Recognition that events have taken place in such a manner as to eventually produce claims but that these events have not yet been reported. In other words, IBNR is a loss that has happened but is not known about. Since it is impossible to know the value of a case not yet reported or investigated, a subjective estimate is often used by insurance companies to recognise losses incurred but not reported.
All open and closed claims occurring within a fixed period, usually a year. Incurred losses include reserves for open claims but do not usually include IBNR losses.
A mechanism that transfers all or part of the captive’s business to a third party. This will be governed by prescribed regulatory processes depending on the domiciles of the transferor and transferee. In the UK, it is performed by the Part VII transfer mechanism and will also require court approval. Insurance business transfers will transfer the liabilities and obligations of the transferor but not generally any benefits such as reinsurance protections. However, a Part VII usually will transfer reinsurance protections. Unlike an LPT, an IBT gives finality as the policy obligations are transferred and not just the economic risk.
A regulatory department charged with the administration of insurance laws and other responsibilities associated with insurance. The commissioner of insurance is the head of this department in most states.
Insurance-linked securities are generally thought to have little to no correlation with the wider financial markets as their value is linked to non-financial risks such as natural disasters, longevity risk or life insurance mortality.
The income of an insurance company derived from its investments, as opposed to its underwriting operations. The term has special significance in the insurance industry as various factions consider whether such income should be considered in ratemaking.
The income of an insurance company derived from its investments, as opposed to its underwriting operations. The term has special significance in the insurance industry as various factions consider whether such income should be considered in ratemaking.