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Identity Theft Insurance

Coverage for expenses incurred as the result of an identity theft. Can include costs for notarizing fraud affidavits and certified mail, lost income from time taken off from work to meet with law-enforcement personnel or Credit agencies, fees for reapplying for loans and attorney's fees to defend against lawsuits and remove criminal or civil judgments.

Immediate Annuity

A product purchased with a lump sum, usually at the time retirement begins or afterwards. Payments begin within about a Year. Immediate annuities can be either fixed or variable.

Incontestable Clause

A Policy provision in which the company agrees not to contest the validity of the contract after it has been in force for a certain period of time, usually two years.

Incurred but not Reported Losses (IBNR)

  1. Losses that are not filed with the insurer or reinsurer until Years after the policy is sold. Some liability claims may be filed long after the event that caused the injury to occur. Asbestos-related diseases, for example, do not show up until decades after the exposure. IBNR also refers to estimates made about claims already reported but where the full extent of the injury is not yet known, such as a Workers Compensation claim where the degree to which work-related injuries prevents a worker from earning what he or she earned before the injury unfolds over time. Insurance companies regularly adjust reserves for such losses as new information becomes available.
  2. The actuarial estimate of amounts required to pay ultimate net losses after netting out existing amounts on reported but unpaid claims. The IBNR estimate includes an allowance for potential changes in such existing amounts as well as additional amounts for claims that have already occurred but are yet to be reported.
  3. Estimates as of the valuation date of future claim payments related to claims that have occurred but have not yet been reported to the company.

Incurred Claims

Claims paid during a period plus the change in the claim reserve

Incurred Losses


Losses occurring within a fixed period, whether or not adjusted or paid during the same period.

Incurred Loss Ratio

The percentage of losses incurred to premiums earned.


Provide financial compensation for losses.

Indemnity Reinsurance

A form of reinsurance under which the risk is passed to the reinsurer who reimburses the Ceding Company for covered losses. The Ceding Company retains its liability to, and its contractual relationship with, the insured.

Independent Agent

Agent who is self-employed, is paid on commission, and represents several insurance companies. (See Captive agent)

Indexing, Indexation

The adjustment of a Ceding Company's retention and the reinsurance limit by a measure of inflation such as the Consumer Price Index. Under indexation, the Ceding Company's original retention and the reinsurance limit are multiplied by the result of dividing the index on the settlement date by the index as of the effective date of the reinsurance agreement.

Individual Cession Administration

A system of reinsurance administration whereby the Ceding Company sends a separate notification to the reinsurer for each risk to be reinsured. The reinsurer then establishes individual records for each cession and calculates the reinsurance premium, inforce, and reserve information for its financial reports. Typically, the reinsurer bills the Ceding Company for the premium due.

Individual Retirement Account (IRA)

A tax-deductible savings plan for those who are self-employed, or those whose earnings are below a certain level or whose employers do not offer retirement plans. Others may make limited contributions on a tax-deferred basis. The Roth IRA, a special kind of retirement account created in 1997, may offer greater tax benefits to certain individuals.

Inflation Factor

A loading to provide for increased medical costs and loss payments in the future due to inflation.

Inflation Guard Clause

A provision added to a homeowners insurance policy that automatically adjusts the coverage limit on the dwelling each time the policy is renewed to reflect current construction costs.

Inherent Vice

Certain goods are, by their very nature susceptible to damage and it would be unreasonable to expect insurers to pay for such damage. Examples of inherent vice are would be deterioration of imperfectly cured skins, spontaneous fermentation or combustion of improperly dried grain.

Inland Marine Insurance

This broad type of coverage was developed for shipments that do not involve ocean transport. Covers articles in transit by all forms of land and air transportation as well as bridges, tunnels and other means of transportation and communication. Floaters that cover expensive personal items such as fine art and jewelry are included in this category. (See Floater)


Insurer’s inability to pay debts. Insurance insolvency standards and the regulatory actions taken vary from state to state. When regulators deem an insurance company is in danger of becoming insolvent, they can take one of three actions: place a company in conservatorship or rehabilitation if the company can be saved or liquidation if salvage is deemed impossible. The difference between the first two options is one of degree – regulators guide companies in conservatorship but direct those in rehabilitation. Typically the first sign of problems is inability to pass the financial tests regulators administer as a routine procedure. (See Liquidation; Risk-based capital)

Insolvency Clause

A provision in reinsurance agreements that provides for the continuance of payments of the obligations of the reinsurer as though no Ceding Company insolvency had occurred, with appropriate recognition of additional expenses of the reinsurer caused by the insolvency. This provision is required in most states.

Insititutional Investor

An organization such as a bank or insurance company that buys and sells large quantities of securities.

Insurable Risk

Risks for which it is relatively easy to get insurance and that meet certain criteria. These include being definable, accidental in nature, and part of a group of similar risks large enough to make losses predictable. The insurance company also must be able to come up with a reasonable price for the insurance.

Insurance (aka Coverage)

A system to make large financial losses more affordable by Pooling the risks of many individuals and business entities and transferring them to an insurance company or other large group in return for a premium.

Insurance Pool

  1. A group of insurance companies that Pool assets, enabling them to provide an amount of insurance substantially more than can be provided by individual companies to ensure large risks such as nuclear power stations. Pools may be formed voluntarily or mandated by the state to cover risks that can’t obtain coverage in the voluntary market such as coastal properties subject to hurricanes. (See Beach and windstorm plans; Fair access to insurance requirements plans / FAIR plans; Joint underwriting association / JUA)
  2. An organization of insurers or reinsurers through which particular types of risks are underwritten with premiums, losses, and expenses shared in agreed ratios.
  3. A method of allocating reinsurance among several reinsurers. Using this method, each reinsurer receives a specified percentage of each risk ceded to the Pool. Percentages may vary by reinsurer, risk classification, etc. Contrast with Reinsurance Wheel. See also Layering and Reinsurance Facility.


Insurance Regulatory Information System (IRIS)

Uses financial ratios to measure insurers’ financial strength. Developed by the National Association of Insurance Commissioners. Each individual state insurance department chooses how to use IRIS.

Insurance Score

Insurance scores are confidential rankings based on Credit information. This includes whether the consumer has made timely payments on loans, the number of open Credit card accounts and whether a bankruptcy filing has been made. An insurance score is a measure of how well consumers manage their financial affairs, not of their financial assets. It does not include information about income or race.

Studies have shown that people who manage their money well tend also to manage their most important asset, their home, well. And people who manage their money responsibly also tend to handle driving a car responsibly. Some insurance companies use insurance scores as an insurance underwriting and rating tool.



Insurance written in an amount approximating the value of the insured property.

Integrated Benefits

Coverage where the distinction between job-related and non-occupational illnesses or injuries is eliminated and Workers Compensation and general health coverage are combined. Legal obstacles exist, however, because the two coverages are administered separately. Previously called twenty-four hour coverage.


A third party in the design, negotiation, and administration of a reinsurance agreement. Intermediaries recommend to ceding companies the type and amount of reinsurance to be purchased and negotiate the placement of coverage with reinsurers. Also called a broker. See Brokerage Market.

Intermediary Clause

A provision in reinsurance agreements which identifies the intermediary negotiating the agreement. Most intermediary Clauses shift all Credit risk to reinsurers by providing that:

  1. the cedant’s payments to the intermediary are deemed payments to the reinsurer; and
  2. the reinsurer’s payments to the intermediary are not payments to the cedant until actually received by the cedant.

This Clause is mandatory in some states


The process of bringing savers, investors and borrowers together so that savers and investors can obtain a return on their money and borrowers can use the money to finance their purchases or projects through loans.

Internal Rate of Return (IRR)

Level discount rate where present value of Distributable Profits are equal to zero at time zero.

Internet Insurer

An insurer that sells exclusively via the Internet.

Internet Liability Insurance

Coverage designed to protect businesses from liabilities that arise from the conducting of business over the Internet, including copyright infringement, defamation, and violation of privacy.

Investment Income

Income generated by the investment of assets. Insurers have two sources of income, underwriting (premiums less claims and expenses) and investment income. The latter can offset underwriting operations, which are frequently unprofitable.


International Underwriting Association of London