Glossary
Activity Tab
Records and tracks events happening on the platform, ensuring transparency and traceability of event information.
ALAE
ALAE, or Allocated Loss Adjustment Expense, refers to the costs directly linked to handling a specific insurance claim. These expenses include things like legal fees, investigation costs, or expert services that are necessary to process or resolve a claim
ALAE Paid
The actual sum of all paid ALAE invoices associated with an event.
ALAE Reserve
The calculated reserve amount for ALAE is the difference between the expected total ALAE and ALAE paid.
Adjustments
Custom changes made to the premium, including credits (discounts), debits (surcharges), and other modifications based on specific conditions or policies.
Base Rate
The base rate is the starting cost used to calculate an insurance premium before any adjustments like surcharges, discounts, or other rating factors are applied. It reflects the standard cost of insuring a specific risk under typical conditions.
Binding
To bind a policy means to make the coverage official and active by finalizing the terms and conditions of the insurance agreement between the insurer and the policyholder. Binding a policy essentially means that the insurance contract is in force, and the insurer is committed to providing the coverage specified in the policy.
Broker
An individual or representative working under a brokerage who sells insurance policies and earns commissions.
Brokerage
A business entity that manages brokers and facilitates the sale of insurance policies. Brokerages can have multiple brokers working under them.
Captive Managers
Captive managers are responsible for managing a captive insurance company, which is an insurance company created and owned by one or more non-insurance companies to insure their own risks.
Certificate of Insurance (COI)
A document issued by an insurance company that verifies the existence of insurance coverage for an individual or business.
Claim
A formal demand for money or a lawsuit that arises from an incident.
Commission Rate
The percentage of the policy premium that a broker earns as compensation for their role in selling the policy.
Coverage
Refers to the specific protections provided by the insurance policy. It defines the situations and events that the insurance policy will pay for. For example, a car insurance policy may cover accidents but not mechanical breakdowns.
Coverage Type
The type of insurance coverage applied to the event configured by the organization.
Credits and Debits
Adjustments that either decrease (credits) or increase (debits) the premium based on specific criteria, such as risk level, behavior, or location.
Defendant
In an insurance context, a defendant is someone being sued or held responsible in a legal case.
Deductible
The amount the insured must pay out of pocket before the insurer starts to cover the costs of a claim.
Entity Type
The classification of individuals, organizations, or objects under an insurance policy based on their roles or risk profiles. This classification helps determine the coverage type and risk assessment.
Endorse a Policy
To endorse a policy means to make changes or updates to an existing insurance policy after it has been issued. These changes could include alterations in coverage or terms.
Expected Total ALAE (Allocated Loss Adjustment Expense)
The total expected cost for handling a claim, such as legal or investigation fees, by the time the claim closes.
Fees
Administrative charges or fees added to the insurance premium, unrelated to the coverage itself but often charged by the carrier.
Form Editor
An AI Insurance tool that allows users to create and modify policy forms. It features word-processing-like functionality, including the ability to import, edit, and add Smart Tags.
Forms (Policy Issuance)
Documents required for policy review and acceptance. Smart Tags can auto-populate these forms with information from the policy creation process.
Historical Data Import
A service that allows customers to populate their AI Insurance system with historical data, eliminating the need to maintain records across multiple systems.
Incident
An unexpected event or occurrence that is tracked because it could potentially lead to a claim or lawsuit.
Insured
An entity (individual, business, or organization) covered by an insurance policy.
Insurance Policy
A formal agreement between the insurance company and the insured, outlining the terms, conditions, coverage, and other details about the insurance contract.
Invoice Audit
An AI Insurance service designed to automatically review invoices for discrepancies, ensuring they align with service agreements and identifying potential billing errors.
Liability
Refers to legal responsibility for something. Liability insurance protects against costs associated with being found legally responsible for damages or injuries caused by accidents.
Loss
The event or damage that leads to a claim being made under the insurance policy.
Modifier Factor
An adjustment factor applied to the base rate to reflect specific characteristics, behaviors, or conditions that impact the insured’s risk. Modifier factors help tailor the base rate to the individual’s risk profile, making the premium more accurate and fair based on their unique circumstances.
MGAs (Managing General Agents)
Entities or agents that operate on behalf of an insurance carrier. They can perform several tasks, such as selling policies, managing claims, and even underwriting. They act as intermediaries between the insurer and the insured.
Operating Account An account set up within AI Insurance to enable premium billing functionality and process payments.
Payee
An individual or company that receives payment.
Policy Issuance
The process of creating and issuing an insurance policy, which involves adding forms, reviewing information, and confirming details.
Premium
The total cost of an insurance policy, calculated using the base rate and modifier factors and adjusted for other variables like surcharges, discounts, or taxes.
Premium Billing
An AI Insurance feature that enables you to generate invoices, collect policy premiums, and manage payments for insurance policies.
Premium Calculation Formula
The formula used to calculate the policy premium:
Presets
Predefined configurations of export settings that save time when exporting data. Users can create, update, or remove presets for frequently used export configurations.
Policy-Level Rating Questions
These questions evaluate the overall risk associated with the policyholder, typically used to assess the organization or entity as a whole, such as a company or hospital.
Rating Engine
A system or tool used to calculate an insurance policy’s premium based on the insured’s responses to a series of rating questions, which determine the risk level and appropriate adjustments to the base rate.
Rating Question
A question asked to an insured to assess their risk and determine their policy premium. These questions can be about age, lifestyle, medical history, or other factors affecting the risk level.
Risk
A specific entity, individual, or item covered under an insurance policy, such as a person (e.g., doctor), object (e.g., vehicle), or location (e.g., hospital). These are evaluated with risk-level rating questions.
Risk-Level Rating Questions
These questions assess the individual or specific risks associated with entities under a policy, such as individual professionals (e.g., doctors) or specific items (e.g., vehicles, properties).
Taxes
State-specific charges applied to an insurance premium that vary depending on the location of the insured.
Underwriting
The process of evaluating the risk and determining the terms and conditions of an insurance policy, including premium calculations based on questions answered by the insured.
Warranty
A guarantee made by the insurer that certain conditions will be met, often linked to the performance or maintenance of covered items.
Smart Tags
Dynamic placeholders used in forms or documents that auto-populate with policy-specific data for faster and more accurate processing.
Submission
The process of presenting an application or risk to an insurer for evaluation and potential underwriting.
Reserves
Funds set aside by the insurer to cover future claim obligations, including both known claims and potential liabilities.
Written Premium
The total amount of premiums recorded by an insurer for policies issued within a specific accounting period.
Active Premium
The portion of the written premium that corresponds to active policies currently in force.
Earned Premium
The portion of the written premium that reflects the revenue earned for the coverage provided during a specific period.
Applicant
An individual or entity applying for insurance coverage, subject to risk evaluation and pricing decisions.
Avg Close Rate
Expense vs. Indemnity
It reflects how much the company spends on operational costs relative to the actual claims paid. A comparison of operational costs versus claims payouts.
Expense: Costs associated with underwriting and managing claims.
Indemnity: Payments made to policyholders to cover losses.
Average Incurred Cost (Claims)
The average total cost of claims incurred by the insurer, including both indemnity payments (actual claim payouts) and related expenses (e.g., investigation, legal fees, etc.).
Assumed Risk
The portion of risk transferred to a reinsurer through reinsurance agreements.
Beneficiary
The person or entity entitled to receive benefits or proceeds from an insurance policy.
Binder
A temporary agreement providing immediate coverage while the formal policy is being prepared.
Book of Business
The total portfolio of insurance policies or clients managed by an insurer, agent, or broker.
Cancellation
Termination of an insurance policy before its expiration date, either by the insured or the insurer.
Coinsurance
A cost-sharing arrangement where the insured and insurer share the claim payment in a specified ratio, e.g., 80/20.
Contingent Liability
Liability that may arise in the future depending on the outcome of an uncertain event.
Declarations Page
The summary section of an insurance policy that outlines key details like coverage limits, policyholder information, and premiums.
Direct Premiums Written
Total premiums collected directly by an insurance company before reinsurance.
Endorsement
A document that modifies the terms of an existing insurance policy.
Exclusions
Specific risks or circumstances that are not covered under an insurance policy.
Exposure
The measure of risk or the potential for loss, often expressed in terms like number of vehicles, properties, or payroll amounts.
Grace Period
A specified period after a premium due date during which coverage remains active, even if the premium has not been paid.
Indemnification
The process of compensating an insured party for a loss, restoring them to their financial position prior to the loss.
Loss Ratio
A key profitability metric calculated as:
Policy Lapse
The termination of a policy due to non-payment of premiums or other contractual breaches.
Reinsurance
The process of transferring a portion of risk from one insurer to another to reduce exposure to large losses.
Umbrella Policy
An additional layer of liability coverage that provides protection beyond the limits of standard policies (e.g., auto or home insurance).
Additional Insured
A person or entity added to a policy to receive coverage under the primary insured’s policy.
Aggregate Deductible
The total deductible amount that must be met across multiple claims before the insurer starts covering costs.
Claim Reserve
Funds set aside to pay for anticipated claims, including known and potential liabilities.
Captive Insurance
A self-insurance arrangement in which a business forms its own insurance company to cover its risks.
Proof of Loss
Documentation provided by the insured to substantiate a claim, including details about the loss and its value.
Replacement Cost Value (RCV)
The cost to replace damaged property with new property of similar type and quality, without considering depreciation.
Subrogation
The insurer’s right to recover the claim amount from a third party responsible for the loss after reimbursing the insured.
No-Fault Insurance
A type of auto insurance where insureds are reimbursed for their damages by their own insurer, regardless of fault.
Retroactive Date
The date after which losses must occur to be covered under a claims-made policy.
Split Limits
Separate coverage limits for different types of losses, such as bodily injury per person, bodily injury per accident, and property damage.
Program Managers
Program Managers design and oversee specialized insurance programs on behalf of insurers, focusing on specific markets, industries, or risk categories. They manage underwriting, marketing, and administration tasks, leveraging their expertise to help insurers efficiently serve niche markets.
Captive Managers
Captive Managers handle the operations of captive insurance companies, which are created by businesses to insure their own risks. They ensure regulatory compliance, manage finances, oversee underwriting, and handle claims administration. Captive Managers empower businesses to take control of their risk management and reduce insurance costs.
TPA (Third-Party Administrator)
Third-Party Administrators (TPAs) are organizations that manage critical insurance services such as claims processing, underwriting support, customer service, and compliance on behalf of insurers or self-insured companies. By outsourcing to TPAs, companies can streamline operations and focus on their core business activities.
RRG (Risk Retention Group)
A Risk Retention Group (RRG) is a member-owned liability insurance company formed under the federal Liability Risk Retention Act. It allows businesses or professionals from similar industries to pool resources and self-insure against liability risks, providing greater control and potential cost savings.
Captive Owners
Captive Owners are businesses or organizations that establish captive insurance companies to cover their unique risks. By owning a captive insurer, these entities gain flexibility in policy design, control over claims handling, and potential financial advantages, such as reduced premiums and tax benefits.
Small Liability Carriers
Small Liability Carriers are insurance companies specializing in liability coverage with smaller premium volumes, often focusing on niche markets or localized risks. These carriers can benefit from tailored insurance technology platforms, like AI Insurance, that provide scalable solutions for underwriting, claims, and policy management without the high costs of larger systems.
Application Parsing
Application Parsing is the process of extracting and analyzing data from insurance applications to streamline policy issuance. With AI Insurance, customers can drag and drop applications into the platform, which uses AI to automatically populate relevant fields. This reduces manual entry errors, speeds up the underwriting process, and improves operational efficiency.
Actuary
A professional who evaluates financial risks associated with insurable events using mathematics, statistics, and financial modeling. Actuaries in insurance play a critical role in designing, pricing, and managing policies by assessing the probability of future events, such as accidents, illnesses, or natural disasters, and their associated costs.
Self-Reconciling Billing
A billing system that automatically matches payments with invoices, simplifying financial management.
User Permissions
Settings that control access levels and functionalities for different users within the insurance platform.
Indemnity Prediction
Utilizing AI to forecast the potential costs associated with claims, aiding in better financial planning.
Underwriting Guidelines
Criteria and procedures that insurers follow to assess risks and determine policy terms.