Study 5 Communication and Service Skills - Key Terms

Question 1

prescription

Answer 1

1 - In law, a limitation of time within which legal action can be taken by a claimant.

2 - In insurance, the period of time in which a claim may be brought by the policyholder.

Question 2

cyber risk

Answer 2

Any risk of financial loss, disruption of business, or damage to an organization’s reputation due to a failure of tis information technology systems.

Question 3

estoppel

Answer 3

A bar created when someone by his action, or lack of it, indicates that he will not exercise a right he has. He stops himself from exercising his right later. For example, if A owns a pen and stands by and watches B sell the pen to C, as if the pen belonged to B, then A cannot later reclaim the pen, arguing that it was his.

Question 4

hard market

Answer 4

A phase of the insurance market cycle in which insurers reduce the amount of coverage they are willing to write, causing supply to shrink and premiums to rise.

Question 5

rate

Answer 5

Amount charged to an insured that reflects the exception of loss for a covered risk, insurance company expenses, and profit. In other words, it is the basis of premium calculation for the insurance provided for the exposure.

Question 6

commission

Answer 6

Compensation based upon the amount of production; for example, independent insurance agents are compensated on the basis of a percentage of the premium. The percentage varies with different lines of insurance.

Question 7

pro rata cancellation

Answer 7

Cancellation of an insurance policy or a bond with the return premium credit being the full proportion of premium for the unexpired term of the policy.

Question 8

short rate cancellation

Answer 8

The cancellation by the insured of a policy before its natural expiration; the insurer pays a return premium that is less than the proportionate part that remains unearned.

Question 9

minimum retained premium

Answer 9

A premium specified on an individual policy that is the minimum amount retained by the insurer in the event that the policy is cancelled mid-term by the insured.

Question 10

lost policy release

Answer 10

A form signed by the insured in order to cancel a lost or destroyed policy that releases the insurer from all liability.

Question 11

flat cancellation

Answer 11

The cancellation of a policy as of the effective date with all paid premium refunded.