Indemnify - answer✔✔To restore a party who has sustained a loss to the same financial position
that party held before the loss occurred
Third Party Administrator (TPA) - answer✔✔An organization that provides administrative
services associated with risk financing and insurance.
Claims representative - answer✔✔A person responsible for investigating, evaluating, and
settling claims.
Producer - answer✔✔Any of several kinds of insurance personnel who place insurance and
surety business with insurers and who represent either insurers, insureds, or both
Public Adjuster - answer✔✔An outside organization or person hired by an insured to represent
the insured in a claim in exchange for a fee.
Premium Audit - answer✔✔Methodical examination of a policyholder's operations, records, and
books of account to determine the actual exposure units and premium for insurance coverages
already provided
Loss ratio - answer✔✔A ratio that measures losses and loss adjustment expenses against earned
premiums and that reflects the percentage of premiums being consumed by losses
Loss adjustment expense (LAE) - answer✔✔The expense that an insurer incurs to investigate,
defend, and settle claims according to the terms specified in the insurance policy.
First Notice of Loss (FNOL) - answer✔✔The initial report notifying the insurer of a claim.
Reserve - answer✔✔The amount the insurer estimates and sets aside to pay on an existing claim.
Individual case method - answer✔✔A method of setting reserves based on the claim's
circumstances and the claim representative's experience in handling similar claims.
Roundtable method - answer✔✔A method of setting reserves by using the consensus of two or
more claims personnel who have independently evaluated the claims file.
Average value method - answer✔✔A case reserving method that establishes a predetermined
dollar amount of reserve for each claim as it is reported.
Formula method - answer✔✔A method of setting claim reserves by using a mathematical
formula.
Expert system method - answer✔✔A method of setting reserves with a software application that
estimates losses and loss adjustment expenses.
Direct loss - answer✔✔A reduction in the value of property that results directly and often
immediately from damage to that property.
Indirect loss - answer✔✔A loss that arises as a result of damage to property, other than the direct
loss to the property.
Pro rata contribution - answer✔✔An approach to other insurance by which the insurers
contribute to the loss payment in the proportion to which they contribute to the total amount of
coverage purchased (their limits of liability).
Insurable interest - answer✔✔An interest in the subject of an insurance policy that is not unduly
remote and that would cause the interested party to suffer financial loss if an insured event
occurred.
Punitive damages (exemplary damages) - answer✔✔A payment awarded by a court to punish a
defendant for a reckless, malicious, or deceitful act to deter similar conduct; the award need not
bear any relation to a party's actual damages.
Compensatory damages - answer✔✔A payment awarded by a court to reimburse a victim for
actual harm.
Special damages - answer✔✔A form of compensatory damages that awards a sum of money for
specific, identifiable expenses associated with the injured person's loss, such as medical expenses
or lost wages.
General damages - answer✔✔A monetary award to compensate a victim for losses, such as pain
and suffering, that do not involve specific measurable expenses.
Coinsurance clause - answer✔✔A clause that requires the insured to carry insurance equal to at
least a specified percentage of the insured's property value.
Discovery - answer✔✔A pretrial exchange of all relevant information between the plaintiff and
defendant.
Summons - answer✔✔A document that directs a sheriff or another court-designated officer to
notify the defendant named in the lawsuit that a lawsuit has been started and that the defendant
has a specified amount of time to answer the complaint.
Complaint - answer✔✔The allegations made by a plaintiff in a lawsuit.
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