SAP: Statutory accounting principles
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Category: Glossary
risk-based pricing: The setting of premiums based on the perceived credit quality of a borrower as well as the LTV of the mortgage. Currently the industry prices risk almost exclusively by LTV. Risk-based pricing represents a matching of premium to risk, which is superior to current practice. However, there is resistance to it because its full implementation would result in considerably lower premiums for the better risks and considerably higher premiums for lower-quality borrowers; this development could significantly reduce the size of the conforming market.
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risk management: Procedure to minimize the adverse effect of a possible financial loss. It involves identifying potential sources of loss, measuring the financial consequences of the loss, and using controls to minimize actual losses or their financial consequences.
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risk in force: The aggregate unpaid balance of loans insured multiplied by the average coverage.
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risk exposure: The possibility of financial loss based on the probability of an event occurring.
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risk classification: The process by which a company decides how its premium rates for life insurance should differ according to the risk characteristics of individuals insured (for example, age, occupation, sex, state of health) and then applies the resulting rules to individual applications. (See underwriting.)
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Risk – insurance term definition
risk: Uncertainty of financial loss; used to designate an insured or a peril insured against.
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Rider – insurance term definition
rider: An amendment to an insurance policy that modifies the policy by expanding or restricting its benefits or excluding certain conditions from coverage.
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return-to-work provision: To encourage employees to return to work as soon as they become physically able, an additional incentive is usually provided under disability insurance for a certain period of time, and is called a return to work provision. Under this provision, the employee can receive up to 100 percent of pre-disability earnings based on a combination of disability benefits and return-to-work earnings.
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return on statutory surplus: The ratio of net operating income to average statutory surplus.
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