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Direct & Facultative


Part of a property or liability insurance policy that states the name and address of policyholder, property insured, its location and description, the policy period, premiums, and supplemental information. Referred to as the “dec page.”


The amount of loss paid by the policyholder. Either a specified dollar amount, a percentage of the claim amount, or a specified amount of time that must elapse before benefits are paid. The bigger the deductible, the lower the premium charged for the same coverage.

Deferred Acquisition Costs (DAC)

Costs directly associated with acquiring new business, which are to be recognized over the lifetime of the business. There are typically two basic types of costs: commission or brokerage costs and first year policy cost. These costs are deferred by capitalizing them as an asset and amortizing them in relationship to premium or profits depending on the underlying product characteristics.

Deferred Annuity

An Annuity contract that is purchased either with a single tax-deferred premium or with periodic tax-deferred premiums over time. Payments begin at a predetermined point in time, such as retirement.

Deferred Policy Acquisition Costs

See Deferred Acquisition Costs

Deficiency Reserves

Regulatory reserves held in excess of regulatory Benefit Reserves. Generally created when the gross premium is less than the premium assumed by the regulatory reserving standard. Not deductible for US Tax purposes.

Defined Benefit Plan

A retirement plan under which pension benefits are fixed in advance by a formula based generally on Years of service to the company multiplied by a specific percentage of wages, usually average earnings over that period or highest average earnings over the final Years with the company.

Defined Contribution Plan

An employee benefit plan under which the employer sets up benefit accounts and contributions are made to it by the employer and by the employee. The employer usually matches the employee's contribution up to a stated limit.

Demand Deposit

Customer assets that are held in a checking account. Funds can be readily withdrawn by check, “on demand.”


The conversion of insurance companies from mutual companies owned by their policyholders into publicly-traded stock companies.

Deposit Premium

The amount of premium (usually for an Excess of Loss Reinsurance contract) which the Ceding Company pays to the reinsurer on a periodic basis during the term of the contract. This amount is generally determined as a percentage of the estimated amount of premium which the contract will produce based on the rate and estimated Subject Premium. It is often the same as the Minimum Premium but may be higher or lower. The deposit premium will be adjusted to the higher of the actual developed premium or the minimum premium after the actual Subject Premium has been determined.

Deposited Reserves

Reserves for ceded liabilities held on the ceding company's books, not on the reinsurer's books.

Depository Institution

Financial institution that obtains its funds mainly through deposits from the public. Includes commercial banks, savings and loan associations, savings banks, and Credit unions.


In insurance, reducing regulatory control over insurance rates and forms. Commercial insurance for businesses of a certain size has been deregulated in many states.


Contracts that derive their value from an underlying financial asset, such as publicly-traded securities and foreign currencies. Often used as a hedge against changes in value.

Diminuition of Value

The idea that a vehicle loses value after it has been damaged in an accident and repaired.

Direct Premium

An insurer's premium income calculated before reflecting reinsurance assumed or ceded

Direct Premiums

Property/casualty premiums collected by the insurer from policyholders, before reinsurance premiums are deducted. Insurers share some direct premiums and the risk involved with their reinsurers.

Direct Sales/ Direct Response

Method of selling insurance directly to the insured through an insurance company’s own employees, through the mail, or via the Internet. This is in lieu of using captive or exclusive agents.

Direct Writers

Insurance companies that sell directly to the public using exclusive agents or their own employees, through the mail, or via Internet. Large insurers, whether predominately direct writers or agency companies, are increasingly using many different channels to sell insurance. In reinsurance, denotes reinsurers that deal directly with the insurance companies they reinsure without using a broker.

Directors and Officers Liability Insurance/D&O

Covers directors and officers of a company for negligent acts or omissions, and for misleading statements that result in suits against the company, often by shareholders. Directors and officers insurance policies usually contain two coverages: personal coverage for individual directors and officers who are not indemnified by the corporation for their legal expenses or judgments against them – some corporations are not required by their corporate or state charters to provide indemnification; and corporate reimbursement coverage for indemnifying directors and officers. Entity coverage for claims made specifically against the company may also be available.

Disabled Life Reserves (DLR)

For an insurance company, a claim reserve liability that is the present value of all amounts that are predicted to become payable while an insured is disabled. May include the IBNR.

Distributable Profits

See Dividends


Money returned to policyholders from an insurance company’s earnings. Considered a partial premium refund rather than a taxable distribution, reflecting the difference between the premium charged and actual losses. Many life insurance policies and some property/casualty policies pay dividends to their owners. Life insurance policies that pay dividends are called participating policies.

Domestic Insurance Company

Term used by a state to refer to any company incorporated there.


See Second Event Retention.