| term |
description |
| ADMITTED ASSETS |
Assets recognized and accepted by state insurance laws in determining the solvency of insurers and reinsurers. To make it easier to assess an insurance companys financial position, state statutory accounting rules do not permit certain assets to be included on the balance sheet. Only assets that can be easily sold in the event of liquidation or borrowed against, and receivables for which payment can be reasonably anticipated, are included in admitted assets. (See Assets ) |
| ADMITTED COMPANY |
An insurance company licensed and authorized to do business in a particular state. |
| ADVERSE SELECTION |
The tendency of those exposed to a higher risk to seek more insurance coverage than those at a lower risk. Insurers react either by charging higher premiums or not insuring at all, as in the case of floods. (Flood insurance is provided by the federal government but sold mostly through the private market.) In the case of natural disasters, such as earthquakes, adverse selection concentrates risk instead of spreading it. Insurance works best when risk is shared among large numbers of policyholders. |
| AFFINITY SALES |
Selling insurance through groups such as professional and business associations. |
| AFTERMARKET PARTS |
See Crash parts; Generic auto parts |
| AGENCY COMPANIES |
Companies that market and sell products via independent agents. |
| AGENT |
Insurance is sold by two types of agents: independent agents, who are self-employed, represent several insurance companies and are paid on commission; and exclusive or captive agents, who represent only one insurance company and are either salaried or work on commission. Insurance companies that use exclusive or captive agents are called direct writers. |
| ALIEN INSURANCE COMPANY |
An insurance company incorporated under the laws of a foreign country, as opposed to a foreign insurance company which does business in states outside its own. |
| ALLIED LINES |
Property insurance that is usually bought in conjunction with fire insurance; it includes wind, water damage and vandalism coverage. |
| ALTERNATIVE DISPUTE RESOLUTION / ADR |
An alternative to going to court to settle disputes. Methods include arbitration, where disputing parties agree to be bound to the decision of an independent third party, and mediation, where a third party tries to arrange a settlement between the two sides. |