Insurance Market Trends and Developments
Expert-defined terms from the Postgraduate Certificate in Level 7 Insurance and Risk Management course at London School of Planning and Management. Free to read, free to share, paired with a professional course.
Insurance Market Trends and Developments Glossary #
Insurance Market Trends and Developments Glossary
A #
A
Actuary #
Actuary
An actuary is a professional who applies mathematical and statistical methods to… #
Actuaries analyze data to calculate the probability of certain events occurring and help insurance companies set premiums and reserves accordingly.
Adverse Selection #
Adverse Selection
Adverse selection refers to a situation where policyholders with a higher risk o… #
This can lead to higher costs for insurance companies and may result in premium increases for all policyholders.
B #
B
Blockchain #
Blockchain
Blockchain is a decentralized, distributed ledger technology that securely recor… #
In the insurance industry, blockchain can streamline processes such as claims processing, policy issuance, and fraud detection.
C #
C
Catastrophe Bonds #
Catastrophe Bonds
Catastrophe bonds, also known as cat bonds, are financial instruments that trans… #
If a predefined catastrophe occurs, investors may lose their principal investment.
Claims Management #
Claims Management
Claims management involves the process of handling insurance claims from policyh… #
This includes investigating claims, determining coverage, and settling claims promptly and fairly. Effective claims management is crucial for customer satisfaction and retention.
D #
D
Data Analytics #
Data Analytics
Data analytics involves the use of statistical analysis and machine learning tec… #
In the insurance industry, data analytics can help companies predict risks, detect fraud, and personalize products and services for customers.
E #
E
Excess and Surplus Lines Insurance #
Excess and Surplus Lines Insurance
Excess and surplus lines insurance provides coverage for risks that are too high… #
These policies are typically sold by non-admitted insurers and are subject to less regulatory oversight than admitted insurance.
F #
F
Fintech #
Fintech
Fintech, short for financial technology, refers to the use of technology to impr… #
In the insurance industry, fintech companies are leveraging artificial intelligence, big data, and mobile applications to enhance customer experience and streamline operations.
G #
G
Globalization #
Globalization
Globalization refers to the interconnectedness of economies, cultures, and socie… #
In the insurance industry, globalization has led to the expansion of multinational insurance companies, increased competition, and the need for cross-border regulatory harmonization.
H #
H
Health Insurance Marketplaces #
Health Insurance Marketplaces
Health insurance marketplaces, also known as exchanges, are online platforms whe… #
These marketplaces were established under the Affordable Care Act to increase access to affordable health coverage.
I #
I
Internet of Things (IoT) #
Internet of Things (IoT)
The Internet of Things (IoT) refers to the network of interconnected devices and… #
In insurance, IoT devices such as telematics in cars and wearables in health insurance can provide real-time data for risk assessment and pricing.
J #
J
Joint Underwriting Association (JUA) #
Joint Underwriting Association (JUA)
A Joint Underwriting Association (JUA) is a state #
sponsored insurance pool that provides coverage for high-risk individuals or properties that are unable to obtain insurance in the standard market. JUAs help ensure that all individuals have access to essential insurance coverage.
K #
K
Key Performance Indicators (KPIs) #
Key Performance Indicators (KPIs)
Key Performance Indicators (KPIs) are measurable values that indicate how effect… #
In the insurance industry, common KPIs include loss ratios, combined ratios, customer retention rates, and claims processing times.
L #
L
Lloyd's of London #
Lloyd's of London
Lloyd's of London is a renowned insurance marketplace where syndicates of underw… #
Lloyd's is known for insuring unique and complex risks, such as celebrity body parts and space missions, through its innovative underwriting methods.
M #
M
Microinsurance #
Microinsurance
Microinsurance provides affordable insurance products tailored to the needs of l… #
Microinsurance aims to protect policyholders against financial risks associated with illness, accidents, and natural disasters.
N #
N
National Flood Insurance Program (NFIP) #
National Flood Insurance Program (NFIP)
The National Flood Insurance Program (NFIP) is a federal program in the United S… #
NFIP aims to reduce the financial impact of flooding on individuals, communities, and the government.
O #
O
Open Enrollment Period #
Open Enrollment Period
The Open Enrollment Period is a specified time frame during which individuals ca… #
Open Enrollment Periods are typically set by government regulations or insurance companies and occur annually.
P #
P
Policyholder Surplus #
Policyholder Surplus
Policyholder surplus is the difference between an insurance company's assets and… #
A strong policyholder surplus indicates financial stability and the ability to withstand unexpected losses.
Q #
Q
Quantitative Easing (QE) #
Quantitative Easing (QE)
Quantitative Easing (QE) is a monetary policy tool used by central banks to stim… #
QE can impact insurance markets by influencing interest rates, inflation, and investment returns on insurers' portfolios.
R #
R
Reinsurance #
Reinsurance
Reinsurance is a risk management strategy where insurance companies transfer a p… #
Reinsurance helps insurers protect against large losses, maintain solvency, and diversify their risk exposure.
S #
S
Smart Contracts #
Smart Contracts
Smart contracts are self #
executing contracts with the terms of the agreement written into code. In insurance, smart contracts can automate claims processing, policy issuance, and premium payments based on predefined conditions, improving efficiency and reducing fraud.
T #
T
Telematics #
Telematics
Telematics refers to the use of technology to monitor and transmit data on vehic… #
In auto insurance, telematics devices installed in cars can track driving habits such as speed, distance, and braking to determine personalized premiums based on actual risk.
U #
U
Underwriting Cycle #
Underwriting Cycle
The underwriting cycle refers to the cyclical pattern of insurance market condit… #
During a hard market, premiums rise, capacity decreases, and underwriting standards tighten, while a soft market sees the opposite trends.
V #
V
Volatility #
Volatility
Volatility refers to the degree of fluctuations in the financial markets, includ… #
High volatility can increase uncertainty and risk for insurers, leading to challenges in pricing risks, managing investments, and maintaining profitability.
W #
W
Weather Derivatives #
Weather Derivatives
Weather derivatives are financial instruments that allow companies to hedge agai… #
Weather derivatives can help insurers manage the impact of weather on their portfolios.
X #
X
X #
efficiency
X-efficiency refers to the ability of firms to minimize costs and maximize outpu… #
In the insurance industry, X-efficiency is essential for insurers to operate efficiently, deliver value to customers, and remain competitive in the market.
Y #
Y
Yield Curve #
Yield Curve
The yield curve is a graphical representation of interest rates on bonds of simi… #
Changes in the yield curve can impact insurers' investment returns, asset-liability management, and pricing of insurance products.
Z #
Z
Zombie Insurance Companies #
Zombie Insurance Companies
Zombie insurance companies are firms that are financially distressed, have inade… #
Regulators may intervene to rehabilitate or liquidate zombie insurers to protect policyholders and maintain market stability.