Glossary

Insurance Terms Glossary

This page provides a glossary of insurance terms and definitions that are commonly used in the insurance business. New terms will be added to the glossary over time.

The definitions in this glossary are developed by the NAIC Research and Actuarial Department staff based on various insurance references. These definitions represent a common or general use of the term. Some words and/or phrases may be defined differently by other entities, or used in a context such that the definition shown may not be applicable.

Terms beginning with C

Calendar/Accident Year Experience: – premiums earned and losses incurred during a calendar year.
Cap: – the maximum amount of benefit payments that can be paid under a policy.
Capital Stock: – common or preferred shares.
Capitation: – a set amount, usually paid on a per person, per month basis, paid out for health coverage.
Captive Agent: – an individual who works for only one insurance company and sells that company's products.
Captive Insurer: – insurance company owned by a parent organization and insuring some or all of the parent's risks or those of affiliated companies. The purpose of such a company is to insure risks of the owner(s) but it may also sell insurance products to outside clients.
Cargo Insurance: – coverage for contents of a vessel while being transported.
Case Reserve: – estimated amount required to pay a reported claim.
Cash Surrender Value: – amount paid to the insured upon surrendering a life insurance policy.
Cash Value: – the accumulated savings or investment of a participating policy less a surrender charge.
Casualty Insurance: – coverage against a variety of losses such as accident, liability, burglary, fidelity, plate glass, disability, and workers' compensation.
Catastrophe: – a sudden and violent disaster, either natural or man-made, such as a group of related claims grouped by an identifier.
Catastrophe Reinsurance: – protection against an excessive accumulation of losses resulting from a catastrophic event such as a major hurricane or earthquake.
Cede: – the passing of risk by the insurer to a reinsurer.
Cedent/Ceding Company: – the insurance company that transfers the insured risk to the reinsurer under a reinsurance contract.
Certificate Of Insurance: – a statement of coverage issued to an individual insured under a group policy.
Cession: – amount of risk transferred by the ceding company to the reinsurer or the document noting the risks and terms agreed upon.
Civil Commotion: – includes riots, strikes or mob violence disturbances usually with an element of political unrest.
Claim: – a demand for payment of loss covered under an insurance policy.
Claim Frequency: – the number of claims per exposure.
Claim Reserve: – the liability established for unpaid claims.
Claims Made Policy: – a policy covering claims reported during a policy period rather than those that occurred within the policy period.
Claimant: – one who files a claim.
Class Rating: – use of statistics derived from experience of a broad group
COBRA: – COBRA – Federal Consolidated Omnibus Budget Reconciliation Act of 1985 requiring employers with more than 20 employees to continue health care coverage terminated employees for a minimum period of 18 months at the employee's' expense.
Co-Insurance: – provision of the insurance policy in which both insurer and insured share the covered losses under a policy.
Collateral: – asset required to be posted as security for an obligation or liability; common examples include ceded reinsurance and letters of credit.
Collected Premium: – the premium actually collected by a company for a given period.
Commercial Lines Insurance: – insurance purchased by corporations, associations, and other non-personal entities for business purposes.
Commercial Multiple Peril Policy (CMP): – a policy combining various property, liability and crime coverages. Business version of homeowners coverage.
Commercial Risk: – the risk of financial or material loss from the failure to collect or earn business revenue, such as failure to obtain or retain customers, economic shifts, or lower commodity prices.
Commission: – fee paid to an insurance agent or broker for the sale of an insurance policy, in accord with the agreed upon terms in the agency contract or brokerage agreement.
Commissioner of Insurance: – elected or appointed state official charged with regulating the insurance sold by licensed companies and producers (agents/brokers) in the state. The official may also be called an Insurance Commissioner or Director of Insurance.
Commissions and Brokerage Expense: – an amount paid for the acquisition of business; includes net commission paid to producers, less commission received for ceded business ceded plus amounts for brokerage and miscellaneous commission expenses.
Common Carrier: – carrier licensed to transport cargo in the course of conducting its business.
Community Rating: – method of setting premium rates for health insurance where rate is determined by the experience of the class of business or geographic locale rather than risk characteristics of an individual insured or group.
Comprehensive General Liability (CGL): – liability insurance coverage for products, completed operations, premises and operations, independent contractors, or professional liability claims, including punitive damages.
Comprehensive Medical Coverage: – medical expense coverage for medical services under a single policy. Major medical coverage combined with basic medical coverage.
Comprehensive Personal Liability Insurance: – coverage protecting households against liability for premises and personal activities.
Concurrent Increases: – the uniform percent increase in workers compensation experience modification based upon a loss evaluation equal to the average loss rate among all insureds.

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