substandard risk: Persons who cannot meet the health requirements of a standard health insurance policy.
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Category: Glossary
substandard insurance: Insurance issued with an extra premium or special restriction to persons who do not qualify for insurance at standard rates.
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Categories
Subrogation – insurance term definition
subrogation: When an insurance company seeks payment from a third party who caused injury to the insured or damage to property.
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straight life annuity: An annuity whose periodic payments stop when the annuitant dies.
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stop-loss insurance: Protection purchased by self-funded buyers against the risk of large losses or a severe adverse claim experience.
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stock life insurance company: A life insurance company owned by stockholders who share in the company’s surplus earnings.
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statutory surplus: The sum of common stock plus preferred stock plus aggregate write-ins for other than special surplus funds plus gross paid-in and contributed surplus plus unassigned funds less treasury stock.
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statutory capital: Sum of statutory surplus, capital, and mandatory securities valuation reserve (MSVR).
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statutory accounting: Accounting practices prescribed by the insurance department of the insurer’s state of domicile based on standards set by the National Association of Insurance Commissioners (NAIC). The principal objective of statutory accounting is to provide a framework for a conservative measurement of an insurer’s surplus.
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state regulation of insurance: The complexity and cost variations of insurance stems directly from state regulation of the industry. Unlike the securities and banking industries, the insurance industry does not have a strong federal oversight role. Instead, through the 1945 McCarran-Ferguson Act, the domestic industry faces 55 sets of overseers (the 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam and American Samoa). With so many different sites of regulation, and so many sources of local sales outlets for insurance policies, itÆs not surprising that insurance policies are hardly the standardized commodities that you find when trading stocks or opening a bank account. This is particularly true in property/casualty coverage and less so in life insurance. Added to the maze of different products is the fact that state-based regulation means that insurers may base their rates in each state on their business profile in that state. Auto rates, for example, reflect accident and theft trends in local territories. The upshot is that there is great pricing variation along with lots of different types of policies. Lastly, insurers have increasing freedom to price their policies for whatever the market will bear. Even if an insurer has to file its rates in your state, you shouldnÆt assume that state regulators are poring over the rates to review their fairness.
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