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C-SHARE VARIABLE ANNUITIES

C-SHARE VARIABLE ANNUITIES - A form of variable annuity contract where the contract holder pays no sales fee up front or surrender charges. Owners can claim full liquidity at any time.

CAPACITY

CAPACITY - The supply of insurance available to meet demand. Capacity depends on the industry‘s financial ability to accept risk. For an individual insurer, the maximum amount of risk it can underwrite based on its financial condition. The adequacy of an insurer‘s capital relative to its exposure to loss is an important measure of solvency. A property/casualty insurer must maintain a certain level of capital and policyholder surplus to underwrite risks. This capital is known as capacity. When the industry is hit by high losses, such as after the World Trade Center terrorist attack, capacity is diminished. It can be restored by increases in net income, favorable investment returns, reinsuring more risk and or raising additional capital. When there is excess capacity, usually because of a high return on investments, premiums tend to decline as insurers compete for market share. As premiums decline, underwriting losses are likely to grow, reducing capacity and causing insurers to raise rates and tighten conditions and limits in an effort to increase profitability. Policyholder surplus is sometimes used as a measure of capacity.

CAPITAL

CAPITAL - Shareholder‘s equity (for publicly traded insurance companies) and retained earnings (for mutual insurance companies). There is no general measure of capital adequacy for property/casualty insurers. Capital adequacy is linked to the riskiness of an insurer‘s business. A company underwriting medical device manufacturers needs a larger cushion of capital than a company writing Main Street business, for example. (See Risk-based capital, Solvency, Surplus )

CAPITAL MARKETS

CAPITAL MARKETS - The markets in which equities and debt are traded. (See Securitization of insurance risk )

CAPTIVE AGENT

CAPTIVE AGENT - A person who represents only one insurance company and is restricted by agreement from submitting business to any other company, unless it is first rejected by the agent‘s captive company. (See Exclusive agent )

CAPTIVES

CAPTIVES - Insurers that are created and wholly owned by one or more non-insurers, to provide owners with coverage. A form of self-insurance.

CAR YEAR

CAR YEAR - Equal to 365 days of insured coverage for a single vehicle. It is the standard measurement for automobile insurance.

CASE MANAGEMENT

CASE MANAGEMENT - A system of coordinating medical services to treat a patient, improve care and reduce cost. A case manager coordinates health care delivery for patients.

CATASTROPHE

CATASTROPHE - Term used for statistical recording purposes to refer to a single incident or a series of closely related incidents causing severe insured property losses totaling more than a given amount, currently $25 million

CATASTROPHE BONDS

CATASTROPHE BONDS - Risk-based securities that pay high interest rates and provide insurance companies with a form of reinsurance to pay losses from a catastrophe such as those caused by a major hurricane. They allow insurance risk to be sold to institutional investors in the form of bonds, thus spreading the risk. (See Securitization of insurance risk) )

CATASTROPHE DEDUCTIBLE

CATASTROPHE DEDUCTIBLE - A percentage or dollar amount that a homeowner must pay before the insurance policy kicks in when a major natural disaster occurs. These large deductibles limit an insurer‘s potential losses in such cases, allowing it to insure more property. A property insurer may not be able to buy reinsurance to protect its own bottom line unless it keeps its potential maximum losses under a certain level.

CATASTROPHE FACTOR

CATASTROPHE FACTOR - Probability of catastrophic loss, based on the total number of catastrophes in a state over a 40-year period.

CATASTROPHE MODEL

CATASTROPHE MODEL - Using computers, a method to mesh long-term disaster information with current demographic, building and other data to determine the potential cost of natural disasters and other catastrophic losses for a given geographic area.

CATASTROPHE REINSURANCE

CATASTROPHE REINSURANCE - Reinsurance for catastrophic losses. The insurance industry is able to absorb the multibillion dollar losses caused by natural and man-made disasters such as hurricanes, earthquakes and terrorist attacks because losses are spread among thousands of companies including catastrophe reinsurers who operate on a global basis. Insurers‘ ability and willingness to sell insurance fluctuates with the availability and cost of catastrophe reinsurance. After major disasters, such as Hurricane Andrew and the World Trade Center terrorist attack, the availability of catastrophe reinsurance becomes extremely limited. Claims deplete reinsurers‘ capital and, as a result, companies are more selective in the type and amount of risks they assume. In addition, with available supply limited, prices for reinsurance rise. This contributes to an overall increase in prices for property insurance.

CELL PHONE INSURANCE

CELL PHONE INSURANCE - Separate insurance provided to cover cell phones for damage or theft. Policies are often sold with the cell phones themselves.

CHARTERED FINANCIAL CONSULTANT / ChFC

CHARTERED FINANCIAL CONSULTANT / ChFC - A professional designation given by The American College to financial services professionals who complete courses in financial planning.

CHARTERED LIFE UNDERWRITER / CLU

CHARTERED LIFE UNDERWRITER / CLU - A professional designation by The American College for those who pass business examinations on insurance, investments and taxation, and have life insurance planning experience.

CHARTERED PROPERTY/CASUALTY UNDERWRITER / CPCU

CHARTERED PROPERTY/CASUALTY UNDERWRITER / CPCU - A professional designation given by the American Institute for Chartered Property Casualty Underwriters. National examinations and three years of work experience are required.

CLAIMS MADE POLICY

CLAIMS MADE POLICY - A form of insurance that pays claims presented to the insurer during the term of the policy or within a specific term after its expiration. It limits liability insurers‘ exposure to unknown future liabilities. (See Occurrence policy )

COBRA

COBRA - Short for Consolidated Omnibus Budget Reconciliation Act. A federal law under which group health plans sponsored by employers with 20 or more employees must offer continuation of coverage to employees who leave their jobs and their dependents. The employee must pay the entire premium. Coverage can be extended up to 18 months. Surviving dependents can receive longer coverage.

COINSURANCE

COINSURANCE - In property insurance, requires the policyholder to carry insurance equal to a specified percentage of the value of property to receive full payment on a loss. For health insurance, it is a percentage of each claim above the deductible paid by the policyholder. For a 20 percent health insurance coinsurance clause, the policyholder pays for the deductible plus 20 percent of his covered losses. After paying 80 percent of losses up to a specified ceiling, the insurer starts paying 100 percent of losses.

COLLATERAL

COLLATERAL - Property that is offered to secure a loan or other credit and that becomes subject to seizure on default. Also called security.

COLLATERAL SOURCE RULE

COLLATERAL SOURCE RULE - Bars the introduction of information that indicates a person has been compensated or reimbursed by a source other than the defendant in civil actions related to negligence or other liability.

COLLISION COVERAGE

COLLISION COVERAGE - Portion of an auto insurance policy that covers the damage to the policyholder‘s car from a collision.

COMBINED RATIO

COMBINED RATIO - Percentage of each premium dollar a property/casualty insurer spends on claims and expenses. A decrease in the combined ratio means financial results are improving; an increase means they are deteriorating.

COMMERCIAL GENERAL LIABILITY INSURANCE / CGL

COMMERCIAL GENERAL LIABILITY INSURANCE / CGL - A broad commercial policy that covers all liability exposures of a business that are not specifically excluded. Coverage includes product liability, completed operations, premises and operations, and independent contractors.

COMMERCIAL LINES

COMMERCIAL LINES - Products designed for and bought by businesses. Among the major coverages are boiler and machinery, business income, commercial auto, comprehensive general liability, directors and officers liability, fire and allied lines, inland marine, medical malpractice liability, product liability, professional liability, surety and fidelity, and workers compensation. Most of these commercial coverages can be purchased separately except business income, which must be added to a fire insurance (property) policy. (See Commercial multiple peril policy )

COMMERCIAL MULTIPLE PERIL POLICY

COMMERCIAL MULTIPLE PERIL POLICY - Package policy that includes property, boiler and machinery, crime and general liability coverages.

COMMERCIAL PAPER

COMMERCIAL PAPER - Short-term, unsecured, and usually discounted promissory note issued by commercial firms and financial companies often to finance current business. Commercial paper, which is rated by debt rating agencies, is sold through dealers or directly placed with an investor.

COMMISSION

COMMISSION - Fee paid to an agent or insurance salesperson as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer, and the marketing methods.

COMMUNITY RATING LAWS

COMMUNITY RATING LAWS - Enacted in several states on health insurance policies. Insurers are required to accept all applicants for coverage and charge all applicants the same premium for the same coverage regardless of age or health. Premiums are based on the rate determined by the geographic region‘s health and demographic profile.

COMPETITIVE REPLACEMENT PARTS

COMPETITIVE REPLACEMENT PARTS - See Crash parts; Generic auto parts

COMPETITIVE STATE FUND

COMPETITIVE STATE FUND - A facility established by a state to sell workers compensation in competition with private insurers.

COMPLAINT RATIO

COMPLAINT RATIO - A measure used by some state insurance departments to track consumer complaints against insurance companies. Generally, it is stated as the number of complaints upheld against an insurance company, as a percentage of premiums written. In some states, complaints from medical providers over the promptness of payments may also be included.

COMPLETED OPERATIONS COVERAGE

COMPLETED OPERATIONS COVERAGE - Pays for bodily injury or property damage caused by a completed project or job. Protects a business that sells a service against liability claims.

COMPREHENSIVE COVERAGE

COMPREHENSIVE COVERAGE - Portion of an auto insurance policy that covers damage to the policyholder‘s car not involving a collision with another car (including damage from fire, explosions, earthquakes, floods and riots), and theft.

COMPULSORY AUTO INSURANCE

COMPULSORY AUTO INSURANCE - The minimum amount of auto liability insurance that meets a state law. Financial responsibility laws in every state require all automobile drivers to show proof, after an accident, of their ability to pay damages up to the state minimum. In compulsory liability states this proof, which is usually in the form of an insurance policy, is required before you can legally drive a car.

CONTINGENT LIABILITY

CONTINGENT LIABILITY - Liability of individuals, corporations, or partnerships for accidents caused by people other than employees for whose acts or omissions the corporations or partnerships are responsible.

COVERAGE

COVERAGE - Synonym for insurance.

CRASH PARTS

CRASH PARTS - Sheet metal parts that are most often damaged in a car crash. (See Generic auto parts )

CREDIT

CREDIT - The promise to pay in the future in order to buy or borrow in the present. The right to defer payment of debt.

CREDIT DERIVATIVES

CREDIT DERIVATIVES - A contract that enables a user, such as a bank, to better manage its credit risk. A way of transferring credit risk to another party.

CREDIT ENHANCEMENT

CREDIT ENHANCEMENT - A technique to lower the interest payments on a bond by raising the issue‘s credit rating, often through insurance in the form of a financial guarantee or with standby letters of credit issued by a bank.

CREDIT INSURANCE

CREDIT INSURANCE - Commercial coverage against losses resulting from the failure of business debtors to pay their obligation to the insured, usually due to insolvency. The coverage is geared to manufacturers, wholesalers and service providers who may be dependent on a few accounts and therefore could lose significant income in the event of an insolvency.

CREDIT LIFE INSURANCE

CREDIT LIFE INSURANCE - Life insurance coverage on a borrower designed to repay the balance of a loan in the event the borrower dies before the loan is repaid. It may also include disablement and can be offered as an option in connection with credit cards and auto loans.

CREDIT RATING

CREDIT RATING - See Bond rating

CREDIT SCORE

CREDIT SCORE - The number produced by an analysis of an individual‘s credit history. The use of credit information affects all consumers in many ways, including getting a job, finding a place to live, securing a loan, getting telephone service and buying insurance. Credit history is routinely reviewed by insurers before issuing a commercial policy because businesses in poor financial condition tend to cut back on safety, which can lead to more accidents and more claims. Auto and home insurers may use information in a credit history to produce an insurance score. Insurance scores may be used in underwriting and rating insurance policies. (See Insurance score )

CRIME INSURANCE

CRIME INSURANCE - Term referring to property coverages for the perils of burglary, theft and robbery.

CROP-HAIL INSURANCE

CROP-HAIL INSURANCE - Protection against damage to growing crops from hail, fire or lightning provided by the private market. By contrast, multiple peril crop insurance covers a wider range of yield reducing conditions, such as drought and insect infestation, and is subsidized by the federal government.

Capitation**

Under a capitation system health care providers are paid a set amount for each enrolled person assigned to that physician or group of physicians, whether or not that person seeks care.

Case Management**

The coordination of medical care for patients with specific diagnoses or high health care needs, performed by case managers who can include medical directors or nurses.

Catastrophic Coverage**

A coverage option with a limited benefit plan design accompanied by a high Deductible. The plan design is intended to protect primarily against the cost for unforeseen and expensive illnesses or injuries. These plans are attractive to young adults in relatively good health.

CHIP**

The Children's Health Insurance Program (CHIP) is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to low income families with children. The program was designed with the intent to cover uninsured children in families with incomes that are modest but too high to qualify for Medicaid.

Chronic Care Management**

The coordination of health care and supportive services to improve the health status of patients with chronic conditions, such as diabetes and asthma. The goals of these programs are to improve the quality of care and manage costs.

COBRA**

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) applies to employers who generally employ 20 or more full time equivalent employees. Employees who lose their jobs are able to continue their employer-sponsored coverage for a set period of time. For example, employees are typically entitled to extend coverage for 18 months, however if they are deemed disabled by the Social Security Administration, coverage may continue for up to 29 months.

Co-insurance**

The amount or percentage of the reimbursed amount of covered expenses a plan member must pay for health services after the Deductible has been met.

Community Living Assistance Services and Supports (CLASS) Program**

The CLASS program establishes a national voluntary long-term care insurance program for the purchase of non-medical services and support necessary for enrollees who have paid premiums into the program and become eligible (due to disability or chronic illnesses). Enrollees would receive benefits that help pay for assistance in the home or in a facility in future years. Enrollment begins January 1, 2011 (targeting working adults who can make voluntary premium contributions through payroll deductions or directly). The first benefits will be paid out to enrollees in 2016.

Community Rating**

A method of pricing health insurance plans, where all policyholders are charged the same premium, regardless of health status, age or other factors. "Modified community rating" generally refers to a method where health insurers may vary premiums based on specified demographic characteristics (e.g. age, gender, location), but cannot vary premiums based on the health status or claims history of policyholders.

Comparative Effectiveness Research**

Research is federally sponsored to compare existing health care interventions to determine which work best for which patients and which pose the greatest benefits and harms. The research also aims to improve the quality of care and to control costs.

Capitation**

Under a capitation system health care providers are paid a set amount for each enrolled person assigned to that physician or group of physicians, whether or not that person seeks care.

Case Management**

The coordination of medical care for patients with specific diagnoses or high health care needs, performed by case managers who can include medical directors or nurses.

Catastrophic Coverage**

A coverage option with a limited benefit plan design accompanied by a high Deductible. The plan design is intended to protect primarily against the cost for unforeseen and expensive illnesses or injuries. These plans are attractive to young adults in relatively good health.

CHIP**

The Children's Health Insurance Program (CHIP) is a program administered by the United States Department of Health and Human Services that provides matching funds to states for health insurance to low income families with children. The program was designed with the intent to cover uninsured children in families with incomes that are modest but too high to qualify for Medicaid.

Chronic Care Management**

The coordination of health care and supportive services to improve the health status of patients with chronic conditions, such as diabetes and asthma. The goals of these programs are to improve the quality of care and manage costs.

COBRA**

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) applies to employers who generally employ 20 or more full time equivalent employees. Employees who lose their jobs are able to continue their employer-sponsored coverage for a set period of time. For example, employees are typically entitled to extend coverage for 18 months, however if they are deemed disabled by the Social Security Administration, coverage may continue for up to 29 months.

Co-insurance**

The amount or percentage of the reimbursed amount of covered expenses a plan member must pay for health services after the Deductible has been met.

Community Living Assistance Services and Supports (CLASS) Program**

The CLASS program establishes a national voluntary long-term care insurance program for the purchase of non-medical services and support necessary for enrollees who have paid premiums into the program and become eligible (due to disability or chronic illnesses). Enrollees would receive benefits that help pay for assistance in the home or in a facility in future years. Enrollment begins January 1, 2011 (targeting working adults who can make voluntary premium contributions through payroll deductions or directly). The first benefits will be paid out to enrollees in 2016.

Community Rating**

A method of pricing health insurance plans, where all policyholders are charged the same premium, regardless of health status, age or other factors. "Modified community rating" generally refers to a method where health insurers may vary premiums based on specified demographic characteristics (e.g. age, gender, location), but cannot vary premiums based on the health status or claims history of policyholders.

Comparative Effectiveness Research**

Research is federally sponsored to compare existing health care interventions to determine which work best for which patients and which pose the greatest benefits and harms. The research also aims to improve the quality of care and to control costs.

Consumer-Directed Health Plans**

These health plans seek to increase consumer awareness about health care costs and provide incentives for consumers to consider costs when making health care decisions. These plans usually have a high Deductible accompanied by a savings account for health care services. There are two types of savings accounts: Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs).

Co-payment**

A fixed dollar amount paid by an individual receiving a health care service covered by the member's plan.

Cost-Sharing**

Health plan members are required to pay a portion of the costs of their care. Examples of these costs include Co-payments, Co-insurance and annual Deductibles.