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Ultimate Net Loss (UNL)

  1. The loss amount, including covered loss adjustment expenses (LAE), against which the retention and the reinsurance limits apply. This term usually means the total sum which the assured, or any company as his insurer, or both, become obligated to pay either through adjudication or compromise, and usually includes hospital, medical and funeral charges and all sums paid as salaries, wages, compensation, fees, charges and law costs, premiums on attachment or appeal bonds, interest, expenses for doctors, lawyers, nurses, and investigators and other persons, and for litigation, settlement, adjustment and investigation of claims and suits which are paid as a consequence of the insured loss, excluding only the salaries of the assured’s or of any underlying insurer’s permanent employees.
  2. The term applied to the reinsurer's loss under a reinsurance contract, generally the gross loss less any recoveries from other insurance which inure to the benefit of the contract in question.

Umbrella Policy

Coverage for losses above the limit of an underlying policy or policies such as homeowners and auto insurance. While it applies to losses over the dollar amount in the underlying policies, terms of coverage are sometimes broader than those of underlying policies.

Unbundled Contracts

A form of Annuity contract that gives purchasers the freedom to choose among certain optional features in their contract.


The result of the policyholder’s failure to buy sufficient insurance. An underinsured policyholder may only receive part of the cost of replacing or repairing damaged items covered in the policy.


The amount of insurance or reinsurance on a risk (or occurrence) which applies to a loss before the next higher excess layer of insurance or reinsurance attaches.

Underlying Premium

See Subject Premium.


Person whose duty is to select risks for insurance and to determine in what amounts and on what terms the insurer will accept the risks.


Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.

Underwriting Income

The insurer’s profit on the insurance sale after all expenses and losses have been paid. When premiums aren’t sufficient to cover claims and expenses, the result is an underwriting loss. Underwriting losses are typically offset by investment income.

Underwriting Year of Experience

Underwriting result based on written premiums and ultimate losses from loss events falling within the same accounting period, where the accounting period is the period covered by the insurance policy or reinsurance agreement, regardless of when the premiums and losses are actually reported, booked or paid. For example, the 1999 underwriting Year includes results in calendar Year 1999 and all future calendar Years on business bound in 1999. Compare with Accident Year of Experience and Calendar Year of Experience.

Unearned Premium

  1. The portion of a premium already received by the insurer under which protection has not yet been provided. The entire premium is not earned until the policy period expires, even though premiums are typically paid in advance.
  2. That portion of the original premium that applies to the unexpired portion of risk. A fire or casualty insurer or reinsurer must carry a reserve against all unearned premiums as a liability in its financial statement, for if the policy should be canceled, the company would have to pay back the unearned part of the original premium.

Unearned Premium Reserve (UPR)

A proportion of the premium due to the reinsurer retained by the ceding company as a guarantee for the fulfilment of the obligations of the reinsurer.

Unearned Reinsurance Premium

That part of the reinsurance premium applicable to the unexpired portion of the policies reinsured.

Uninsurable Risk

Risks for which it is difficult for someone to get insurance. (See Insurable Risk)

Uninsured Motorists Coverage

Portion of an auto insurance policy that protects a policyholder from uninsured and hit-and-run drivers.

Universal Life Insurance

A flexible premium policy that combines protection against premature death with a type of savings vehicle, known as a cash value account, that typically earns a money market rate of interest. Death benefits can be changed during the life of the policy within limits, generally subject to a medical examination. Once funds accumulate in the cash value account, the premium can be paid at any time but the policy will lapse if there isn’t enough money to cover annual mortality charges and administrative costs.

Unlevered Return On Equity

US GAAP after-tax income before debt cost divided by Total Equity

Unusual Expenses

In life reinsurance, non-routine expenses of the Ceding Company for claims investigation, legal defense or rescission actions. The reinsurer typically agrees to pay such expenses as distinct from punitive, exemplary or other noncontractual expenses which it does not agree to pay.


See Generally Accepted Accounting Principles (GAAP)