C

Question 1

Capital and Surplus

Answer 1

a company’s assets minus its liabilities.

Question 2

Capital and Surplus Requirement

Answer 2

statutory requirement ordering companies to maintain their capital and surplus at an amount equal to or in excess of a specified amount to help assure the solvency of the company by providing a financial cushion against expected loss or misjudgments and generally measured as a company’s admitted assets minus its liabilities, determined on a statutory accounting basis.

Question 3

Capital Gains (Loss)

Answer 3

excess (deficiency) of the sales price of an asset over its book value. Calculated on the basis of original cost adjusted, as appropriate, for accrual of discount or amortization of premium and for depreciation.

Question 4

Captive Agent

Answer 4

an individual who sells or services insurance contracts for a specific insurer or fleet of insurers.

Question 5

Captive Insurer

Answer 5

an insurance company established by a parent firm for the purpose of insuring the parent’s exposures.

Question 6

Carrying Value (Amount)

Answer 6

the SAP book value plus accrued interest and reduced by any valuation allowance and any non-admitted adjustment applied to the individual investment.

Question 7

Cash

Answer 7

a medium of exchange.

Question 8

Cash Equivalent

Answer 8

short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Investments with original maturities of three months or less qualify under this definition.

Question 9

Casualty Insurance

Answer 9

a form of liability insurance providing coverage for negligent acts and omissions such as workers compensation, errors and omissions, fidelity, crime, glass, boiler, and various malpractice coverages.

Question 10

Catastrophe Bonds

Answer 10

Bonds issued by an insurance company with funding tied to the company’s losses from disasters, or acts of God. A loss exceeding a certain size triggers a reduction in the bond value or a change in the bond structure as loss payments are paid out of bond funds.

Question 11

Catastrophe Loss

Answer 11

a large magnitude loss with little ability to forecast.

Question 12

Ceded Premium

Answer 12

amount of premium (fees) used to purchase reinsurance.

Question 13

Ceding Company

Answer 13

an insurance company that transfers risk by purchasing reinsurance.

Question 14

Change in Valuation Basis

Answer 14

a change in the interest rate, mortality assumption or reserving method or other factors affecting the reserve computation of policies in force.

Question 15

Chartered Life Underwriter (CLU)

Answer 15

a professional designation awarded by the American College to persons in the life insurance field who pass a series of exams in insurance, investment, taxation, employee benefit plans, estate planning, accounting, management, and economics.

Question 16

Chartered Property Casualty Underwriter (CPCU)

Answer 16

a professional designation awarded by the American Institute of Property and Casualty Underwriters to persons in the property and liability insurance field who pass a series of exams in insurance, risk management, economics, finance, management, accounting, and law. Designates must also have at least three years experience in the insurance business or related field.

Question 17

Claim

Answer 17

a request made by the insured for insurer remittance of payment due to loss incurred and covered under the policy agreement.

Question 18

Claims Adjustment Expenses

Answer 18

costs expected to be incurred in connection with the adjustment and recording of accident and health, auto medical and workers’ compensation claims.

Question 19

Claims-Made Form

Answer 19

a type of liability insurance form that only pays if the both event that causes (triggers) the claim and the actual claim are submitted to the insurance company during the policy term.

Question 20

Class Rating

Answer 20

a method of determining rates for all applicants within a given set of characteristics such as personal demographic and geographic location.

Question 21

Collar

Answer 21

an agreement to receive payments as the buyer of an Option, Cap or Floor and to make payments as the seller of a different Option, Cap or Floor.

Question 22

Collateral Loans

Answer 22

unconditional obligations for the payment of money secured by the pledge of an investment.

Question 23

Collateralized Bond Obligations (CBO)

Answer 23

an investment-grade bond backed by a pool of low-grade debt securities, such as junk bonds, separated into tranches based on various levels of credit risk.

Question 24

Collateralized Mortgage Obligations (CMO)

Answer 24

a type of mortgage-backed security (MBS) with separate pools of pass-through security mortgages that contain varying classes of holders and maturities (tranches) with the advantage of predictable cash flow patterns.

Question 25

Combinations

Answer 25

a special form of package policy composed of personal automobile and homeowners insurance.

Question 26

Combined Ratio

Answer 26

an indication of the profitability of an insurance company, calculated by adding the loss and expense ratios.

Question 27

Commencement Date

Answer 27

date when the organization first became obligated for any insurance risk via the issuance of policies and/or entering into a reinsurance agreement. Same as “effective date” of coverage.

Question 28

Commercial Earthquake

Answer 28

earthquake property coverage for commercial ventures.

Question 29

Commercial Farm and Ranch

Answer 29

a commercial package policy for farming and ranching risks that includes both property and liability coverage. Coverage includes barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.

Question 30

Commercial Flood

Answer 30

separate flood insurance policy sold to commercial ventures.

Question 31

Commercial General Liability

Answer 31

flexible and broad commercial liability coverage with two major sub-lines: premises/operations sub-line and products/completed operations sub-line.

Question 32

Commercial Mortgage-Backed Securities

Answer 32

a type of mortgage-backed security that is secured by the loan on a commercial property.

Question 33

Commercial Multiple Peril

Answer 33

policy that packages two or more insurance coverages protecting an enterprise from various property and liability risk exposures. Frequently includes fire, allied lines, various other coverages (e.g., difference in conditions) and liability coverage. Such coverages would be included in other annual statement lines, if written individually.

Question 34

Commercial Package Policy

Answer 34

provides a broad package of property and liability coverages for commercial ventures other than those provided insurance through a business owners policy.

Question 35

Commercial Property

Answer 35

property insurance coverage sold to commercial ventures.

Question 36

Commission

Answer 36

a percentage of premium paid to agents by insurance companies for the sale of policies.

Question 37

Community Rating

Answer 37

a rating system where standard rating is established and usually adjusted within specific guidelines for each group on the basis of anticipated utilization by the group’s employees.

Question 38

Company Code

Answer 38

a five-digit identifying number assigned by NAIC, assigned to all insurance companies filing financial data with NAIC.

Question 39

Comprehensive General Liability (CGL)

Answer 39

coverage of all business liabilities unless specifically excluded in the policy contract.

Question 40

Comprehensive Personal Liability

Answer 40

comprehensive liability coverage for exposures arising out of the residence premises and activities of individuals and family members. (Non-business liability exposure protection for individuals.)

Question 41

Concurrent Causation

Answer 41

property loss incurred from two or more perils in which only one loss is covered but both are paid by the insurer due to simultaneous incident.

Question 42

Conditions

Answer 42

requirements specified in the insurance contract that must be upheld by the insured to qualify for indemnification.

Question 43

Condos

Answer 43

homeowners insurance sold to condominium owners occupying the described property.

Question 44

Contingency Reserves

Answer 44

required by some jurisdictions as a hedge against adverse experience from operations, particularly adverse claim experience.

Question 45

Contract Reserves

Answer 45

reserves set up when, due to the gross premium structure, the future benefits exceed the future net premium. Contract reserves are in addition to claim and premium reserves.

Question 46

Contractual Liability

Answer 46

liability coverage of an insured who has assumed the legal liability of another party by written or oral contract. Includes a contractual liability policy providing coverage for all obligations and liabilities incurred by a service contract provider under the terms of service contracts issued by the provider.

Question 47

Corrective Order

Answer 47

commissioner’s directive of action to be completed by an insurer.

Question 48

Credit

Answer 48

individual or group policies that provide benefits to a debtor for full or partial repayment of debt associated with a specific loan or other credit transaction upon disability or involuntary unemployment of debtor, except in connection with first mortgage loans.

Question 49

Credit – Assumption Agreement

Answer 49

an insurance certificate issued on an existing insurance contract indicating that another insurer has assumed all of the risk under the contract from the ceding insurance company.

Question 50

Credit – Credit Default

Answer 50

coverage purchased by manufacturers, merchants, educational institutions, or other providers of goods and services extending credit, for indemnification of losses or damages resulting from the nonpayment of debts owed to them for goods or services provided in the normal course of their business.

Question 51

Credit – Involuntary Unemployment

Answer 51

credit insurance that provides a monthly or lump sum benefit during an unpaid leave of absence from employment resulting from specified causes, such as layoff, business closure, strike, illness of a close relative and adoption or birth of a child. This insurance is sometimes referred to as Credit Family Leave.

Question 52

Credit – Personal Property Insurance

Answer 52

insurance written in connection with a credit transaction where the collateral is not a motor vehicle, mobile home or real estate and that covers perils to the goods purchased through a credit transaction or used as collateral for a credit transaction and that concerns a creditor’s interest in the purchased goods or pledged collateral, either in whole or in part; or covers perils to goods purchased in connection with an open-end transaction.

Question 53

Credit – Placed Insurance

Answer 53

insurance that is purchased unilaterally by the creditor, who is the named insured, subsequent to the date of the credit transaction, providing coverage against loss, expense or damage to property as a result of fire, theft, collision or other risks of loss that would either impair a creditor’s interest or adversely affect the value of collateral. “Creditor Placed Home” means “Creditor Placed Insurance” on homes, mobile homes and other real estate. “Creditor Placed Auto” means insurance on automobiles, boats or other vehicles.

Question 54

Credit Risk

Answer 54

part of the risk-based capital formula that addresses the collectability of a company’s receivables and the risk of losing a provider or intermediary that has received advance capitation payments.

Question 55

Creditor-Placed Home

Answer 55

single interest or dual interest credit insurance purchased unilaterally by the creditor, who is the named insured, subsequent to the date of the credit transaction, providing coverage against loss to property that would either impair a creditor’s interest or adversely affect the value of collateral on homes, mobile homes, and other real estate.

Question 56

Crop

Answer 56

coverage protecting the insured against loss or damage to crops from a variety of perils, including but not limited to fire, lightening, loss of revenue, tornado, windstorm, hail, flood, rain, or damage by insects.

Question 57

Crop-Hail Insurance

Answer 57

coverage for crop damage due to hail, fire or lightning.