A type of specialized self-insurance that allows employers to pay employees’ healthcare costs up to a certain, predetermined amount—and then rely on the insurer to make up the difference. Though some employers see this as a tactic for saving money, others end up spending much more than they would have using a group health insurance … Read more
An insurance company owned by its stockholders, who share in profits through earnings distributions and stock value increases. Insurance companies are generally classified as either mutual or stock companies. This is more of a traditional distinction, as true mutual companies are becoming rare. The difference between the two types of companies is that mutual companies … Read more
The portion of its liquid assets that an insurance company must hold, either as cash or marketable investments, in order to remain solvent and protect itself against investment loss. Holding a statutory reserve reduces the risk associated with insurance. However, it also leads to the loss of potential profits, as the money held in reserve … Read more
A category of auto insurance made up of average, low-risk drivers insured by companies that sell that type of insurance. Though some insurers specialize in high risk, or ‘non-standard’ auto insurance, many more offer standard auto and cover the average driver. Examples include State Farm, Allstate and Farmers Insurance. All insurance customers classified as standard … Read more
The financial stability of an insurance company that gives it the margin needed to pay policyholder claims. Some of the regulations used to gauge insurers’ solvency include minimum capital and surplus requirements, financial ratio tests and financial data disclosure. Basically, solvency represents the ability of an insurance company to cover its losses. In the short … Read more
An investment account established by a life insurance company that’s kept separate from other funds and used to pay for pension plans and other life products with variable rates of return. In the United States, a separate account provides security that allows investors to choose an investment vehicle according to their individual risk tolerance and … Read more
A place you can sell life insurance policies you no longer need for a percentage of their face value. A secondary market usually involves an insurance settlement company, which purchases your unneeded policy from you for an agreed-upon price. The investor then continues paying the premiums and collects the death benefit when you die. Demand … Read more
A list of items “scheduled” or covered under a home insurance policy. Schedules can list specific benefits, assets, charges, credits and other features that are unique to the policy, such as earthquake insurance. When an event occurs and damages an insured person’s home, a quick look at the schedule inside an insurance policy reveals whether … Read more
Insurance companies that come together to form an organization of self-insurers that’s chartered and licensed in at least one state to sell liability insurance. Risk retention groups are owner controlled and allow members to write liability insurance for any or all insurance types, excluding first party coverage such as property, workers compensation and personal lines … Read more
The process businesses go through that includes analyzing the pure risks they face, gauging the likelihood of financial loss involved in those risks, and taking steps to minimize or manage them through risk management. Some ways that companies handle risk management are through avoiding risk, retaining it, reducing or transferring it. This is usually accomplished … Read more