Tax treatment depends upon type of captive, premium volume, and investment income.

A clause in a policy stating that after a policy has been in effect for a given length of time (generally one or two years),

Ratio applied to losses at one retention level (e.g. $1,000,000 per occurrence) to determine expected losses at another retention level (e.g., $5,000,000).

Represents the liability for unpaid claims not reflected in the case reserve estimates for individual losses. The two components to IBNR reserves are pure IBNR

Expenses not yet paid. Can also include paid expenses in some accounting systems.

Portion of an earned premium dollar that is spent on incurred losses.

1) The total amount of paid claims and loss reserves associated with a particular period of time (usually a policy year). Generally, incurred losses are

Affirmative assumption of the financial consequences for liabilities of another through a contract. See Indemnification agreement.

To make compensation to an entity for incurred hurt, loss, or damage; restore to original position.

The party that is relieved of liability assumed by the indemnitor.

The party that assumes the liability inherent in a situation.

Restoring an injured party to the financial position they enjoyed prior to a loss; reimbursing an injured party suffering loss for the amount of the

Also known as “fee-for-service plans”, provide a specified payment for medical services rendered regardless of the actual charges.

Organization or a person hired by an insurer and paid a fee for settling claims.

A system of marketing insurance that involves self-employed parties (independent contractors (agents)) who enter into contracts with usually more than one insurer to represent the

Individual or entity that agrees to perform specific work for another but is not subject to direction or management by the person who contracted for

Physicians that retain their individual practices and separate offices but belong to a legal entity for contracting purposes with HMOs.

Contracts where the policy owner can share in a percentage of the growth of an indexed investment (a mutual fund tied to the Standard &

What is an Indexed Ultimate Total Loss? Answer: Indexed Ultimate Total Loss are incurred losses that have been developed (trended) and indexed (adjusted) for inflation.

Amount of premium calculated for any one period using the retrospective rating formula.

A loss or damage that results from an insured’s inability to use his/her property because of direct loss to the property of others.

Health insurance that is typically purchased by individuals who are self-employed, unemployed or work for a company that does not offer employee health benefits.

A self-directed, tax-deferred retirement investment account established by employed workers who earn a salary, wage, or self-employment income. An individual may establish an IRA account

Premium loading to provide for future increases in claims costs and loss payments resulting from inflation.

A feature that increases the amount of an insurance benefit by a fixed percentage automatically every year, to adjust for inflation.