B-SHARE
VARIABLE ANNUITY
A form of
variable annuity contract with no initial sales charge but if the
contract is cancelled the holder pays deferred sales charges
(usually from 5 to 7 percent the first year, declining to zero after
from 5 to 7 years). The most common form of annuity
contract.
BALANCE SHEET
Provides a
snapshot of a company’s financial condition at one point in time. It
shows assets, including investments and reinsurance, and
liabilities, such as loss reserves to pay claims in the future, as
of a certain date. It also states a company’s equity, known as
policyholder surplus. Changes in that surplus are one indicator of
an insurer’s financial standing.
BANK HOLDING
COMPANY
A company that
owns or controls one or more banks. The Federal Reserve has
responsibility for regulating and supervising bank holding company
activities, such as approving acquisitions and mergers and
inspecting the operations of such companies. This authority applies
even though a bank owned by a holding company may be under the
primary supervision of the Comptroller of the Currency or the FDIC.
BASIS POINT
0.01 percent of
the yield of a mortgage, bond or note. The smallest measure used.
BEACH AND
WINDSTORM PLANS
State-sponsored
insurance pools that sell property coverage for the peril of
windstorm to people unable to buy it in the voluntary market because
of their high exposure to risk. Seven states (AL, FL, LA, MS, NC,
SC, TX) offer these plans to cover residential and commercial
properties against hurricanes and other windstorms. Georgia and New
York provide this kind of coverage for windstorm and hail in certain
coastal communities through other property pools. Insurance
companies that sell property insurance in the state are required to
participate in these plans. Insurers share in profits and losses.
(See Fair access to insurance requirements plans / FAIR plans;
Residual market)
BINDER
Temporary
authorization of coverage issued prior to the actual insurance
policy.
BLANKET
INSURANCE
Coverage for more
than one type of property at one location or one type of property at
more than one location. Example: chain stores.
BODILY INJURY
LIABILITY COVERAGE
Portion of an
auto insurance policy that covers injuries the policyholder causes
to someone else.
BOILER AND
MACHINERY INSURANCE
Often called
Equipment Breakdown, or Systems Breakdown insurance. Commercial
insurance that covers damage caused by the malfunction or breakdown
of boilers, and a vast array of other equipment including air
conditioners, heating, electrical, telephone, and computer systems.
BOND
A security that
obligates the issuer to pay interest at specified intervals and to
repay the principal amount of the loan at maturity. In insurance, a
form of suretyship. Bonds of various types guarantee a payment or a
reimbursement for financial losses resulting from dishonesty,
failure to perform and other acts.
BOND RATING
An evaluation of
a bond’s financial strength, conducted by such major ratings
agencies as Standard & Poor’s and Moody’s Investors Service.
BOOK OF
BUSINESS
Total amount of
insurance on an insurer's books at a particular point in time.
BROKER
An intermediary
between a customer and an insurance company. Brokers typically
search the market for coverage appropriate to their clients. They
work on commission and usually sell commercial, not personal,
insurance. In life insurance, agents must be licensed as securities
brokers/dealers to sell variable annuities, which are similar to
stock market-based investments.
BURGLARY AND
THEFT INSURANCE
Insurance for the
loss of property due to burglary, robbery or larceny. It is provided
in a standard homeowners policy and in a business multiple peril
policy.
BUSINESS
INCOME INSURANCE (also known as BUSINESS INTERRUPTION INSURANCE)
Commercial
coverage that reimburses a business owner for lost profits and
continuing fixed expenses during the time that a business must stay
closed while the premises are being restored because of physical
damage from a covered peril, such as a fire. Business interruption
insurance also may cover financial losses that may occur if civil
authorities limit access to an area after a disaster and their
actions prevent customers from reaching the business premises.
Depending on the policy, civil authorities coverage may start after
a waiting period and last for two or more weeks.
BUSINESSOWNERS POLICY / BOP
A policy that
combines property, liability and business interruption coverages for
small- to medium-sized businesses. Coverage is generally cheaper
than if purchased through separate insurance policies.
Glossary of Insurance Terms
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