed with non-admitted insurers — carriers not licensed in the insured's state — for risks the admitted market will not write. It is subject to its own broker licensing, diligent-search, tax and filing requirements, and is a staple of the MGA and specialty market.

TCF is the conduct principle — formalised by the UK FCA and echoed in fairness regimes worldwide — that insurers must deliver fair outcomes to customers across the product lifecycle: suitable products, clear information, fair claims handling and no unreasonable barriers. Evidence of outcomes, not policy statements, is what regulators inspect.

Treaty reinsurance covers an entire defined book of business automatically: every risk meeting the treaty's terms is ceded without individual negotiation. Treaties are the workhorse of reinsurance programmes, agreed annually between cedent and reinsurers.

Underwriting is the process of evaluating a risk, deciding whether to insure it, and on what terms and price. In Life it weighs medical and financial evidence; in P&C it weighs exposure, loss history and hazard data. The underwriter's mandate is codified in guidelines, authority limits and rating rules.

Unfair claims practices acts — adopted in some form by every US state from the NAIC model — prohibit conduct such as misrepresenting policy provisions, failing to acknowledge or investigate claims promptly, and not attempting fair settlement when liability is clear. They are the legal baseline every claims operation, automated or manual, must evidence compliance with.