Glossar der Versicherungsbedingungen Diese Seite enthält ein Glossar der Versicherungsbedingungen und Definitionen, die häufig im Versicherungsgeschäft verwendet werden. Neue Begriffe werden dem Glossar im Laufe der Zeit hinzugefügt. Die Definitionen in diesem Glossar werden von der NAIC Research und Actuarial Abteilung Mitarbeiter basierend auf verschiedenen Versicherungsreferenzen entwickelt. Diese Definitionen stellen eine allgemeine oder allgemeine Verwendung des Begriffs dar. Einige Wörter und / oder Ausdrücke können von anderen Stellen unterschiedlich definiert oder in einem Kontext verwendet werden, so dass die angegebene Definition möglicherweise nicht anwendbar ist. (Klicken Sie auf den Buchstaben, um Begriffe zu sehen, die mit diesem Alphabet beginnen.) Unfall - ein unerwartetes Ereignis oder Umstand ohne absichtliche Absicht. Unfallversicherung - Versicherung für unvorhergesehene Körperverletzung. Unfall nur - ein Versicherungsvertrag, der allein oder in Kombination für Tod, Zerstückelung, Invalidität oder Krankenhaus und medizinische Versorgung, die durch Unfälle oder bestimmte Unfälle verursacht werden oder erforderlich sind, gewährt. Unfall - oder ADORD - Maßnahmen, die allein oder in Kombination für Tod, Zerstückelung, Invalidität oder Krankenhaus und medizinische Versorgung sorgen, die durch Unfälle oder bestimmte Unfälle verursacht oder erforderlich sind. Arten von Berichterstattung gehören Studentenunfall, Sportunfall, Reiseunfall, Decke Unfall, spezifischer Unfall oder versehentlicher Tod und Zerstückelung (ADampD). Unfallbedingte Körperverletzung - unerwartete Verletzung einer Person. Unfallverhütung Zerstückelung - ein Versicherungsvertrag, der bei Todesfall und / oder Zerstückelung durch Unfall oder bestimmte Unfallarten eine bestimmte Leistung zahlt. Kumulierung Zeitraum - Zeitraum der versicherten müssen förderfähig medizinische Kosten mindestens gleich dem abzugsfähigen Betrag, um eine Leistungszeitraum unter einem großen medizinischen Kosten oder umfassende medizinische Kostenpolitik zu etablieren. Tatsächlicher Barwert - Rückzahlungsbetrag für Schadenersatz wegen Verlust oder Beschädigung von Eigentum in den meisten Fällen ist es Ersatzkosten minus Abschreibungen Versicherungsmathematische Bericht - (PC Insurance) ein Dokument oder eine andere Präsentation, als formale Mittel zur Vermittlung an die staatliche Regulierungsbehörde vorbereitet und Dem Aufsichtsrat oder dessen Äquivalent, den beruflichen Schlußfolgerungen und Empfehlungen des Versicherungsmathematikers, der Aufzeichnung und Übermittlung der Methoden und Verfahren, um sicherzustellen, daß die Adressaten sich der Bedeutung der Stellungnahme oder der Feststellungen des Aktuars bewusst sind und die der Stellungnahme zugrunde liegenden Analysen dokumentieren . (In Life and Health) würde dieses Dokument ein Versicherungsmathematisches Memorandum genannt werden. Versicherungsmathematiker - Business-Profi, die Wahrscheinlichkeiten des Risikos und Risikomanagements einschließlich Berechnung der Prämien, Dividenden und anderen anwendbaren Versicherungs-Industrie-Standards analysiert. Adjuster - eine Person, die Ansprüche untersucht und empfiehlt Abwicklungsoptionen auf der Grundlage von Schätzungen der Schäden und Versicherungspolicen statt. Aufnahme - Krankenhaus stationäre Pflege für jeden medizinischen Zustand. Zugelassene Vermögenswerte - Vermögenswerte des Versicherers, die bewertet und in die Bilanz aufgenommen werden können, um die Rentabilität der Gesellschaft zu bestimmen. Zulässige Unternehmen - eine Versicherungsgesellschaft lizenziert, um Geschäfte in einem Staat (s), mit Sitz in einem alternativen Staat oder Land. Vorauszahlungen - treten auf, wenn eine Police verarbeitet wurde und die Prämie vor dem Wirksamwerden gezahlt wurde. Diese sind eine Verbindlichkeit gegenüber der Gesellschaft und nicht in der Prämie oder der nicht einbezahlten Prämienreserve enthalten. Unerwünschte Selektion - das soziale Phänomen, bei dem Personen mit einer überdurchschnittlichen Verlustwahrscheinlichkeit einen größeren Versicherungsschutz suchen als solche mit geringerem Risiko. Advisory Organization - eine Gruppe, die von Mitgliedsunternehmen unterstützt wird, deren Aufgabe es ist, Schadenstatistiken zu sammeln und Trendverluste zu veröffentlichen. Affiliate - eine Person oder Körperschaft, die direkt oder indirekt über eine oder mehrere andere Personen oder Körperschaften kontrolliert wird, wird durch den Versicherer kontrolliert oder steht unter dieser Kontrolle. Agent - eine Person, die verkauft, Dienstleistungen oder Verhandlungen Versicherungen entweder im Namen eines Unternehmens oder unabhängig. Aggregat - der maximale Dollarbetrag oder der Gesamtbetrag, der für einen einzigen Verlust oder mehrere Verluste während eines Versicherungszeitraums oder für ein einzelnes Projekt zu zahlen ist. Aggregate Cost Payments - Methode der Rückerstattung eines Krankenversicherungsplans bei einer direkt versorgenden Körperschaft, wobei (1) der Gesundheitsplan vertraglich verpflichtet ist, die Gesamtbetriebskosten des Unternehmens zu bezahlen, abzüglich der Erträge des Unternehmens von anderen Nutzern (2) Es bestehen gegenseitige unbegrenzte Garantien der Solvabilität zwischen dem Unternehmen und dem Gesundheitsplan, die ihr jeweiliges Kapital und ihren Überschuss bei der gegenseitigen Gewährleistung in Gefahr bringen. Flugzeugabdeckung für Luftfahrzeuge (Rumpf) und deren Inhalt Flugzeughersteller und Luftfahrzeughersteller haften gegenüber Fluggästen, Flughäfen und anderen Dritten. ALAE - eine Schätzung der Schadenabwicklung, die mit einer bestimmten Forderung verbunden ist. Alien Company - eine Versicherungsgesellschaft gegründet nach den Gesetzen eines fremden Landes. Das Unternehmen muss den staatlichen regulatorischen Standards entsprechen, um gesetzlich Versicherungsprodukte in diesem Staat zu verkaufen. Allied Lines - Deckungen, die in der Regel mit Sachversicherung, z. B. Glas, Tornado, Windsturm und Hagelsprinkler und Wasserschäden Explosion, Aufruhr und Zivilbevölkerung wachsende Kulturen Überschwemmung regen und Schäden aus Flugzeugen und Fahrzeug, etc. All-Risk - auch als offene Gefahr bekannt, deckt diese Art von Politik eine breite Palette von Verluste. Die Police deckt Risiken, die nicht explizit im Versicherungsvertrag ausgeschlossen sind. Alternative Arbeitnehmer Entschädigung - außer Standardarbeitskräfte Entschädigung, Arbeitgeber Haftung und Überschuss Arbeitnehmer Entschädigung (z. B. große Selbstbehalt, Managed Care). Ambulante Dienste - Gesundheitsdienste für Mitglieder, die nicht auf eine Gesundheitseinrichtung. Ambulante Dienstleistungen werden oft als ambulante Dienstleistungen bezeichnet. Jahresabschluss - ein Jahresbericht, der bei jedem Staat, in dem ein Versicherer tätig ist, eingereicht werden muss. Dieser Bericht gibt einen Überblick über die Vermögens-, Finanz - und Ertragslage eines Unternehmens sowie über wesentliche Ereignisse im Berichtsjahr. Rentenempfänger - der Begünstigte einer Annuitätszahlung oder Person, während deren Leben und Rente zahlbar ist. Annuities ndash Sofort Nicht variabel - ein Annuitätsvertrag, der die feste Zahlung der Annuität am Ende des ersten Zahlungsintervalls nach dem Kauf vorsieht. Das Intervall kann variieren, aber die Annuität Auszahlungen müssen innerhalb von 13 Monaten beginnen. Annuität - ein Vertrag, der Einkommen für einen bestimmten Zeitraum oder Dauer des Lebens für eine Person oder Personen. Schätzung - Wertschätzung. Schiedsgerichtsverfahren - eine verbindliche Streitbeilegungs-Taktik, bei der ein Schlichter ohne Interesse an dem Ergebnis tritt. Beurteilter Wert - Schätzwert für reales oder persönliches Eigentum, das von einem steuerpflichtigen Unternehmen errichtet wird - voraussichtlicher künftiger wirtschaftlicher Nutzen, der durch ein bestimmtes Unternehmen infolge früherer Geschäfte oder Ereignisse erzielt oder kontrolliert wird. Ein Vermögenswert hat drei wesentliche Merkmale: Er verkörpert einen wahrscheinlichen künftigen Nutzen, der eine Kapazität umfasst, einzeln oder in Kombination mit anderen Vermögenswerten, direkt oder indirekt zu zukünftigen Nettozahlungszuflüssen beizutragen Die Transaktion oder andere ereignisbezogene Anreize für das Recht der Körperschaften oder die Kontrolle über die Leistung ist bereits eingetreten. Asset Risk - in der risikobasierten Kapitalformel das dem Unternehmen zuzurechnende Risiko. Assigned Risk - Ein staatlicher Pool, der gegründet wurde, um Geschäfte zu reduzieren, die von den Carriern im Standardversicherungsmarkt abgelehnt wurden. Assisted Living Care - eine Politik oder ein Reiter, die Abdeckung nur bietet, während ein Versicherungsnehmer auf eine betreute Wohnen Anlage beschränkt und erfüllt die politischen Anforderungen für die Berichterstattung. Angenommene Rückversicherung - die Übernahme eines Risikos von einem anderen Versicherungsunternehmen in einem Rückversicherungsvertrag oder - vertrag. Authorized Company - ein Versicherer lizenziert oder zugelassen, Geschäfte in einem bestimmten Staat zu tätigen. Autorisierte Kontrollebene Risikobasiertes Kapital - theoretischer Kapitalbetrag plus Überschuss eines Versicherungsunternehmens sollte beibehalten werden. Autorisierte Rückversicherung - Rückversicherung bei einem Rückversicherer, der in einem Staat lizenziert oder anderweitig zur Rückversicherung zugelassen ist. Kfz-Haftpflicht - Deckung, die vor finanziellen Verlusten aufgrund der gesetzlichen Haftung für Verletzungen des Kraftfahrzeugs (Körperverletzung und medizinische Zahlungen) oder Sachschäden durch Unfälle aus Eigentum, Instandhaltung oder Benutzung eines Kraftfahrzeugs (einschließlich Freizeitbeschäftigung) schützt Fahrzeuge wie Wohnmobile). Kommerziell ist definiert als alle Kraftfahrzeugrichtlinien, die Fahrzeuge beinhalten, die vorwiegend im Zusammenhang mit Geschäften, gewerblichen Betrieben, Tätigkeit, Beschäftigung oder Tätigkeiten für Gewinn oder Gewinn verwendet werden. Kein Fehler ist durch den betreffenden Staat definiert. Auto Physical Damage - Kfz-Versicherung (einschließlich Kollision, Vandalismus, Feuer und Diebstahl), die gegen Materialschäden gegen das versicherte Fahrzeug versichert. Kommerziell ist definiert als alle Kraftfahrzeugrichtlinien, die Fahrzeuge beinhalten, die in Verbindung mit Geschäften, gewerblichen Betrieben, Tätigkeit, Beschäftigung oder Tätigkeiten verwendet werden, die für Gewinn oder Gewinn ausgeübt werden. Kfz-Haftpflichtversicherung - Deckung für Körperverletzungen und Sachschäden, die durch Eigentum oder Betrieb eines Fahrzeugs entstehen. Bilanz - Buchführung, die die finanzielle Lage eines Unternehmens zu einem bestimmten Zeitpunkt darstellt. BCEGS - Building Code Effectiveness Grading Zeitplan - Klassifizierungssystem für die Bewertung von Bauordnungen je geografischer Region mit besonderem Schwerpunkt auf der Minderung von Verlusten durch Naturkatastrophen. Begünstigte - eine Person, die Anspruch auf Zahlung aufgrund des Willens, Lebensversicherungspolice, Ruhestand, Rente, Vertrauen oder andere Vertrag erhalten kann. Benefits (Medical amp Hospital Ausgaben) - Gesamtausgaben für Gesundheitsdienste, die an oder im Namen eines Mitglieds gezahlt werden. Deckung - Deckung für Eigentum und Haftung, die sich auf mehr als einen Standort, Klasse von Eigentum oder Arbeitnehmer erstreckt. Boatowners / Personal Watercraft - deckt Schäden an Vergnügungsbooten, Motoren, Anhängern, Bootfahren Ausrüstung und persönlichem Wasserfahrzeug sowie Körperverletzung und Sachschäden Haftung für andere. Körperverletzung - Körperverletzung einschließlich Krankheit oder Krankheit an eine Person. Boiler amp Maschinen oder Anlagen Breakdown amp Maschinen - Abdeckung für den Ausfall von Kesseln, Maschinen und anderen elektrischen Geräten. Die Leistungen umfassen (i) Eigentum des Versicherten, der durch den Unfall unmittelbar beschädigt wurde (ii) Kosten für vorübergehende Reparaturen und Beschleunigungskosten und (iii) Haftung für Sachschäden an Dritten. Abdeckung umfasst auch Inspektion der Ausrüstung. Anleihen - eine Form der Schuldverschreibung, bei der der Schuldner eine Gläubigeranteil an der Gesellschaft hat. Verpflichtungen, die von Geschäftseinheiten, staatlichen Einheiten und bestimmten gemeinnützigen Einheiten mit einem festen Zeitplan für eine oder mehrere künftige Zahlungen von Geld ausgegeben werden, umfassen Commercial Paper, verkäufliche Einlagenzertifikate, Pensionsgeschäfte und Equipment Trust Zertifikate. Buchwert - originäre Kosten, einschliesslich aktivierter Akquisitionskosten und kumulierter Abschreibungen, nicht abgeschriebener Prämien und Rabatte, aufgeschobener Entstehungs - und Verpflichtungsgebühren, direkter Abschreibung und Erhöhung / Verminderung durch Anpassung. Broker - eine Person, die Provisionen aus dem Verkauf und Service von Versicherungspolicen erhält. Diese Personen arbeiten im Auftrag des Kunden und sind nicht auf den Verkauf von Policen für ein bestimmtes Unternehmen beschränkt, sondern Provisionen werden von der Firma bezahlt, mit der der Verkauf gemacht wurde. Builders Risk Policy - in der Regel auf einem Berichtswesen oder einem ausgefüllten Wertformular, diese Versicherung versichert gegen den Verlust von Gebäuden im Laufe des Baus. Die Abdeckung umfasst auch Maschinen und Ausrüstungen verwendet, die im Laufe des Baues und Materialien im Zusammenhang mit dem Bau. Einbruch - und Diebstahlversicherung für Eigentum, das durch Bruch und Eintritt in das Versicherungsobjekt, Einbruchdiebstahl, Diebstahl, Fälschung, Fälschung, Betrug, Entführung und Löschung und außerbetriebliche Belichtung entsteht oder zerstört wird. Business Auto - Abdeckung für Kraftfahrzeuge, andere als die in der Garage Geschäft, im Handel tätig. Business Auto-Einreichungen sind einzeln oder in einer Kombination Abdeckung wie die folgenden: Auto Liability, PIP, MP, nicht versicherte Autofahrer und / oder Underversicherten Autofahrer (UM / UIM) angegebene Ursachen für Verlust, umfassende und Kollision. Betriebsunterbrechung - Einkommensverlust durch Sachschäden an einer Betriebseinrichtung. Unternehmer Politik - Business-Versicherung in der Regel für Eigentum, Haftung und Betriebsunterbrechung Abdeckung. Kalenderjahr Abzugsfähig - in der Krankenversicherung der Betrag, der vom Versicherten in einem Kalenderjahr gezahlt werden muss, bevor der Versicherer für weitere Schadenskosten verantwortlich ist. Kapital und Überschuss - ein Unternehmen Vermögenswerte abzüglich ihrer Verbindlichkeiten. Kapital - und Überschussanforderungen - Gesetzliche Anforderungen, die Unternehmen verpflichten, ihr Kapital und ihren Überschuss in einem Betrag zu halten, der einem bestimmten Betrag entspricht oder diesen übersteigt, um die Solvabilität der Gesellschaft zu gewährleisten, indem sie ein finanzielles Kissen gegen den erwarteten Verlust oder Fehlentscheidungen liefern und in der Regel als Unternehmen zugelassene Vermögenswerte abzüglich ihrer Verbindlichkeiten, die auf einer gesetzlichen Grundlage ermittelt werden. Capital Gains (Loss) - Überschuss (Mangel) des Verkaufspreises eines Vermögenswertes über seinen Buchwert. Berechnet auf Basis der gegebenenfalls angepassten Anschaffungskosten für die Abgrenzung des Abschlags oder der Amortisation der Prämie sowie der Abschreibungen. Capitation Arrangement - ein Vergütungsplan, der im Zusammenhang mit einigen Managed-Care-Verträgen verwendet wird, bei denen ein Arzt oder eine andere medizinische Einrichtung einen Pauschalbetrag, in der Regel monatlich, für jeden Teilnehmer bezahlt, der diesen Arzt oder medizinischen Versorger gewählt hat. Überzahlte Zahlungen werden manchmal in einer pro Mitglied / pro Monat Zahlung ausgedrückt. Der kapitierte Anbieter ist in der Regel unter den Bedingungen des Vertrages für die Lieferung oder Vermittlung der vertragsgemäßen Leistungen, die von der versicherten Person verlangt werden, verantwortlich. Captive Agent - eine Person, die verkauft oder Dienstleistungen Versicherungsverträge für einen bestimmten Versicherer oder eine Flotte von Versicherern. Captive Insurer - eine Versicherungsgesellschaft, die von einer Muttergesellschaft für die Zwecke der Versicherung der Eltern Forderungen. Buchwert (Betrag) - der SAP-Buchwert zuzüglich aufgelaufener Zinsen und vermindert um eine Wertberichtigung und eine nicht angepasste Anpassung der einzelnen Anlagen. Cash - ein Tauschmittel. Barmittel Äquivalente kurzfristige, hochliquide Anlagen, die (a) ohne weiteres in bekannte Barmittel umwandelbar sind und b) so nahe ihrer Fälligkeit sind, dass sie aufgrund von Zinsänderungen ein unbedeutendes Risiko für Wertänderungen darstellen. Anlagen, deren ursprüngliche Laufzeit drei Monate oder weniger beträgt, unter dieser Definition qualifizieren. Unfallversicherung - eine Form der Haftpflichtversicherung, die Deckung für fahrlässige Handlungen und Unterlassungen wie Arbeitnehmer Entschädigung, Fehler und Auslassungen, Treue, Verbrechen, Glas, Kessel und verschiedene Fehlverhalten Abdeckungen. Katastrophenanleihen - Anleihen, die von einer Versicherungsgesellschaft mit Finanzierung an die Unternehmen Verluste aus Katastrophen oder Handlungen Gottes gebunden. Ein Verlust, der eine bestimmte Grösse übersteigt, bewirkt eine Verringerung des Anleihewertes oder eine Veränderung der Anleihestruktur, da Auszahlungen aus Rentenfonds gezahlt werden. Katastrophenverlust - ein großer Betrag Verlust mit wenig Fähigkeit zu prognostizieren. Abgezahlte Prämie - Prämienbetrag (Gebühren) für die Rückversicherung. Ceding Company - eine Versicherungsgesellschaft, die Risiken durch den Kauf einer Rückversicherung überträgt. Zentren für Medicare amp Medicaid Services (CMS) - US-Behörde für die Lizenzierung von föderativ qualifizierten HMOs. Dies war früher die Health Care Financing Administration. Änderung der Bewertungsgrundlage - Änderung der Zins-, Mortalitäts - oder Reservierungsmethode oder anderer Faktoren, die die Reserve-Berechnung der geltenden Policen beeinflussen. Chartered Life Underwriter (CLU) - eine Berufsbezeichnung, die vom American College an Personen im Lebensversicherungsbereich vergeben wird, die eine Reihe von Prüfungen in Versicherungen, Investitionen, Steuern, Vorsorgeplänen, Nachlassplanung, Rechnungswesen, Management und Ökonomie bestehen. Chartered Property Casualty Underwriter (CPCU) - eine Berufsbezeichnung, die vom amerikanischen Institut für Schaden - und Unfallversicherer an Personen im Sach - und Haftpflichtversicherungsbereich vergeben wird, die eine Reihe von Prüfungen in Versicherungen, Risikomanagement, Wirtschaft, Finanzen, Und Recht. Designates müssen auch mindestens drei Jahre Erfahrung im Versicherungsgeschäft oder verwandten Bereich haben. Anspruch - ein Antrag des Versicherten für den Versicherer Überweisung der Zahlung aufgrund des entstandenen Schadens und im Rahmen der Politik Vereinbarung abgedeckt. Schadenersatzaufwendungen - Kosten, die im Zusammenhang mit der Anpassung und Erfassung von Unfall - und Gesundheits-, Auto - medizin - und Arbeitnehmerentschädigungsleistungen anfallen. Anspruchsberechtigte Form - Eine Form der Haftpflichtversicherung, die nur dann bezahlt wird, wenn die beiden Ereignisse, die die Forderung (die Auslöser) der Forderung und der tatsächlichen Forderung auslösen, während des Versicherungsvertrags Klassenbewertung - eine Methode zur Festsetzung der Sätze für alle Antragsteller Innerhalb eines bestimmten Satzes von Merkmalen wie persönlicher demographischer und geografischer Lage. Coinsurance - Eine Klausel in den meisten Versicherungspolicen enthalten, um Versicherungsnehmer zu ermutigen, eine angemessene Menge an Versicherung zu tragen. Versäumt die versicherte Person, den in der Klausel genannten Betrag (in der Regel mindestens 80) zu halten, teilt der Versicherte einen höheren Anteil des Schadens. In der Krankenversicherung ein Prozentsatz von jedem Anspruch, den der Versicherte zu tragen. Collar - eine Vereinbarung, Zahlungen als Käufer einer Option, Cap oder Floor zu erhalten und Zahlungen als Verkäufer einer anderen Option, Cap oder Floor zu leisten. Collateral Loans - unbedingte Verpflichtungen für die Zahlung von Geld durch die Verpfändung einer Investition gesichert. Collateralized Bond Obligations (CBOs) - eine Investment-Grade-Anleihe, die von einem Pool von minderwertigen Schuldtiteln wie Junk Bonds unterstützt wird, die in verschiedene Tranchen unterteilt sind. Collateralized Mortgage Obligations (CMOs) - eine Art von Mortgage Backed Security (MBS) mit separaten Pools von Pass-Through-Sicherheit Hypotheken, die unterschiedliche Klassen von Inhabern und Fälligkeiten (Tranchen) mit dem Vorteil der vorhersehbaren Cash-Flow-Muster enthalten. Kombinationen - eine besondere Form der Paket-Politik aus persönlichen Auto-und Hausbesitzer Versicherung zusammen. Combined Ratio - ein Indiz für die Rentabilität einer Versicherungsgesellschaft, berechnet durch Addition der Verlust - und Kostenquoten. Anfangsdatum - Zeitpunkt, zu dem die Organisation zunächst für Versicherungsrisiken über die Emission von Policen und / oder den Abschluss eines Rückversicherungsvertrags verpflichtet wurde. Gleiches wie effektives Datum der Abdeckung. Gewerbliche Auto - Versicherung für Kraftfahrzeuge im Besitz eines Unternehmens, das im Handel tätig ist und die die versicherten Personen vor finanziellen Verlusten schützt, aufgrund der gesetzlichen Haftung für Kfz - Verletzungen oder Sachschäden durch Unfälle aufgrund von Eigentum, Instandhaltung und Benutzung , Oder Sorgerechtsverstärker-Steuerung eines Kraftfahrzeugs. Dies umfasst kommerzielle Auto-Kombinationen von Business Auto, Garage, Trucker und / oder andere kommerzielle Auto. Kommerzielle Erdbeben - Erdbeben Eigentum Abdeckung für kommerzielle Ventures. Commercial Farm und Ranch - eine kommerzielle Paket-Politik für die Landwirtschaft und ranching Risiken, die sowohl Sach-und Haftpflichtversicherung umfasst. Deckung umfasst Scheunen, Stallungen, andere landwirtschaftliche Strukturen und Farm Binnenschifffahrt, wie mobile Geräte und Viehbestand. Kommerzielle Überschwemmung - getrennte Hochwasserschutzversicherung an gewerbliche Unternehmen verkauft. Commercial Allgemeine Haftung - flexible amp breite kommerzielle Haftung Abdeckung mit zwei großen Unterlinien: Räumlichkeiten / Operationen sub-line und Produkte / abgeschlossenen Operationen Sub-Zeile. Commercial Mortgage-Backed Securities - eine Art von Hypotheken-backed Sicherheit, die durch das Darlehen auf einer gewerblichen Immobilie gesichert ist. Commercial Multiple Peril - Politik, die zwei oder mehr Versicherungen Schutz eines Unternehmens aus verschiedenen Eigentum und Haftung Risiko Expositionen. Häufig sind Feuer, alliierte Linien, verschiedene andere Deckungen (z. B. Unterschied in Bedingungen) und Haftung Abdeckung. Solche Deckungen würden, wenn sie einzeln geschrieben werden, in andere Jahresabschlusszeilen aufgenommen. Fügen Sie unter dieser Art von Versicherungen Multi-Peril-Politik (mit Ausnahme von Ackerbauern, Hausbesitzer und Automobil-Politik), die Deckung für die Haftung außer auto. Commercial Package Policy - bietet eine breite Palette von Sach-und Haftungsrisiken für kommerzielle Unternehmen mit Ausnahme der Versicherten durch eine Unternehmer-Politik. Gewerbliche Immobilien - Sachversicherungen an gewerbliche Unternehmen verkauft. Kommission - ein Prozentsatz der Prämie an Agenten von Versicherungsgesellschaften für den Verkauf von Policen gezahlt. Community Rating - ein Rating-System, in dem Standard-Rating etabliert und in der Regel angepasst wird innerhalb spezifischer Leitlinien für jede Gruppe auf der Grundlage der voraussichtlichen Nutzung durch die Gruppen Mitarbeiter. Buchungskreis - eine von der NAIC zugeteilte fünfstellige Identifikationsnummer, die allen Versicherungsunternehmen, die Finanzdaten bei der NAIC einreichen, zugewiesen ist. Abgeschlossene Betriebspflichten - die Haftung von Vertragspartnern, Installateuren, Elektriker, Reparaturwerkstätten und ähnlichen Betrieben für Personen, die Körperverletzungen oder Sachschäden durch mangelhafte oder vom Versicherten begangene oder aufgegebene Arbeiten oder Tätigkeiten aus dem Versicherungsbereich verursacht haben . Umfassende (Krankenhaus und medizinische) - Branche, die medizinische Versorgung umfasst Krankenhaus, chirurgische, medizinische Hauptabdeckungen umfasst nicht Medicare Supplement, administrative Dienstleistungen (ASC) Verträge, nur administrative Dienstleistungen (ASO) Verträge, föderale Mitarbeiter Gesundheit Leistungen Pläne (FEHBP ), Medizinische nur Programme, Medicare und Medicaid-Programme, Vision nur und dental nur Geschäft. Umfassende Allgemeine Haftung (CGL) - Abdeckung aller Geschäftsverbindlichkeiten, soweit nicht ausdrücklich in dem Vertragsvertrag ausgeschlossen. Umfassende persönliche Haftung - umfassende Haftungsdeckung für Forderungen, die sich aus dem Wohnsitz und den Tätigkeiten von Einzelpersonen und Familienangehörigen ergeben. (Non-Business-Haftpflicht-Expositions-Schutz für Einzelpersonen.) Umfassende / Major Medical - Politik, die eine voll versicherte Entschädigung, HMO, PPO oder Gebühr für Service-Deckung für Krankenhaus, medizinische und chirurgische Kosten. Abdeckung schließt kurzfristige Krankenversicherung, die Federal Employees Health Benefit Program und nicht-umfassende Berichterstattung wie nur grundlegende Krankenhaus nur, medizinische nur, Krankenhaus Entbindung, chirurgische, ambulante Entschädigung, spezifizierte Krankheit, Intensivmedizin und Orgel-und Gewebetransplantatabdeckung. Gleichzeitige Verursachung - Eigentumsverlust, der aus zwei oder mehr Gefahren entsteht, in denen nur ein Verlust gedeckt ist, aber beide vom Versicherer aufgrund eines gleichzeitigen Vorfalls bezahlt werden. Bedingungen - Anforderungen aus dem Versicherungsvertrag, die vom Versicherten für eine Entschädigung qualifiziert werden müssen. Eigentumswohnungen - Hausbesitzer Versicherung verkauft an Eigentumswohnung Eigentümer Besetzung der beschriebenen Eigenschaft. Bau und Umwandlung Haftung - die Haftung eines Versicherten für Personen, die Körperverletzungen oder Sachschäden durch Umbauten infolge Abbruch, Neubau oder Veränderung der Gebäudestruktur auf dem Gelände des Versicherungsnehmers verursacht haben. Notfallreserven - die von einigen Gerichtsbarkeiten als Absicherung gegen nachteilige Erfahrungen aus dem operativen Geschäft erforderlich sind, insbesondere nachteilige Schadenerfahrungen. Haftungsverhältnisse - die Haftung eines Versicherten an Personen, die durch eine von einem unabhängigen Vertragspartner geleistete Arbeit, die von dem Versicherten beauftragt wurde, eine illegale, von Natur aus gefährliche oder unmittelbar von der versicherten Person betreute Arbeit durchzuführen, Gesetzliche oder vertragliche Bestimmung, die Anbieter verpflichtet, Pflege zu einer Einschreibung für einige Zeit nach dem Datum des Gesundheitsplans Insolvenz der Firma zu liefern. Weiterführende Pflege Rentnergemeinschaften - Senioren Gehäuse Vorkehrungen, die neben dem Gehäuse sind einige Bestimmungen für qualifizierte Pflege. Vertragsrückstellungen - Rückstellungen gebildet, wenn die künftigen Leistungen aufgrund der Bruttoprämienstruktur die zukünftige Nettoprämie übersteigen. Die Kontraktreserven sind neben den Forderungs - und Prämienreserven. Vertragliche Haftung - Haftpflichtversicherung eines Versicherten, der die gesetzliche Haftung einer anderen Partei durch schriftlichen oder mündlichen Vertrag übernommen hat. Enthält eine vertragliche Haftungsregelung, die alle Verpflichtungen und Verbindlichkeiten, die einem Dienstleistungsauftragnehmer aufgrund der vom Dienstleistungserbringer erteilten Dienstleistungsverträge entstehen, abdeckt. Convertible Term Insurance Policy - eine Versicherung, die in eine dauerhafte Versicherung ohne medizinische Bewertung umgewandelt werden kann. Der Versicherer ist verpflichtet, die Politik zu erneuern, unabhängig von der Gesundheit des Versicherten unter politischen Bedingungen. Koordination der Leistungen (COB) - Bereitstellung, um über Versicherungen zu beseitigen und ein rasches und ordnungsgemäßes Schadenbezahlungssystem zu schaffen, wenn eine Person von mehr als einem Gruppenversicherungs - und / oder Gruppendienstplan abgedeckt ist. Copay - ein Kostenteilungsmechanismus in Gruppenversicherungsplänen, in denen der Versicherte einen festgelegten Dollarbetrag der angefallenen medizinischen Ausgaben bezahlt und der Versicherer den Rest bezahlt. Korrekturauftrag - Kommissionskommission von einem Versicherer auszufüllen. Gedeckte Leben - Die Gesamtzahl der versicherten Lebenspartner, einschließlich der Familienangehörigen, nach einzelnen Policen und Gruppenzertifikaten. Kredit - Einzel - oder Gruppenrichtlinien, die einem Schuldner für die vollständige oder teilweise Rückzahlung von Schulden im Zusammenhang mit einem bestimmten Darlehen oder anderen Kreditgeschäften bei Invalidität oder unfreiwilliger Arbeitslosigkeit des Schuldners Vorteile gewähren, ausgenommen im Zusammenhang mit ersten Hypothekendarlehen. Credit ndash Annahmevereinbarung - ein Versicherungszertifikat, das auf einem bestehenden Versicherungsvertrag ausgestellt wurde und angibt, dass ein anderes Versicherungsunternehmen das gesamte Risiko aus dem Vertrag von der Zedentenversicherung übernommen hat. Credit - Credit Default - Abdeckung, die von Herstellern, Händlern, Bildungseinrichtungen oder anderen Anbietern von Gütern und Dienstleistungen erworben wird, die den Kredit verlängern, für die Entschädigung von Verlusten oder Schäden, die sich aus der Nichtzahlung von Verbindlichkeiten ergeben, die ihnen für Waren oder Dienstleistungen geschuldet werden, Ihr Geschäft. Credit ndash Involuntary Arbeitslosigkeit - macht Darlehen / Kredit-Transaktionszahlungen an den Gläubiger, wenn der Schuldner wird unfreiwillig arbeitslos. Kredit Unfall und Gesundheit (Gruppe und Einzelperson) - Deckung, die Kreditnehmern im Zusammenhang mit einem Verbraucherkreditgeschäft angeboten oder angeboten werden, wenn der Erlös zur Rückzahlung einer Schuld oder eines Ratenkredits verwendet wird, falls der Verbraucher infolge eines Unfalls behindert ist , Einschließlich einer Dauer von höchstens 120 Monaten. Credit Disability - macht monatliche Darlehen / Kredit-Transaktionszahlungen an den Gläubiger bei der Invalidierung eines versicherten Schuldners. Credit Krankenversicherung - Politik, die Gläubiger als Begünstigter für die Versicherung eines Schuldners zuweisen und damit die Zahlungsbilanz an den Gläubiger zurücksendet, sollte der Schuldner behindert werden. Kreditunwillige Arbeitslosigkeit - Kreditversicherung, die während eines unbezahlten Urlaubsurlaubs aus bestimmten Gründen, wie Entlassung, Betriebsschließung, Streik, Krankheit eines nahen Verwandten und Annahme oder Geburt eines Kindes, einen monatlichen oder pauschalen Nutzen gewährt. Diese Versicherung wird manchmal auch als Credit Family Leave bezeichnet. Credit Life Insurance - Politik zuweisen Gläubiger als Begünstigter für die Versicherung auf einen Schuldner damit Abtretung der Zahlungsbilanz an Gläubiger nach dem Tod des Schuldners. Credit Personality Insurance - Versicherung in Verbindung mit einem Kreditgeschäft, bei dem es sich bei den Sicherheiten nicht um ein Kraftfahrzeug, ein Mobilheim oder eine Immobilien handelt und das die Gefahren für die durch ein Kreditgeschäft erworbenen Waren abdeckt oder als Sicherheiten für ein Kreditgeschäft verwendet wird Ein Gläubigerinteresse an der Kaufsache oder verpfändete Sicherheiten ganz oder teilweise oder deckt Gefahren für im Zusammenhang mit einem offenen Geschäft gekaufte Waren ab. Kreditversicherungen - Versicherungen, die einseitig von dem Gläubiger erworben werden, der nach dem Datum des Kreditgeschäfts der Versicherte ist und eine Deckung gegen Verluste, Kosten oder Sachschäden aufgrund von Feuer, Diebstahl, Kollision oder anderen Risiken bereitstellt Die entweder ein Gläubigerinteresse beeinträchtigen oder den Wert der Sicherheiten beeinträchtigen würden. Creditor Placed Home bedeutet Gläubiger platziert Versicherung auf Immobilien, Mobilheime und andere Immobilien. Creditor Placed Auto bedeutet Versicherung für Autos, Boote oder andere Fahrzeuge. Kreditrisiko - Teil der risikobasierten Kapitalformel, die die Erfassung von Forderungen eines Unternehmens adressiert und das Risiko eines Verlusts eines Providers oder Intermediärs, der Vorauszahlungen geleistet hat, betrifft. Creditor-Placed Auto - einzelne Zinsen oder Dual-Zinsen Kreditversicherung, die einseitig durch den Gläubiger, der die benannte versichert ist, nach dem Datum des Kreditgeschäftes, die Abdeckung gegen den Verlust von Eigentum, die entweder eine Gläubiger Interesse oder nachteilig beeinträchtigen würde gekauft wird Beeinträchtigen den Wert der Sicherheiten auf Autos, Booten oder anderen Fahrzeugen. Creditor-Placed Home - Einzelzins - oder Dualzinskreditversicherung, die einseitig vom Gläubiger erworben wird, der nach dem Datum des Kreditgeschäfts der genannte Versicherte ist und eine Deckung gegen Vermögensverluste vorsieht, die eine Gläubigerinteresse beeinträchtigen oder die Gläubiger beeinträchtigen würde Wert der Sicherheiten auf Immobilien, Mobilheime und andere Immobilien. Ernte - Deckung zum Schutz der Versicherten vor Verlust oder Beschädigung von Pflanzen aus einer Vielzahl von Gefahren, einschließlich, aber nicht beschränkt auf Feuer, Erleichterung, Verlust von Einnahmen, Tornado, Sturm, Hagel, Überschwemmung, Regen oder Schäden durch Insekten. Ernte-Hagelversicherung - Deckung für Ernte-Schäden durch Hagel, Feuer oder Blitz. Datum der Ausstellung - Datum, an dem ein Versicherungsunternehmen eine Police ausstellt. Erklärungen - Grundsatzerklärungen über den Antragsteller und Sachwerte wie demographische und berufliche Informationen, Eigenschaftsspezifikationen und erwartete Kilometerleistung pro Jahr. Selbstbehalt - Teil des versicherten Schadens (in Dollars), der vom Versicherungsnehmer gezahlt wird. Aufgelaufene Annuität - Annuitätszahlung in Form einer einmaligen Zahlung oder einer Reihe von Raten, die zu einem späteren Zeitpunkt beginnen sollen, wie zB in einer bestimmten Anzahl von Jahren oder am Ein bestimmtes Alter. Demutualisierung - Umwandlung einer Versicherungsgesellschaft in eine Kapitalgesellschaft. Zahnmedizinische Versicherung - Politik, die nur zahnärztliche Behandlungen Vorteile wie routinemäßige zahnärztliche Untersuchungen, präventive zahnärztliche Arbeit, und zahnärztliche Verfahren erforderlich, um Zahnzerfall und Krankheiten der Zähne und Kiefer zu behandeln. Dental nur - Branche, die zahnärztliche nur Abdeckung Abdeckung kann auf einer Stand-alone-Basis oder als Reiter zu einer medizinischen Politik. If the coverage is as a rider, deductibles or out-of-pocket limits must be set separately from the medical coverage. Does not include self-insured business as well as FEHBP or Medicare and Medicaid programs. Derivative - securities priced according to the value of other financial instruments such as commodity prices, interest rates, stock market prices, foreign or exchange rates. Difference In Conditions (DIC) Insurance - special form of open-peril coverage written in conjunction with basic fire coverage and designed to provide protection against losses not reimbursed under the standard fire forms. Examples are flood and earthquake coverage. Direct Incurred Loss - loss whereby the proximate cause is equivalent to the insured peril. Direct Loss - Damage to covered real or personal property caused by a covered peril. Direct Writer - an insurance company that sells policies to the insured through salaried representatives or exclusive agents only reinsurance companies that deal directly with ceding companies instead of using brokers. Direct Written Premium - total premiums received by an insurance company without any adjustments for the ceding of any portion of these premiums to the Reinsurer. Directors amp Officers Liability - liability coverage protecting directors or officers of a corporation from liability arising out of the performance of their professional duties on behalf of the corporation. Disability Income - a policy designed to compensate insured individuals for a portion of the income they lose because of a disabling injury or illness. Disability Income - Long-Term - policies that provide a weekly or monthly income benefit for more than five years for individual coverage and more than one year for group coverage for full or partial disability arising from accident and/or sickness. Disability Income - Short-Term - policies that provide a weekly or monthly income benefit for up to five years for individual coverage and up to one year for group coverage for full or partial disability arising from accident and/or sickness. Dividend - a refund of a portion of the premium paid by the insured from insurer surplus. Domestic Insurer - an insurance company that is domiciled and licensed in the state in which it sells insurance. Dual Interest - insurance that protects the creditors and the debtors interest in the collateral securing the debtors credit transaction. Dual Interest includes insurance commonly referred to as Limited Dual Interest. Dwelling Property/Personal Liability - a special form of package policy composed of dwelling fire and/or allied lines, and personal liability insurance. Early warning system - a system designed by insurance industry regulators of identifying practices and risk-related trends that contribute to systemic risk by measuring insurer financial stability. Earned Premium - portion of insureds prepaid premium allocated to the insurance companys loss experience, expenses, and profit year - to - date. Earthquake - property coverages for losses resulting from a sudden trembling or shaking of the earth, including that caused by volcanic eruption. Excluded are losses resulting from fire, explosion, flood or tidal wave following the covered event. EBNR - Earned but not reported - premium amount insurer reasonably expects to receive for which contracts are not yet final and exact amounts are not definite. EDP Policies - coverage to protect against losses arising out of damage to or destruction of electronic data processing equipment and its software. Effective Date - date at which an insurance policy goes into force. Elevators and Escalators Liability - liability coverage for bodily injury or property damage arising from the use of elevators or escalators operated, maintained or controlled by the insured. Employee Benefit Liability - liability protection for an employer for claims arising from provisions in an employee benefit insurance plan provided for the economic and social welfare of employees. Examples of items covered are pension plans, group life insurance, group health insurance, group disability income insurance, and accidental death and dismemberment. Employee Retirement Income Security Act of 1974 (ERISA) - a federal statute governing standards for private pension plans, including vesting requirements, funding mechanisms, and plan design. Employers Liability - employers liability coverage for the legal liability of employers arising out of injuries to employees. This code should be used when coverage is issued as an endorsement, or as part of a statutory workers compensation policy. Employment Practices Liability Coverage - liability insurance for employers providing coverage for wrongful termination, discrimination, or sexual harassment of the insureds current or former employees. Encumbrance - outstanding mortgages or other debt related to real estate and any unpaid accrued acquisition or construction costs. Endorsement - an amendment or rider to a policy adjusting the coverages and taking precedence over the general contract. Enrollment ndash The total number of plans, not the total number of covered lives, providing coverage to the enrollee and their dependents. Environmental Impairment Liability (EIL) - coverage for negligence or omission resulting in pollution or environmental contamination. Environmental Pollution Liability - liability coverage of an insured to persons who have incurred bodily injury or property damage from acids, fumes, smoke, toxic chemicals, waste materials or other pollutants. Equity Indexed Annuity - a fixed annuity that earns interest or provides benefits that are linked to an external reference or equity index, subject to a minimum guarantee. Errors and Omissions Liability Professional Liability other than Medical - liability coverage of a professional or quasi professional insured to persons who have incurred bodily injury or property damage, or who have sustained any loss from omissions arising from the performance of services for others, errors in judgment, breaches of duty, or negligent or wrongful acts in business conduct. Event Cancellation - coverage for financial loss because of the cancellation or postponement of a specific event due to weather or other unexpected cause beyond the control of the insured. Excess and Umbrella Liability - liability coverage of an insured above a specific amount set forth in a basic policy issued by the primary insurer or a self insurer for losses over a stated amount or an insured or self insurer for known or unknown gaps in basic coverages or self insured retentions. Excess of Loss Reinsurance - loss sharing mechanism where an insurer pays all claims up to a specified amount and a reinsurance company pays any claims in excess of stated amount. Excess Workers Compensation - either specific and/or aggregate excess workers compensation insurance written above an attachment point or self-insured retention. Expense Ratio - percentage of premium income used to attain and service policies. Derived by subtracting related expenses from incurred losses and dividing by written premiums. Experience Rating - rating system where each group is rated entirely on the basis of its own expected claims in the coming period, with retrospective adjustments for prior periods. This method is prohibited under the conditions for federal qualification. Exposure - risk of possible loss. Extra Expense Insurance - a type of property insurance for extraordinary expenses related to business interruption such as a back-up generator in case of power failure. Face Amount - the value of a policy to be provided upon maturity date or death. Facultative Reinsurance - reinsurance for a specific policy for which terms can be negotiated by the original insurer and reinsurer. FAIR Plan - Fair Access to Insurance Requirements - state pools designed to provide insurance to property owners who are unable to obtain property insurance through conventional means. Fair Value - the amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available. If a quoted market price is available, the fair value is the product of the number of trading units times market price. Farmowners Insurance - farmowners insurance sold for personal, family or household purposes. This package policy is similar to a homeowners policy, in that it has been developed for farms and ranches and includes both property and liability coverage for personal and business losses. Coverage includes farm dwellings and their contents, barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock. Federal Flood Insurance - coverage for qualifying residents and businesses in flood prone regions through the National Flood Insurance Act, a federally subsidized flood insurance program enacted in 1968. Federally Reinsured Crop - crop insurance coverage that is either wholly or in part reinsured by the Federal Crop Insurance Corporation (FCIC) under the Standard Reinsurance Agreement (SRA). This includes the following products: Multiple Peril Crop Insurance (MPCI) Catastrophic Insurance, Crop Revenue Coverage (CRC) Income Protection and Revenue Assurance. Fees Payable - fees incurred but not yet paid. FEMA - Federal Emergency Management Agency - an independent agency, tasked with responding to, planning for, mitigating and recovery efforts of natural disasters. Fidelity - a bond or policy covering an employers loss resulting from an employees dishonest act (e. g. loss of cash, securities, valuables, etc.). Financial Guaranty - a surety bond, insurance policy, or an indemnity contract (when issued by an insurer), or similar guaranty types under which loss is payable upon proof of occurrence of financial loss to an insured claimant, obligee or indemnitee as a result of failure to perform a financial obligation or any other permissible product that is defined as or determined to be financial guaranty insurance. Financial Reporting - insurance companies are required to maintain records and file annual and quarterly financial statements with regulators in accordance with statutory accounting principles (SAP). Statutory rules also govern how insurers should establish reserves for invested assets and claims and the conditions under which they can claim credit for reinsurance ceded. Financial Responsibility Law - a statute requiring motorists to show capacity to pay for automobile-related losses. Financial Statement - balance sheet and profit and loss statement of an insurance company. This statement is used by the NAIC, and by State Insurance Commissioners to regulate an insurance company according to reserve requirements, assets, and other liabilities. Fire - coverage protecting the insured against the loss to real or personal property from damage caused by the peril of fire or lightning, including business interruption, loss of rents, etc. Fire Legal Liability - coverage for property loss liability as the result of separate negligent acts and/or omissions of the insured that allows a spreading fire to cause bodily injury or property damage of others. An example is a tenant who, while occupying another partys property, through negligence causes fire damage to the property. Flood - coverage protecting the insured against loss or damage to real or personal property from flood. (Note: If coverage for flood is offered as an additional peril on a property insurance policy, file it under the applicable property insurance filing code.) Foreign Insurer - an insurance company selling policies in a state other than the state in which they are incorporated or domiciled. Foreign Investment - an investment in a foreign jurisdiction, or an investment in a person, real estate or asset domiciled in a foreign jurisdiction. An investment shall not be deemed to be foreign if the issuing person, qualified primary credits source or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction, unless: a) The issuing person is a shell business entity and b) The investment is not assumed, accepted, guaranteed or insured or otherwise backed by a domestic jurisdiction or a person, that is not a shell business entity, domiciled in a domestic jurisdiction. Foreign jurisdiction - a jurisdiction outside of the United States, Canada or any province or political subdivision of the foregoing. Fraternal Insurance - a form of group coverage or disability insurance available to members of a fraternal organization. Fronting - an arrangement in which a primary insurer acts as the insurer of record by issuing a policy, but then passes the entire risk to a reinsurer in exchange for a commission. Often, the fronting insurer is licensed to do business in a state or country where the risk is located, but the reinsurer is not. Generally Accepted Accounting Principles (GAAP) - an aggregate of the accounting standards, principles and best practices for the preparation of financial statements allowing for consistency in reporting. Gramm-Leach Bliley Act (GLBA) - act, repealing Glass-Steagal Act of 1933, allows consolidation of commercial banks, investment institutions and insurance companies. Established a framework of responsibilities of federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations. Goodwill - the difference between the cost of acquiring the entity and the reporting entitys share of the book value of the acquired entity. Gross Paid-in and Contributed Surplus - amount of capital received in excess of the par value of the stock issued. Gross Premium - the net premium for insurance plus commissions, operating and miscellaneous commissions. For life insurance, this is the premium including dividends. Group Accident and Health - coverage written on a group basis (e. g. employees of a single employer and their dependents) that pays scheduled benefits or medical expenses caused by disease, accidental injury or accidental death. Excludes amounts attributable to uninsured accidents and health plans and the uninsured portion of partially insured accident and health plans. Group Annuities ndash Deferred Non - Variable and Variable - an annuity contract that provides an accumulation based on both (1) funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and (2) funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. The contract provides for the initiation of payments at some designated future date. Group Annuities ndash Deferred Variable - an annuity contract that provides an accumulation based fund where the accumulation varies in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. Must include at least one option to have the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder and may include at least one option to have the series of payments vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. This annuity contract provides for the initiation of payments at some designated future date. Group Annuities ndash Immediate Non-Variable and Variable - an annuity contract that provides an accumulation based on both (1) funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and (2) funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. The contract provides for the initiation of payments at some interval that may vary, however the annuity payouts must begin within 13 months. Group Annuities ndash Immediate Variable - an annuity contract that provides for the first payment of the annuity at the end of the fixed interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months. The amount varies with the value of equities (separate account) purchased as investments by the insurance companies. Group Annuities ndash Unallocated - annuity contracts or portions thereof where the Insurer purchases an annuity for the retirees. Group Annuity - a contract providing income for a specified period of time, or duration of life for a person or persons established to benefit a group of employees. Group Health - health insurance issued to employers, associations, trusts, or other groups covering employees or members and/or their dependents, to whom a certificate of coverage may be provided. Group Code - a unique three to five digit number assigned by the NAIC to identify those companies that are part of a larger group of insurance companies. Group Credit ndash Life - contracts sold in connection with loan/credit transactions or other credit transactions, which do not exceed a stated duration and/or amount and provide insurance protection against death. Group Health Organizations ndash Health Maintenance (HMO) - a plan under which an enrollee pays a membership fixed fee in advance in return for a wide range of comprehensive health care services with the HMOs approved providers in a designated service area. Guaranty Fund - funding mechanism employed by states to provide funds to cover policyholder obligations of insolvent reporting entities. Hard Market - a market characterized by high demand and low supply. Hazard - circumstance which tends to increase the probability or severity of a loss. Health ndash Excess/Stop Loss - this type of insurance may be extended to either a health plan or a self-insured employer plan. Its purpose is to insure against the risk that any one claim will exceed a specific dollar amount or that an entire plans losses will exceed a specific amount. Health Insurance - a generic term applying to all types of insurance indemnifying or reimbursing for losses caused by bodily injury or illness including related medical expenses. Health Maintenance Organization (HMO) - a medical group plan that provides physician, hospital, and clinical services to participating members in exchange for a periodic flat fee. Health Plan - written promise of coverage given to an individual, family, or group of covered individuals, where a beneficiary is entitled to receive a defined set of health care benefits in exchange for a defined consideration, such as a premium. Hold-Harmless Agreement - A risk transfer mechanism whereby one party assumes the liability of another party by contract Homeowners Insurance - a package policy combining real and personal property coverage with personal liability coverage. Coverage applicable to the dwelling, appurtenant structures, unscheduled personal property and additional living expense are typical. Includes mobile homes at a fixed location. Hospital Indemnity Coverage - coverage that provides a pre-determined, fixed benefit or daily indemnity for contingencies based on a stay at a hospital or intensive care facility. Hull Insurance - coverage for damage to a vessel or aircraft and affixed items. Incontestability Provision - a life insurance and annuity provision limiting the time within which the insurer has the legal right to void the contract on grounds of material misrepresentation in the policy application. Incurred But Not Reported (IBNR) - (Pure IBNR) claims that have occurred but the insurer has not been notified of them at the reporting date. Estimates are established to book these claims. May include losses that have been reported to the reporting entity but have not yet been entered into the claims system or bulk provisions. Bulk provisions are reserves included with other IBNR reserves to reflect deficiencies in known case reserves. IBNR can sometimes include estimates of incurred but Not Enough Reported (IBNER) Incurred Claims - paid claims plus amounts held in reserve for those that have been incurred but not yet paid. Incurred Losses - sustained losses, paid or not, during a specified time period. Incurred losses are typically found by combining losses paid during the period plus unpaid losses sustained during the time period minus outstanding losses at the beginning of the period incurred in the previous period. Indemnity, Principle of - a general legal principle related to insurance that holds that the individual recovering under an insurance policy should be restored to the approximate financial position he or she was in prior to the loss. Legal principle limiting compensation for damages be equivalent to the losses incurred. Independent Adjuster - freelance contractor paid a fee for adjusting losses on behalf of companies. Independent Agent - a representative of multiple insurance companies who sells and services policies for records which they own and operate under the American Agency System. Independent Contractor - an individual who is not employed for a company but instead works for themselves providing goods or services to clients for a fee. Index Annuity - an interest bearing fixed annuity tied to an equity index, such as the Dow Jones Industrial Average or S amp P 500. Individual Annuities ndash Deferred Variable - an annuity contract that provides an accumulation based fund where the accumulation varies in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. Must include at least one option to have the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder and may include at least one option to have the series of payments vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. This annuity contract provides for the initiation of payments at some designated future date. Individual Annuities ndash Immediate Variable - an annuity contract that provides for the first payment of the annuity at the end of the fixed interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months. The amount varies with the value of equities (separate account) purchased as investments by the insurance companies. Individual Annuities ndash Special - contracts with certain noteworthy attributes. Individual Annuities - Deferred Non-Variable and Variable - an annuity contract that provides an accumulation based on both (1) funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and (2) funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. The contract provides for the initiation of payments at some designated future date. Individual Annuities - Deferred Non-Variable - an annuity contract that provides an accumulation based on funds that accumulate based on a guaranteed crediting interest rate or additional interest rate. This annuity contract provides for the initiation of payments at some designated future date. Individual Annuities - Immediate Non-Variable - an annuity contract that provides for the fixed payment of the annuity at the end of the first interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months. Individual Annuities - Immediate Non-Variable and Variable - an annuity contract that provides an accumulation based on both (1) funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and (2) funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. The contract provides for the initiation of payments at some interval that may vary, however the annuity payouts must begin within 13 months. Individual Health - health insurance where the policy is issued to an individual covering the individual and/or their dependents in the individual market. This includes conversions from group policies. Individual Credit ndash Credit Disability - makes monthly loan/credit transaction payments to the creditor upon the disablement of an insured debtor. Individual Credit ndash Life - contracts sold in connection with loan/credit transactions or other credit transactions, which do not exceed a stated duration and/or amount and provide insurance protection against death. Industrial Life - Industrial life insurance, also called debit insurance, is insurance under which premiums are paid monthly or more often, the face amount of the policy does not exceed a stated amount, and the words industrial policy are printed in prominent type on the face of the policy. Inland Marine - coverage for property that may be in transit, held by a bailee, at a fixed location, a movable good that is often at different locations (e. g. off road constructions equipment), or scheduled property (e. g. Homeowners Personal Property Floater) including items such as live animals, property with antique or collectors value, etc. This line also includes instrumentalities of transportation and communication, such as bridges, tunnels, piers, wharves, docks, pipelines, power and phone lines, and radio and television towers. Insurable Interest - A right or relationship in regard to the subject matter of the insured contract such that the insured can suffer a financial loss from damage, loss or destruction to it. (Bickelhaupt and Magee ) Insurance - an economic device transferring risk from an individual to a company and reducing the uncertainty of risk via pooling. Insurance Holding Company System - consists of two or more affiliated persons, one or more of which is an insurer. Insurance Regulatory Information System (IRIS) - a baseline solvency screening system for the National Association of Insurance Commissioners (NAIC) and state insurance regulators established in the mid-1970s. Insurance to Value - Amount of insurance purchased vs. the actual replacement cost of the insured property expressed as a ratio. Insured - party(ies) covered by an insurance policy. Insurer - an insurer or reinsurer authorized to write property and/or casualty insurance under the laws of any state. Intermediary - a person, corporation or other business entity (not licensed as a medical provider) that arranges, by contracts with physicians and other licensed medical providers, to deliver health services for a health insurer and its enrollees via a separate contract between the intermediary and the insurer. International - includes all business transacted outside the U. S. and its territories and possessions where the appropriate line of business is not determinable. Internet Liability Insurance/Cyber Insurance - coverage for cyber commerce including copyright infringement, libel, and violation of privacy. Investment grade - the obligation has been determined to be in one of the top four generic lettered rating classifications by a securities rating agency acceptable to the commissioner, that the obligation has been identified in writing by such a rating agency to be of investment grade quality, or, if the obligation has not been submitted to any such rating agency, that the obligation has been determined to be investment grade (Class 1 and Class 2) by the Securities Valuation Office of the National Association of Insurance Commissioners. Investment Income Accrued - investment income earned as of the reporting date but not legally due to be paid to the reporting entity until subsequent to the reporting date. Investment Income Due - investment income earned and legally due to be paid to the reporting entity as of the reporting date. Investment Income Gross - shall be recorded as earned and shall include investment income collected during the period, the change in investment income due and accrued, the change in unearned investment income plus any amortization (e. g. discounts or premiums on bonds, origination fees on mortgage loans, etc.) Irrevocable Beneficiary - a life insurance policy beneficiary who has a vested interest in the policy proceeds even during the insureds lifetime because the policy owner has the right to change the beneficiary designation only after obtaining the beneficiarys consent. Joint and Last Survivor Annuity - retirement plan that continues to payout so long as at least one, of two or more, annuitants is alive. Joint Underwriting Association (JUA) - a loss-sharing mechanism combining several insurance companies to provide extra capacity due to type or size of exposure. Joint-Life Annuity - an annuity contract that ceases upon the death of the first of two or more annuitants. Key-Persons Insurance - a policy purchased by, for the benefit of, a business insuring the life or lives of personnel integral to the business operations. Kidnap/Ransom Insurance - coverage for ransom or extortion costs and related expenses. Lapse - termination of a policy due to failure to pay the required renewal premium. Level Premium Insurance - life insurance policy for which the cost is equally distributed over the term of the premium period, remaining constant throughout. Liability - a certain or probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or to provide services to other entities in the future as a result of a past transactions(s) or event(s). three essential characteristics: a) It embodies a present duty or responsibility to one or more other entities that entails settlement by probable future transfer or use of assets at a specified or determinable date, on occurrence of a specified event, or on demand b) The duty or responsibility obligates a particular entity, leaving it little or no discretion to avoid the future sacrifice and c) The transaction or other event obligating the entity has already happened. Life ndash Endowment - insurance that pays the same benefit amount should the insured die during the term of the contract, or if the insured survives to the end of the specified coverage term or age. Life ndash Flexible Premium Adjustable Life - a group life insurance that provides a face amount that is adjustable to the certificate holder and allows the certificate holder to vary the modal premium that is paid or to skip a payment so long as the certificate value is sufficient to keep the certificate in force, and under which separately identified interest credits (other than in connection with dividend accumulation, premium deposit funds or other supplementary accounts) and mortality and expense charges are made to individual certificates while providing minimum guaranteed values. Life Settlements - a contract or agreement in which a policyholder agrees to sell or transfer ownership in all or part of a life insurance policy to a third party for compensation that is less than the expected death benefit of a policy. Lifetime Disability Benefit - a provision in some disability income policies to recoup lost wages for the term of disability or remainder of insureds life in case of permanent disability. Limited Benefit - policies that provide coverage for vision, prescription drug, and/or any other single service plan or program. Also include short-term care policies that provide coverage for less than one year for medical and other services provided in a setting other than an acute care unit of the hospital. Limited Payment Life Insurance - a form of whole-life insurance with a pre-defined number of premiums to be paid. Limited Policies - health insurance coverage for a certain ailment, such as cancer. Limits - maximum value to be derived from a policy. Line of Business - classification of business written by insurers. Liquor Liability - coverage for the liability of an entity involved in the retail or wholesale sales of alcoholic beverages, or the serving of alcoholic beverages, to persons who have incurred bodily injury or property damage arising from an intoxicated person. Living benefits rider - a rider attached to a life insurance policy providing long term care for the terminally ill. Lloyds of London - association offering membership in various syndicates of wealthy individuals organized for the purpose of writing insurance for a particular hazard. Loan-backed Securities - pass-through certificates, collateralized mortgage obligations (CMOs), and other securitized loans not included in structured securities where payment of interest and/or principal is directly proportional to the interest and/or principal received by the issuer from the mortgage pool or other underlying securities. Long Duration Contracts - contracts, excluding financial guaranty contracts, mortgage guaranty contracts and surety contracts, that fulfill both of the following conditions: (1) the contract term is greater than or equal to thirteen months and (2) the insurer can neither cancel nor increase the premium during the contract term. Long-Term Care - policies that provide coverage for not less than one year for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital, including policies that provide benefits for cognitive impairment or loss of functional capacity. This includes policies providing only nursing home care, home health care, community based care, or any combination. The policy does not include coverage provided under comprehensive/major medical policies, Medicare Advantage, or for accelerated heath benefit-type products. Long-Term Disability Income Insurance - policy providing monthly income payments for insureds who become disabled for an extensive length of time, typically two years or longer. Loss - physical damage to property or bodily injury, Including loss of use or loss of income Loss Adjustment Expense (LAE) - expected payments for costs to be incurred in connection with the adjustment and recording of losses. Can be classified into two broad categories: Defense and Cost Containment (DCC) and Adjusting and Other (AO). Can also be separated into (Allocated Loss Adjustment Expense) and (Unallocated Loss Adjustment Expense for ratemaking purposes. Loss Frequency - incidence of claims on a policy during a premium period. Loss of Use Insurance - policy providing protection against loss of use due to damage or destruction of property. Loss Payable Clause - coverage for third party mortgagee in case of default on insured property, secured by a loan, that has been lost or damaged. Loss Ratio - the percentage of incurred losses to earned premiums. Loss Reserve - the amount that insurers set aside to cover claims incurred but not yet paid. Loss Reserves - an estimate of liability or provision in an insurers financial statement, indicating the amount the insurer expects to pay for losses incurred but not yet reported or reported claims that havent been paid. Losses Incurred - Includes claims that have been paid and/or have amounts held in reserve for future payment Losses Incurred But Not Reported (IBNR) - An estimated amount set aside by the insurance company to pay claims that may have occurred, but for some reason have not yet been reported to the insurance company. Major Medical - a hospital/surgical/medical expense contract that provides comprehensive benefits as defined in the state in which the contract will be delivered. Malpractice - alleged misconduct or negligence in a professional act resulting in loss or injury. Managed Care - system of health care delivery that attempts to influence the utilization, quality, and cost of services provided. Mandated benefits - insurance required by state or federal law. Manufacturers Output Policies - provides broad form coverage of personal property of an insured manufacturer including raw material, goods in process, finished goods and goods shipped to customers. Margin Premium - a deposit that an organization is required to maintain with a broker with respect to the Futures Contracts purchased or sold. Market Value - fair value or the price that could be derived from current sale of an asset. Mechanical Breakdown Insurance - premiums attributable to policies covering repair or replacement service, or indemnification for that service, for the operational or structural failure of property due to defects in materials or workmanship, or normal wear and tear. (May cover motor vehicles, mobile equipment, boats, appliances, electronics, residual structures, etc.) Medicaid - policies issued in association with the Federal/State entitlement program created by Title XIX of the Social Security Act of 1965 that pays for medical assistance for certain individuals and families with low incomes and resources. Medical amp Hospital Expenses (Benefits or Claims) - total expenditures for health care services paid to or on behalf of members. Medical Malpractice - insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insureds misconduct, negligence, or incompetence, in rendering or failure to render professional services. Medical Only - line of business that provides medical only benefits without hospital coverage. An example would be provider-sponsored organizations where there is no coverage for other than provider (non-hospital) services. Does not include self-insured business, FEHBP, Medicare and Medicaid programs, or dental only business. Medical Professional Liability - insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insureds misconduct, negligence, or incompetence in rendering professional services. Medical Professional Liability is also known as Medical Malpractice. Medicare - a state assistance program, passed under Title XVIII of the Social Security Amendments of 1965, to provide hospital and medical expense insurance to those over 65 years of age. Medicare Choice - a major initiative in the Balanced Budget Act of 1997 (also called Medicare Part C), under which Medicare beneficiaries may select from among several managed care options or a Medicare system. Medicare Advantage Plan - an HMO, PPO, or Private Fee-For Service Plan that contracts with Medicare Advantage Prescription Drug Plan also includes drug benefits. The plan may provide extra coverage such as vision, hearing, dental, and/or health and wellness programs. Medicare pays a fixed amount for insureds care every month to the companies offering Medicare Advantage plans. Medicare Cost - contract with Center for Medicare and Medicaid Services (CMS) for Medicare coverage. These contracts with CMS provide reimbursement through pre-determined monthly amount per member based on a total estimated budget. The beneficiary may use providers outside the provider network. Does not include stand alone Medicare Part D Plans. Medicare Part D - Stand-Alone - stand-alone Part D coverage written through individual contracts stand-alone Part D coverage written through group contracts and certificates and Part D coverage written on employer groups where the reporting entity is responsible for reporting claims to the Centers for Medicare amp Medicaid Services (CMS). Medicare Supplement - Insurance coverage sold on an individual or group basis to help fill the gaps in the protections granted by the federal Medicare program. This is strictly supplemental coverage and cannot duplicate any benefits provided by Medicare. It is structured to pay part or all of Medicares deductibles and co-payments. It may also cover some services and expenses not covered by Medicare. Also known as Medigap insurance. Medigap - supplementary private health insurance products to Medicare insurance benefits. Minimum Premium Plan - an arrangement under which an insurance carrier will, for a fee, handle the administration of claims and insure against large claims for a self-insured group. The employer self-funds a fixed percentage (e. g. 90) of the estimated monthly claims, and the insurer covers the remainder. Mobile Homes - Homeowners - homeowners insurance sold to owners occupying the described mobile home. Mobile Homes under Transport - coverage for mobile homes while under transport for personal or commercial use. Modified Guaranteed - an annuity that contains a provision that adjusts the value of withdrawn funds based on a formula in the contract. The formula reflects market value adjustments. Member - A person who has enrolled as a subscriber or an eligible dependent of a subscriber and for whom the health organization has accepted the responsibility for the provision of health services as may be contracted for. Moral Hazard - personality characteristics that increase probability of losses. For example not taking proper care to protect insured property because the insured knows the insurance company will replace it if it is damaged or stolen. Morale Hazard - negligence or disregard on the part of the insured which could lead to probable loss. Morbidity - the frequency or severity of disease or illness within a subset of the population. Morbidity Risk - the potential for a person to experience illness, injury, or other physical or psychological impairment, whether temporary or permanent. Morbidity risk excludes the potential for an individuals death, but includes the potential for an illness or injury that results in death. Morbidity Table - a statistical record of the rate of illness among the defined age groups. Mortality Table - chart that shows the death rates of a particular population at each age displayed as the number of deaths per thousand. Mortgage - a note used to secure a loan for real property. Mortgage Guaranty - insurance that indemnifies a lender for loss upon foreclosure if a borrower fails to meet required mortgage payments. Mortgage Insurance - a form of life insurance coverage payable to a third party lender/mortgagee upon the death of the insured/mortgagor for loss of loan payments. Mortgage-Backed Securities - a type of asset-backed security that is secured by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by an accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments. Furthermore, the mortgage must have originated from a regulated and authorized financial institution. Multi-Peril Insurance - personal and business property coverage combining several types of property insurance in one policy. Municipal Bond Guarantee Insurance - coverage sold to municipalities to guarantee the principle payment on bonds issued. Municipal Liability - liability coverage for the acts of a municipality. Municipal obligation bond - any security, or other instrument, including a state lease but not a lease of any other governmental entity, under which a payment obligation is created, issued by or on behalf of a governmental unit to finance a project servicing a substantial public purpose, and 1) Payable from tax revenues, but not tax allocations, within the jurisdiction of such governmental unit 2) Payable or guaranteed by the United States of America or any agency, department or instrumentality thereof, or by a state housing agency 3) Payable from rates or charges (but not tolls) levied or collected in respect of a non-nuclear utility project, public transportation facility (other than an airport facility) or public higher education facility or 4) With respect to lease obligations, payable from future appropriations. Mutual Insurance Company - a privately held insurer owned by its policyholders, operated as a non-profit that may or may not be incorporated. Mutual Insurance Holding Company - a company organized as a mutual and owning a capital stock insurer or insurers for the benefit of pooling risk for many people, typically those in the same industry. Named Insured - the individual defined as the insured in the policy contract. Named Peril Coverage - insurance for losses explicitly defined in the policy contract. National Association of Insurance Commissioners (NAIC) - the U. S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U. S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U. S. Negligence - failure to exercise reasonable consideration resulting in loss or damage to oneself or others. Net Admitted Assets - total of assets whose values are permitted by state law to be included in the annual statement of the insurer. Net Income - total revenues from an insurers operations less total expenses and income taxes Net Premiums Earned - premiums on property/casualty or health policies that will not have to be returned to the policyholder if the policy is cancelled. NFIP - National Flood Insurance Program - flood insurance and floodplain management for personal and business property administered under the National Flood Act of 1968. Encourages participation by private insurers through a flood insurance pool . Nonadmitted Assets - assets having economic value other than those which can be used to fulfill policyholder obligations, or those assets which are unavailable due to encumbrances or other third party interests and should not be recognized on the balance sheet. Nonadmitted Insurer - insurance company not licensed to do business within a given state. Non-controlled stock insurers - insurers in which a parent company has: 1) a financial interest represented by the direct or indirect ownership of less than 50 of voting shares, and 2) does not have the ability to exercise control over the insurer, e. g. through voting stock or management contract Non-proportional Reinsurance - reinsurance that is not secured on individual lives for specific individual amount of reinsurance, but rather reinsurance that protects the ceding companys overall experience on its entire portfolio of business, or at least a broad segment of it. The most common forms of non-proportional reinsurance are stop loss and catastrophe. Notional Value - the principal value upon which future payments are based in a derivative transaction as at a specific period in time (the as of reporting date) in the reporting currency. Nationally Recognized Statistical Rating Organization (NRSRO) - refers to rating organizations so designated by the SEC whose status has been confirmed by the Securities Valuation Office. Examples are: Moodys Investors Service, Inc. Standard amp Poors (SampP), A. M. Best Company (A. M. Best) and Fitch Ratings and Dominion Bond Rating Service (DBRS). Nuclear Energy Liability - coverage for bodily injury and property damage liability resulting from the nuclear energy material (whether or not radioactive) on the insured businesss premises or in transit. Occurrence - an accident. including injurious exposure to conditions, which results, during the policy period in bodily injury or property damage neither expected or intended from the standpoint of the insured. (Bickelhaupt and Magee) Ocean Marine - coverage for ocean and inland water transportation exposures goods or cargoes ships or hulls earnings and liability. Officer - a president, vice-president, treasurer, actuary, secretary, controller and any other person who performs for the company functions corresponding to those performed by the foregoing officers. Option - an agreement giving the buyer the right to buy or receive, sell or deliver, enter into, extend or terminate, or effect a cash settlement based on the actual or expected price, level, performance or value of one or more Underlying Interests. Other Accident and Health - accident and health coverages not otherwise properly classified as Group Accident and Health or Credit Accident and Health (e. g. collectively renewable and individual non-cancelable, guaranteed renewable, non-renewable for stated reasons only, etc.). Include all Medicare Part D Prescription Drug Coverage, whether sold on a stand-alone basis or through a Medicare Advantage product and whether sold directly to an individual or through a group. Other Considerations - Unallocated annuity considerations and other unallocated deposits that incorporate any mortality or morbidity risk and are not reported as direct premiums, direct annuity considerations or deposit-type contract funds. Other Liability - coverage protecting the insured against legal liability resulting from negligence, carelessness, or a failure to act resulting in property damage or personal injury to others. Other Underwriting Expenses - allocable expenses other than loss adjustment expenses and investment expenses. Owner Occupied - homeowners insurance sold to owners occupying the described property. Package Policy - two or more distinct policies combined into a single contract. Par Value - the nominal or face value of a stock or bond. Peril - the cause of property damage or personal injury, origin of desire for insurance. Cause of Loss Permanent Life Insurance - policy that remains active for the life of the insured. Personal Auto Policy - coverage designed to insure private passenger automobiles and certain types of trucks owned by an individual or husband and wife. Personal Earthquake - earthquake property coverage for personal, family or household purposes. Personal Flood - separate flood insurance policy sold for personal, family or household purposes. Personal GAP Insurance - credit insurance that insures the excess of the outstanding indebtedness over the primary property insurance benefits in the event of a total loss to a collateral asset. Personal Injury Liability - liability coverage for those who have been discriminated against, falsely arrested, illegally detained, libeled, maliciously prosecuted, slandered, suffered from identity theft, mental anguish or alienation of affections, or have had their right of privacy violated. Personal Injury Protection Coverage/PIP - automobile coverage available in states that have enacted no-fault laws or other auto reparation reform laws for treatment of injuries to the insured and passengers of the insured. Personal Property - single interest or dual interest credit insurance (where collateral is not a motor vehicle, mobile home, or real estate) that covers perils to goods purchased or used as collateral and that concerns a creditors interest in the purchased goods or pledged collateral either in whole or in part or covers perils to goods purchased in connection with an open-end credit transaction. Pet Insurance Plans - veterinary care plan insurance policy providing care for a pet animal (e. g. dog or cat) of the insured owner in the event of its illness or accident. Policy - a written contract ratifying the legality of an insurance agreement. Policy Dividend - a refund of part of the premium on a participating life insurance policy. Amount of payment is determined by subtracting the actual premium expense from the premium charged. The payment can be taken as cash, applied to a purchase an increment of paid-up insurance, left on deposit with the insurance company or applied to purchase term insurance for one year. Policy Period - time period during which insurance coverage is in effect. Policy Reserve - the amount of money allocated specifically for the fulfillment of policy obligations by a life insurance company reserves are in place to safeguard that the company is able to pay all future claims. Policyholders Surplus - assets in excess of the liabilities of a company or net income above any monies indebted to legal obligation. Pollution - environmental contamination. Pool - an association organized for the purpose of absorbing losses through a risk-sharing mechanism thereby limiting individual exposures. Preferred Provider Organization (PPO) - arrangement, insured or uninsured, where contracts are established by Health Plan Companies (typically, commercial insurers, and, in some circumstances, by self-insured employers) with health care providers. The Health Plans involved will often designate these contracted providers as preferred and will provide an incentive, usually in the form of lower deductibles or co-payments, to encourage covered individuals to use these providers. Members are allowed benefits for non-participating provider services on an indemnity basis with significant copayments and providers are often, but not always, paid on a discounted fee for service basis. Preferred Risk - insured, or applicant for insurance, who presents likelihood of risk lower than that of the standard applicant. Premises and Operations - policies covering the liability of an insured to persons who have incurred bodily injury or property damage on an insureds premises during normal operations or routine maintenance, or from an insureds business operations either on or off of the insureds premises. Premium - Money charged for the insurance coverage reflecting expectation of loss. Premiums Earned - the portion of premium for which the policy protection or coverage has already been given during the now-expired portion of the policy term. Premiums Net - is the amount calculated on the basis of the interest and mortality table used to calculate the reporting entitys statutory policy reserves. Premiums Written - total premiums generated from all policies (contracts) written by an insurer within a given period of time. Primary Insurance - coverage that takes precedence when more than one policy covers the same loss. Prior Approval Law - a state regulatory requirement for pre-approval of all insurance rates and forms. Private Passenger Auto (PPA) - filings that include singularly or in any combination coverage such as the following: Auto Liability, Personal Injury Protection (PIP), Medical Payments (MP), Uninsured/Underinsured (UM/UIM) Specified Causes of Loss, Comprehensive, and Collision. Producer - an individual who sells, services, or negotiates insurance policies either on behalf of a company or independently. Product Liability - insurance coverage protecting the manufacturer, distributor, seller, or lessor of a product against legal liability resulting from a defective condition causing personal injury, or damage, to any individual or entity, associated with the use of the product. Professional Errors and Omissions Liability - coverage available to pay for liability arising out of the performance of professional or business related duties, with coverage being tailored to the needs of the specific profession. Examples include abstracters, accountants, insurance adjusters, architects, engineers, insurance agents and brokers, lawyers, real estate agents, stockbrokers. Property - coverage protecting the insured against loss or damage to real or personal property from a variety of perils, including but not limited to fire, lightening, business interruption, loss of rents, glass breakage, tornado, windstorm, hail, water damage, explosion, riot, civil commotion, rain, or damage from aircraft or vehicles. Pro-rata (proportional) Reinsurance - portion of the losses and premium reinsurer shares with the ceding entity. Protected Cell - an insurance-linked security retained within the insurance or reinsurance company and is used to insulate the proceeds of the securities offering from the general business risks of the insurer, granting an additional comfort level for investors of the securitized instrument. Protection and Indemnity (PampI) Insurance - a broad form of marine legal liability insurance coverage. Provider Sponsored Network (PSN) - formal affiliations of providers, sometimes called integrated delivery systems, organized and operated to provide an integrated network of health care providers with which third parties, such as insurance companies, HMOs, or other Health Plan Companies, may contract for health care services to covered individuals. Some models of integration include Physician Hospital Organizations, Management Service Organizations, Group Practices Without Walls, Medical Foundations, and Health Provider Cooperatives. Provisions - contingencies outlined in an insurance policy. Proximate Cause - event covered under insureds policy agreement. Public Adjuster - independent claims adjuster representing policyholders instead of insurance companies. Pure Premium - that portion of the premium equal to expected losses void of insurance company expenses, premium taxes, contingencies, or profit margin. Pure Risk - circumstance including possibility of loss or no loss but no possibility of gain. Qualified Actuary - a person who meets the basic education, experience and continuing education requirements (these differ by line of business) of the Specific Qualification Standard for Statements of Actuarial Opinion, NAIC Property and Casualty Annual Statement, as set forth in the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States, promulgated by the American Academy of Actuaries, and is in good standing of the American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries. Rate - value of insured losses expressed as a cost per unit of insurance. Risk Based Capital (RBC) Ratio - ratio used to identify insurance companies that are poorly capitalized. Calculated by dividing the companys capital by the minimum amount of capital regulatory authorities have deemed necessary to support the insurance operations. Rebate - a refund of part or all of a premium payment. Reinsurance - a transaction between a primary insurer and another licensed (re) insurer where the reinsurer agrees to cover all or part of the losses and/or loss adjustment expenses of the primary insurer. The assumption is in exchange for a premium. Indemnification is on a proportional or non-proportional basis. Reinsurer - company assuming reinsurance risk. Renewable Term Insurance - insurance that is renewable for a limited number of successive terms by the policyholder and is not contingent upon medical examination. Renters Insurance - liability coverage for contents within a renters residence. Coverage does not include the structure but does include any affixed items provided or changed by the renter. Replacement Cost - the cost of replacing property without a reduction for depreciation due to normal wear and tear. Reported Losses - Includes both expected payments for losses relating to insured events that have occurred and have been reported to the insurance company, but not yet paid. Reserve - A portion of the premium retained to pay future claims Reserve Credit - reduction of reserve amounts for reinsurance ceded. Reductions may include the claim reserve and/or the unearned premium reserve. Residence - the domicile location of a member as shown by his or her determination as a resident. Residual Market Plan - method devised for coverage of greater than average risk individuals who cannot obtain insurance through normal market channels. Retention - a mechanism of internal fund allocation for loss exposure used in place of or as a supplement to risk transfer to an insurance company. Retention Limit - maximum amount of medical and hospital expense an insurer will carry on its own. The limit can be for an individual claim and/or for the insurers total claims, depending upon the terms of the reinsurance contract. Retrocession - the portion of risk that a reinsurance company cedes or amount of insurance the company chooses not to retain. Retrospective Rating - the process of determining the cost of an insurance policy based on the actual loss experience determined as an adjustment to the initial premium payment. Rider - an amendment to a policy agreement. Risk - Uncertainty concerning the possibility of loss by a peril for which insurance is pursued. Risk Retention Act - a 1986 federal statute amending portions of the Product Liability Risk Retention Act of 1981 and enacted to make organization of Risk Retention Groups and Purchasing Groups more efficient. Risk Retention Group - group-owned insurer organized for the purpose of assuming and spreading the liability risks to its members. Salvage - value recoverable after a loss. Statutory Accounting Principles (SAP) - a set of accounting principles set forth by the National Association of Insurance Commissioners used to prepare statutory financial statements for insurance companies. Securitization of Insurance Risk - a method for insurance companies to access capital and hedge risks by converting policies into securities that can be sold in financial markets. Security - a share, participation, or other interest in property or in an enterprise of the issuer or an obligation of the issuer. Self-Insurance - type of insurance often used for high frequency low severity risks where risk is not transferred to an insurance company but retained and accounted for internally. Separate Account - segregated funds held and invested independently of other assets by an insurer for the purpose of a group retirement fund. Short-term Disability - a company standard defining a period of time employees are eligible for short-term disability coverage, typically for 2 years or less. Short-Term Medical - policies that provide major medical coverage for a short period of time, typically 30 to 180 days. These policies may be renewable for multiple periods. Situs of Contract - the jurisdiction in which the contract is issued or delivered as stated in the contract. Social Insurance - compulsory insurance plan administered by a federal or state government agency with the primary emphasis on social adequacy. Soft Market - a buyers market characterized by abundant supply of insurance driving premiums down. Special revenue bond - any security, or other instrument under which a payment obligation is created, issued by or on behalf of a governmental unit to finance a project serving a substantial public purpose and not payable from the sources in connection with the payment of municipal obligation bonds. Specified Disease Coverage - coverage that provides primarily pre-determined benefits for expenses of the care of cancer and/or other specified diseases. Specified/Named Disease - policies that provide benefits only for the diagnosis and/or treatment of a specifically named disease or diseases. Benefits can be paid as expense incurred, per diem or as a principal sum. Standard Risk - a person who, according to a companys underwriting standards, is considered a normal risk and insurable at standard rates. High or low risk candidates may qualify for extra or discounted rates based on their deviation from the standard. State Childrens Health Insurance Program - policies issued in association with the Federal/State partnership created by title XXI of the Social Security Act. State of Domicile - the state where a companys home office is located. State Page - Exhibit of Premiums and Losses for each state a company is licensed. The state of domicile receives a schedule for each jurisdiction the company wrote direct business, or has amounts paid, incurred or unpaid. Statement Type - refers to the primary business type under which the company files its annual and quarterly statement, such as Life, Property, Health, Fraternal, Title. Statement Value - the Statutory Accounting Principle book value reduced by any valuation allowance and non-admitted adjustment applied to an individual investment or a similar group of investments, e. g. bonds, mortgage loans, common stock. Statutory Accounting - method of accounting standards and principles used by state regulatory authorities to measure the financial condition of regulated companies and other insurance enterprises. This method tends to be more conservative than the Generally Accepted Accounting Principles used by most businesses. Compliance with solvency and other standards is determined using financial documents prepared in accordance with Statutory Accounting Principles. Stock Insurance Company - business owned by stockholders. Stop Loss/Excess Loss - individual or group policies providing coverage to a health plan, a self-insured employer plan, or a medical provider providing coverage to insure against the risk that any one claim or an entire plans losses will exceed a specified dollar amount. Structured Securities - loan-backed securities that have been divided into two or more classes of investors where the payment of interest and/or principal of any class of securities has been allocated in a manner that is not proportional to interest and/or principal received by the issuer from the mortgage pool or other underlying securities. Structured Settlements - periodic fixed payments to a claimant for a determinable period, or for life, for the settlement of a claim. Subrogation - situation where an insurer, on behalf of the insured, has a legal right to bring a liability suit against a third party who caused losses to the insured. Insurer maintains the right to seek reimbursement for losses incurred by insurer at the fault of a third party. Subrogation Clause - section of insurance policies giving an insurer the right to take legal action against a third party responsible for a loss to an insured for which a claim has been paid. Subsequent Event - events or transactions that occur subsequent to the balance sheet date, but before the issuance of the statutory financial statements and before the date the audited financial statements are issued, or available to be issued. Substandard Risk - (impaired risk) risks deemed undesirable due to medical condition or hazardous occupation requiring the use of a waiver, a special policy form, or a higher premium charge. Superfund - federal act mandating retroactive liability for environmental pollution where responsible party maintains accountability for environmental clean-up regardless of length of time since polluting event occurred. Surety Bond - a three-party agreement whereby a guarantor (insurer) assumes an obligation or responsibility to pay a second party (obligee) should the principal debtor (obligor) become in default. Surplus - insurance term referring to retained earnings. Surplus Line - specialized property or liability coverage available via nonadmitted insurers where coverage is not available through an admitted insurer, licensed to sell that particular coverage in the state. Swap - an agreement to exchange or net payments as the buyer of an Option, Cap or Floor and to make payments as the seller of a different Option, Cap or Floor. Tenants - homeowners insurance sold to tenants occupying the described property. Term - period of time for which policy is in effect. Term Insurance - life insurance payable only if death of insured occurs within a specified time, such as 5 or 10 years, or before a specified age. Third Party - person other than the insured or insurer who has incurred losses or is entitled to receive payment due to acts or omissions of the insured. Title Insurance - coverage that guarantees the validity of a title to real and personal property. Buyers of real and personal property and mortgage lenders rely upon the coverage to protect them against losses from undiscovered defects in existence when the policy is issued. Total Liabilities - total money owed or expected to be owed by the insurance company. Total Revenue - premiums, revenue, investment income, and income from other sources. Travel Coverage - covers financial loss due to trip cancellation/interruption lost or damaged baggage trip or baggage delays missed connections and/or changes in itinerary and casualty losses due to rental vehicle damage. Treaty - a reinsurance agreement between the ceding company and reinsurer. Unallocated Loss Adjustment Expense (ULAE) - loss adjustment expenses that cannot be specifically tied to a claim. Umbrella and Excess (Commercial) - coverage for the liability of a commercial venture above a specific amount set forth in a basic policy issued by the primary insurer or a self-insurer for losses over a stated amount or an insured or self-insurer for known or unknown gaps in basic coverages or self-insured retentions. Umbrella and Excess (Personal) - non-business liability protection for individuals above a specific amount set forth in a basic policy issued by the primary insurer or a self-insurer for losses over a stated amount or an insured or self-insurer for known or unknown gaps in basic coverages or self-insured retentions. Unauthorized Reinsurance - reinsurance placed with a company not authorized in the reporting companys state of domicile. Underinsured Motorist Coverage - policy option for bodily injury or property losses caused by a motorist with coverage insufficient to cover total dollar amount of losses. Compensation for the injured party is equal to the difference between the losses incurred and the liability covered by the motorist at fault. Underlying Interest - the asset(s), liability(ies) or other interest(s) underlying a derivative instrument, including, but not limited to, any one or more securities, currencies, rates indices, commodities, derivative instruments, or other financial market instruments. Underwriter - person who identifies, examines and classifies the degree of risk represented by a proposed insured in order to determine whether or not coverage should be provided and, if so, at what rate. Underwriting - the process by which an insurance company examines risk and determines whether the insurer will accept the risk or not, classifies those accepted and determines the appropriate rate for coverage provided. Underwriting Risk - section of the risk-based capital formula calculating requirements for reserves and premiums. Unearned Premium - amount of premium for which payment has been made by the policyholder but coverage has not yet been provided. Unearned Premium Reserve - all premiums (fees) received for coverage extending beyond the statement date appears as a liability on the balance sheet. Universal Life Insurance - adjustable life insurance under which premiums and coverage are adjustable, company expenses are not specifically disclosed to the insured but a financial report is provided to policyholders annually. Unpaid Losses - claims that are in the course of settlement. The term may also include claims that have been incurred but not reported. Valued Policy - an insurance contract for which the value is agreed upon in advance and is not related to the amount of the insured loss. Valued Policy Law - state legislation which specifies that the insured shall receive the face amount of the policy in the event of a total loss to a dwelling rather than the actual cash value regardless of the principle of indemnity. Variable Annuity - an annuity contract under which the premium payments are used to purchase stock and the value of each unit is relative to the value of the investment portfolio. Variable Life Insurance - life insurance whose face value and/or duration varies depending upon the value of underlying securities. Variable Universal Life - combines the flexible premium features of universal life with the component of variable life in which excess credited to the cash value of the account depends on investment results of separate accounts. The policyholder selects the accounts into which the premium payments are to be made. Viatical Settlements - contracts or agreements in which a buyer agrees to purchase all or a part of a life insurance policy. Vision - limited benefit expense policies. Provides benefits for eye care and eye care accessories. Generally provides a stated dollar amount per annual eye examination. Benefits often include a stated dollar amount for glasses and contacts. May include surgical benefits for injury or sickness associated with the eye. Warrant - an agreement that gives the holder the right to purchase an underlying financial instrument at a given price and time or at a series of prices and times according to a schedule or warrant agreement. Warranty - coverage that protects against manufacturers defects past the normal warranty period and for repair after breakdown to return a product to its originally intended use. Warranty insurance generally protects consumers from financial loss caused by the sellers failure to rectify or compensate for defective or incomplete work and cost of parts and labor necessary to restore a products usefulness. Includes but is not limited to coverage for all obligations and liabilities incurred by a service contract provider, mechanical breakdown insurance and service contracts written by insurers. Whole Life - life insurance that may be kept in force for a persons entire life and that pays a benefit upon the persons death, whenever that may be. Whole Life Insurance - life insurance that may be kept in force for the duration of a persons life and pays a benefit upon the persons death. Premiums are made for same time period. Workers Compensation - insurance that covers an employers liability for injuries, disability or death to persons in their employment, without regard to fault, as prescribed by state or federal workers compensation laws and other statutes. 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Aufrechtzuerhalten. , . Docs,,,,. Aufrechtzuerhalten. , , . ,. Aufrechtzuerhalten. , . . () . . , Doc. , Büro , . Behaupten, geltend machen; Last Updated: 5 March 2012 Site Maintained By: econ. iastate. edu/tesfatsi/Professor Leigh Tesfatsion mailto:tesfatsiiastate. edutesfatsi AT iastate. edu Econ 308 Web Site: Frederic S. Mishkin, The Economics of Money, Banking, and Financial Markets, Seventh Edition, Addison-Wesley, Boston, MA, latest edition. Throughout his text, Mishkin stresses that the evolution of financial markets, both in the U. S. and throughout the world, has resulted from an intricate interplay of three factors: chance, necessity, and design. In short, history matters, and it matters a lot. In addition, throughout his text Mishkin consistently stresses the importance of information. He argues that it is impossible to understand the special nature of financial markets relative to markets for real goods and services unless one understands the peculiar types of quotasymmetric information problemsquot intrinsically associated with financial assets. He argues that these asymmetric information problems have largely shaped the structure of financial markets in the past, and that the recent surge of innovations in information technology (IT) -- in particular, Internet-related IT -- is leading to a dramatic restucturing of financial markets today. The notes, below, provide basic background information on financial markets as covered in Mishkin in Chapters 2 and 4. For a more extensive set of notes relating to these and other Mishkin chapters, visit the home page for econ. iastate. edu/classes/econ353/tesfatsion/Econ 353 (Money, Banking, and Financial Institutions) www2.econ. iastate. edu/tesfatsi/finintro. htmIntroduction to Financial Markets and Institutions www2.econ. iastate. edu/tesfatsi/finintro. htmAdditional Distinctions Among Securities Markets www2.econ. iastate. edu/tesfatsi/finintro. htmAsymmetric Information Problems Arising in Financial Markets www2.econ. iastate. edu/tesfatsi/finintro. htmThe Concept of Present Value www2.econ. iastate. edu/tesfatsi/finintro. htmMeasuring Interest Rates by Yield to Maturity www2.econ. iastate. edu/tesfatsi/finintro. htmInterest Rates vs. Return Rates www2.econ. iastate. edu/tesfatsi/finintro. htmReal vs. Nominal Interest Rates An asset is anything of durable value, that is, anything that acts as a means to store value over time. Real assets are assets in physical form (e. g. land, equipment, houses. ), including quothuman capitalquot assets embodied in people (natural abilities, learned skills, knowledge. ). Financial assets are claims against real assets, either directly (e. g. stock share equity claims) or indirectly (e. g. money holdings, or claims to future income streams that originate ultimately from real assets). Securities are financial assets exchanged in auction and over-the-counter markets (see below) whose distribution is subject to legal requirements and restrictions (e. g. information disclosure requirements). Lenders are people who have available funds in excess of their desired expenditures that they are attempting to loan out, and borrowers are people who have a shortage of funds relative to their desired expenditures who are seeking to obtain loans. Borrowers attempt to obtain funds from lenders by selling to lenders newly issued claims against the borrowers39 real assets, i. e. by selling the lenders newly issued financial assets. A financial market is a market in which financial assets are traded. In addition to enabling exchange of previously issued financial assets, financial markets facilitate borrowing and lending by facilitating the sale by newly issued financial assets. Examples of financial markets include the New York Stock Exchange (resale of previously issued stock shares), the U. S. government bond market (resale of previously issued bonds), and the U. S. Treasury bills auction (sales of newly issued T-bills). A financial institution is an institution whose primary source of profits is through financial asset transactions. Examples of such financial institutions include discount brokers (e. g. Charles Schwab and Associates), banks, insurance companies, and complex multi-function financial institutions such as Merrill Lynch. Introduction to Financial Markets and Institutions: Financial markets serve six basic functions. These functions are briefly listed below: Borrowing and Lending: Financial markets permit the transfer of funds (purchasing power) from one agent to another for either investment or consumption purposes. Price Determination: Financial markets provide vehicles by which prices are set both for newly issued financial assets and for the existing stock of financial assets. Information Aggregation and Coordination: Financial markets act as collectors and aggregators of information about financial asset values and the flow of funds from lenders to borrowers. Risk Sharing: Financial markets allow a transfer of risk from those who undertake investments to those who provide funds for those investments. Liquidity: Financial markets provide the holders of financial assets with a chance to resell or liquidate these assets. Efficiency: Financial markets reduce transaction costs and information costs. In attempting to characterize the way financial markets operate, one must consider both the various types of financial institutions that participate in such markets and the various ways in which these markets are structured. Who are the Major Players in Financial Markets By definition, financial institutions are institutions that participate in financial markets, i. e. in the creation and/or exchange of financial assets. At present in the United States, financial institutions can be roughly classified into the following four categories: quotbrokersquot quotdealersquot quotinvestment bankersquot and quotfinancial intermediaries. quot A broker is a commissioned agent of a buyer (or seller) who facilitates trade by locating a seller (or buyer) to complete the desired transaction. A broker does not take a position in the assets he or she trades -- that is, the broker does not maintain inventories in these assets. The profits of brokers are determined by the commissions they charge to the users of their services (either the buyers, the sellers, or both). Examples of brokers include real estate brokers and stock brokers. Diagrammatic Illustration of a Stock Broker: Buyer Stock Broker Seller Stock (Passed Thru) Stock Like brokers, dealers facilitate trade by matching buyers with sellers of assets they do not engage in asset transformation. Unlike brokers, however, a dealer can and does quottake positionsquot (i. e. maintain inventories) in the assets he or she trades that permit the dealer to sell out of inventory rather than always having to locate sellers to match every offer to buy. Also, unlike brokers, dealers do not receive sales commissions. Rather, dealers make profits by buying assets at relatively low prices and reselling them at relatively high prices (buy low - sell high). The price at which a dealer offers to sell an asset (the quotasked pricequot) minus the price at which a dealer offers to buy an asset (the quotbid pricequot) is called the bid-ask spread and represents the dealer39s profit margin on the asset exchange. Real-world examples of dealers include car dealers, dealers in U. S. government bonds, and Nasdaq stock dealers. Diagrammatic Illustration of a Bond Dealer: Bond Dealer Bond An investment bank assists in the initial sale of newly issued securities (i. e. in IPOs Initial Public Offerings) by engaging in a number of different activities: Advice: Advising corporations on whether they should issue bonds or stock, and, for bond issues, on the particular types of payment schedules these securities should offer Underwriting: Guaranteeing corporations a price on the securities they offer, either individually or by having several different investment banks form a syndicate to underwrite the issue jointly Sales Assistance: Assisting in the sale of these securities to the public. Some of the best-known U. S. investment banking firms are Morgan Stanley, Merrill Lynch, Salomon Brothers, First Boston Corporation, and Goldman Sachs. Unlike brokers, dealers, and investment banks, financial intermediaries are financial institutions that engage in financial asset transformation. That is, financial intermediaries purchase one kind of financial asset from borrowers -- generally some kind of long-term loan contract whose terms are adapted to the specific circumstances of the borrower (e. g. a mortgage) -- and sell a different kind of financial asset to savers, generally some kind of relatively liquid claim against the financial intermediary (e. g. a deposit account). In addition, unlike brokers and dealers, financial intermediaries typically hold financial assets as part of an investment portfolio rather than as an inventory for resale. In addition to making profits on their investment portfolios, financial intermediaries make profits by charging relatively high interest rates to borrowers and paying relatively low interest rates to savers. Types of financial intermediaries include: Depository Institutions (commercial banks, savings and loan associations, mutual savings banks, credit unions) Contractual Savings Institutions (life insurance companies, fire and casualty insurance companies, pension funds, government retirement funds) and Investment Intermediaries (finance companies, stock and bond mutual funds, money market mutual funds). Diagrammatic Example of a Financial Intermediary: A Commercial Bank Lending by B Borrowing by B F . gt B . gt H Loan contracts Deposit accounts issued by F to B issued by B to H are liabilities of F are liabilities of B and assets of B and assets of H NOTE: FFirms, BCommercial Bank, and HHouseholds Important Caution: These four types of financial institutions are simplified idealized classifications, and many actual financial institutions in the fast-changing financial landscape today engage in activities that overlap two or more of these classifications, or even to some extent fall outside these classifications. A prime example is Merrill Lynch, which simultaneously acts as a broker, a dealer (taking positions in certain stocks and bonds it sells), a financial intermediary (e. g. through its provision of mutual funds and CMA checkable deposit accounts), and an investment banker. What Types of Financial Market Structures Exist The costs of collecting and aggregating information determine, to a large extent, the types of financial market structures that emerge. These structures take four basic forms: Auction markets conducted through brokers Over-the-counter (OTC) markets conducted through dealers Organized Exchanges, such as the New York Stock Exchange, which combine auction and OTC market features. Specifically, organized exchanges permit buyers and sellers to trade with each other in a centralized location, like an auction. However, securities are traded on the floor of the exchange with the help of specialist traders who combine broker and dealer functions. The specialists broker trades but also stand ready to buy and sell stocks from personal inventories if buy and sell orders do not match up. Intermediation financial markets conducted through financial intermediaries Financial markets taking the first three forms are generally referred to as securities markets. Some financial markets combine features from more than one of these categories, so the categories constitute only rough guidelines. An auction market is some form of centralized facility (or clearing house) by which buyers and sellers, through their commissioned agents (brokers), execute trades in an open and competitive bidding process. The quotcentralized facilityquot is not necessarily a place where buyers and sellers physically meet. Rather, it is any institution that provides buyers and sellers with a centralized access to the bidding process. All of the needed information about offers to buy (bid prices) and offers to sell (asked prices) is centralized in one location which is readily accessible to all would-be buyers and sellers, e. g. through a computer network. No private exchanges between individual buyers and sellers are made outside of the centralized facility. An auction market is typically a public market in the sense that it open to all agents who wish to participate. Auction markets can either be call markets -- such as art auctions -- for which bid and asked prices are all posted at one time, or continuous markets -- such as stock exchanges and real estate markets -- for which bid and asked prices can be posted at any time the market is open and exchanges take place on a continual basis. Experimental economists have devoted a tremendous amount of attention in recent years to auction markets. Many auction markets trade in relatively homogeneous assets (e. g. ny. frb. org/pihome/fedpoint/fed41.htmlTreasury bills, notes, and bonds) to cut down on information costs. Alternatively, some auction markets (e. g. in second-hand jewelry, furniture, paintings etc.) allow would-be buyers to inspect the goods to be sold prior to the opening of the actual bidding process. This inspection can take the form of a warehouse tour, a catalog issued with pictures and descriptions of items to be sold, or (in televised auctions) a time during which assets are simply displayed one by one to viewers prior to bidding. Auction markets depend on participation for any one type of asset not being too quotthin. quot The costs of collecting information about any one type of asset are sunk costs independent of the volume of trading in that asset. Consequently, auction markets depend on volume to spread these costs over a wide number of participants. An over-the-counter market has no centralized mechanism or facility for trading. Instead, the market is a public market consisting of a number of dealers spread across a region, a country, or indeed the world, who make the market in some type of asset. That is, the dealers themselves post bid and asked prices for this asset and then stand ready to buy or sell units of this asset with anyone who chooses to trade at these posted prices. The dealers provide customers more flexibility in trading than brokers, because dealers can offset imbalances in the demand and supply of assets by trading out of their own accounts. Many well-known common stocks are traded over-the-counter in the United States through nasdaq/NASDAQ (National Association of Securies Dealers39 Automated Quotation System). Intermediation Financial Markets: An intermediation financial market is a financial market in which financial intermediaries help transfer funds from savers to borrowers by issuing certain types of financial assets to savers and receiving other types of financial assets from borrowers. The financial assets issued to savers are claims against the financial intermediaries, hence liabilities of the financial intermediaries, whereas the financial assets received from borrowers are claims against the borrowers, hence assets of the financial intermediaries. (See the diagrammatic illustration of a financial intermediary presented earlier in these notes.) Additional Distinctions Among Securities Markets Primary versus Secondary Markets: Primary markets are securities markets in which newly issued securities are offered for sale to buyers. Secondary markets are securities markets in which existing securities that have previously been issued are resold. The initial issuer raises funds only through the primary market. Debt Versus Equity Markets: Debt instruments are particular types of securities that require the issuer (the borrower) to pay the holder (the lender) certain fixed dollar amounts at regularly scheduled intervals until a specified time (the maturity date) is reached, regardless of the success or failure of any investment projects for which the borrowed funds are used. A debt instrument holder only participates in the management of the debt instrument issuer if the issuer goes bankrupt. An example of a debt instrument is a 30-year mortgage. In contrast, an equity is a security that confers on the holder an ownership interest in the issuer. There are two general categories of equities: quotpreferred stockquot and quotcommon stock. quot Common stock shares issued by a corporation are claims to a share of the assets of a corporation as well as to a share of the corporation39s net income -- i. e. the corporation39s income after subtraction of taxes and other expenses, including the payment of any debt obligations. This implies that the return that holders of common stock receive depends on the economic performance of the issuing corporation. Holders of a corporation39s common stock typically participate in any upside performance of the corporation in two ways: by receiving a share of net income in the form of dividends and by enjoying an appreciation in the price of their stock shares. However, the payment of dividends is not a contractual or legal requirement. Even if net earnings are positive, a corporation is not obliged to distribute dividends to shareholders. For example, a corporation might instead choose to keep its profits as retained earnings to be used for new capital investment (self-financing of investment rather than debt or equity financing). On the other hand, corporations cannot charge losses to their common stock shareholders. Consequently, these shareholders at most risk losing the purchase price of their shares, a situation which arises if the market price of their shares declines to zero for any reason. An example of a common stock share is a share of IBM. In contrast, preferred stock shares are usually issued with a par value (e. g. 100) and pay a fixed dividend expressed as a percentage of par value. Preferred stock is a claim against a corporation39s cash flow that is prior to the claims of its common stock holders but is generally subordinate to the claims of its debt holders. In addition, like debt holders but unlike common stock holders, preferred stock holders generally do not participate in the management of issuers through voting or other means unless the issuer is in extreme financial distress (e. g. insolvency). Consequently, preferred stock combines some of the basic attributes of both debt and common stock and is often referred to as a hybrid security. Money versus Capital Markets: The money market is the market for shorter-term securities, generally those with one year or less remaining to maturity. Examples: U. S. Treasury bills negotiable bank certificates of deposit (CDs) commercial paper, Federal funds Eurodollars. Remark: Although the maturity on certificates of deposit (CDs) -- i. e. on large time deposits at depository institutions -- can run anywhere from 30 days to over 5 years, most CDs have a maturity of less than one year. Those with a maturity of more than one year are referred to as term CDs. A CD that can be resold without penalty in a secondary market prior to maturity is known as a negotiable CD. The capital market is the market for longer-term securities, generally those with more than one year to maturity. Examples: Corporate stocks residential mortgages U. S. government securities (marketable long-term) state and local government bonds bank commercial loans consumer loans commercial and farm mortgages. Remark: Corporate stocks are conventionally considered to be long-term securities because they have no maturity date. Domestic Versus Global Financial Markets: Eurocurrencies are currencies deposited in banks outside the country of issue. For example, eurodollars, a major form of eurocurrency, are U. S. dollars deposited in foreign banks outside the U. S. or in foreign branches of U. S. banks. That is, eurodollars are dollar-denominated bank deposits held in banks outside the U. S. An international bond is a bond available for sale outside the country of its issuer. Example of an International Bond: a bond issued by a U. S. firm that is available for sale both in the U. S. and abroad. A foreign bond is an international bond issued by a country that is denominated in a foreign currency and that is for sale exclusively in the country of that foreign currency. Example of a Foreign Bond: a bond issued by a U. S. firm that is denominated in Japanese yen and that is for sale exclusively in Japan. A Eurobond is an international bond denominated in a currency other than that of the country in which it is sold. More precisely, it is issued by a borrower in one country, denominated in the borrower39s currency, and sold outside the borrower39s country. Example of a Eurobond: Bonds sold by the U. S. government to Japan that are denominated in U. S. dollars. Asymmetric Information in Financial Markets Asymmetric information in a market for goods, services, or assets refers to differences (quotasymmetriesquot) between the information available to buyers and the information available to sellers. For example, in markets for financial assets, asymmetric information may arise between lenders (buyers of financial assets) and borrowers (sellers of financial assets). Problems arising in markets due to asymmetric information are typically divided into two basic types: quotadverse selectionquot and quotmoral hazard. quot This section explains these two types of problems, using financial markets for concrete illustration. 1. Adverse Selection Adverse selection is a problem that arises for a buyer of goods, services, or assets when the buyer has difficulty assessing the quality of these items in advance of purchase. Consequently, adverse selection is a problem that arises because of different (quotasymmetricquot) information between a buyer and a seller before any purchase agreement takes place. An Illustration of Adverse Selection in Loan Markets: In the context of a loan market, an adverse selection problem arises if the contractual terms that a lender sets in advance in an attempt to protect himself against the consequences of inadvertently lending to high risk borrowers have the perverse effect of encouraging high risk borrowers to self-select into the lender39s loan applicant pool while at the same time encouraging low risk borrowers to self-select out of this pool. In this case, the lender39s pool of loan applicants is adversely affected in the sense that the average quality of borrowers in the pool decreases. Moral hazard is said to exist in a market if, after the signing of a purchase agreement between the buyer and seller of a good, service, or asset: the seller changes his or her behavior in such a way that the probabilites (risk calculations) used by the buyer to determine the terms of the purchase agreement are no longer accurate the buyer is only imperfectly able to monitor (observe) this change in the seller39s behavior. For example, a moral hazard problem arises if, after a lender purchases a loan contract from a borrower, the borrower increases the risks originally associated with the loan contract by investing his borrowed funds in more risky projects than he originally reported to the lender. The Concept of Present Value Suppose someone promises to pay you 100 in some future period T. This amount of money actually has two different values: a nominal value of 100, which is simply a measure of the number of dollars that you will receive in period T and a present value (sometimes referred to as a present discounted value), roughly defined to be the minimum number of dollars that you would have to give up today in return for receiving 100 in period T. Stated somewhat differently, the present value of the future 100 payment is the value of this future 100 payment measured in terms of current (or present) dollars. The concept of present value permits financial assets with different associated payment streams to be compared with each other by calculating the value of these payment streams in terms of a single common unit: namely, current dollars. A specific procedure for the calculation of present value for future payments will now be developed. Present Value of Payments One Period Into the Future: If you save 1 today for a period of one year at an annual interest rate i, the nominal value of your savings after one year will be where the asterisk quotquot denotes multiplication. On the other hand, proceeding in the reverse direction from the future to the present, the present value of the future dollar amount V(1) (1i)1 is equal to 1. That is, the amount you would have to save today in order to receive back V(1)(1i)1 in one year39s time is 1. Notice that this calculation of 1 as the present value of V(1)(1i)1 satisfies the following formula: (2) Present Value -------- . Indeed, given any fixed annual interest rate i, and any payment V(1) to be received one year from today, the present value of V(1) is given by formula (2). In effect, then, the payment V(1) to be received one year from now has been discounted back to the present using the annual interest rate i, so that the value of V(1) is now expressed in current dollars. Present Value of Payments Multiple Periods Into the Future: If you save 1 today at a fixed annual interest rate i, what will be the value of your savings in one year39s time In two year39s time In n year39s time If you save 1 at a fixed annual interest rate i, the nominal value of your savings in one year39s time will be V(1)(1i)1. If you then put aside V(1) as savings for an additional year rather than spend it, the nominal value of your savings at the end of the second year will be And so forth for any number of years n. Value of 1 (1i)1 (1i) 1 (1i) 1 Now consider the present value of V(n) (1i)n1 for any year n. By construction, V(n) is the nominal value obtained after n years when a single dollar is saved for n successive years at the fixed annual interest rate i. Consequently, the present value of V(n) is simply equal to 1, regardless of the value of n. Notice, however, that the present value of V(n) -- namely, 1 -- can be obtained from the following formula: Indeed, given any fixed annual interest rate i, and any nominal amount V(n) to be received n years from today, the present value of V(n) can be calculated by using formula (5). Present Value of Any Arbitrary Payment Stream: Now suppose you will be receiving a sequence of three payments over the next three years. The nominal value of the first payment is 100, to be received at the end of the first year the nominal value of the second payment is 150, to be received at the end of the second year and the nominal value of the third payment is 200, to be received at the end of the third year. Given a fixed annual interest rate i, what is the present value of the payment stream (100,150,200) consisting of the three separate payments 100, 150, and 200 to be received over the next three years To calculate the present value of the payment stream (100,150,200), use the following two steps: Step 1: Use formula (5) to separately calculate the present value of each of the individual payments in the payment stream, taking care to note how many years into the future each payment is going to be received. Step 2: Sum the separate present value calculations obtained in Step 1 to obtain the present value of the payment stream as a whole. Carrying out Step 1, it follows from formula (5) that the present value of the 100 payment to be received at the end of the first year is 100/(1i). Similarly, it follows from formula (5) that the present value of the 150 payment to be received at the end of the second year is Finally, it follows from formula (3) that the present value of the 200 payment to be received at the end of the third year is Consequently, adding together these three separate present value calculations in accordance with Step 2, the present value PV(i) of the payment stream (100,150,200) is given by More generally, given any fixed annual interest rate i, and given any payment stream (V1,V2,V3. VN) consisting of individual payments to be received over the next N years, the present value of this payment stream can be found by following the two steps outlined above. In particular, then, given any fixed annual interest rate, and given any payment stream paid out on a yearly basis to the owner of some financial asset, the present (current dollar) value of this payment stream can be found by following Steps 1 and 2 outlined above. Consequently, regardless how different the payment streams associated with different financial assets might be, one can calculate the present values for these payment streams in current dollar terms and hence have a way to compare them. Measuring Interest Rates by Yield to Maturity By definition, the current annual yield to maturity for a financial asset is the particular fixed annual interest rate i which, when used to calculate the present value of the financial asset39s future stream of payments to the financial asset39s owner, yields a present value equal to the current market value of the financial asset. Below we illustrate this calculation for coupon bonds. Yield to Maturity for Coupon Bonds: The basic contractual terms of a coupon bond are as follows: Receives: Price Pb START /// DATE Buyer Payment C Payment C Payment C Receives: Face Value F Consider a coupon bond whose purchase price is Pb94, whose face value is F 100, whose annual coupon payment is C 10, and whose maturity is 10 years. The payment stream to the buyer (new owner) generated by this coupon bond is given by ( 10, 10, 10, 10, 10, 10, 10, 10, 10, 10 100 ). For any given fixed annual interest rate i, the present value PV(i) of the payment stream (9) is given by the sum of the separate present value calculations for each of the annual payments in this payment stream as determined by formula (5). That is, PV(i) 10/(1i) 10/(1i)2 . 10/(1i)10 100/(1i)10 . The current value of the coupon bond is its current purchase price Pb 94. It then follows by definition that the yield to maturity for this coupon bond is found by solving the following equation for i: The calculation of the yield to maturity i from formula (11) can be difficult, but tables have been published that permit one to read off the yield to maturity i for a coupon bond once the purchase price, the face value, the coupon rate, and the maturity are known. More generally, given any coupon bond with purchase price Pb, face value F, coupon payment C, and maturity N, the yield to maturity i is found by means of the following formula: where the present value PV(i) of the coupon bond is given by PV(i) C/(1i) C/(1i)2 . C/(1i)N F/(1i)N . Interest Rates vs. Return Rates Given any asset A held over any given time period T, the return to A over the holding period T is, by definition: the sum of all payments (rents, coupon payments, dividends, etc.) generated by A during period T, assumed paid out at the end of the period, PLUS the capital gain () or loss (-) in the market value of A over period T, measured as the market value of A at the end of period T minus the market value of A at the beginning of period T. The return rate on asset A over the holding period T is then defined to be the return on A over period T divided by the market value of A at the beginning of period T. More precisely, suppose that an asset A is held over a time period that starts at some time t and ends at time t1. Let the market value of A at time t be denoted by P(t) and the market value of A at time t1 be denoted by P(t1). Finally, let V(t, t1) denote the sum of all payments accruing to the holder of asset A from t to t1, assumed to be paid out at time t1. Then, by definition, the return rate on asset A from t to t1 is given by the following formula: (13) Return Rate onV(t, t1) P(t1) - P(t) time t to t1 P(t) payments Capital Gain (if ) received as or Loss (if -) as percentage percentage of P(t) Formula (13) holds for any asset A, whether physical or financial. The question then arises: For financial assets, what is the connection between the return rate defined by formula (13) and the interest rate on the financial asset defined by the yield to maturity The return rate on a financial asset is not necessarily equal to the yield to maturity on the financial asset. Starting at any current time t, the return rate is calculated for some specified holding period from t to t39, whether or not this holding period coincides with the maturity of the financial asset. Moreover, the return rate takes into account any capital gains or losses that occur during this holding period, in addition to any payments received from the financial asset during this holding period. In contrast, starting at any current time t, the yield to maturity takes into account the payment stream generated by the financial asset over its entire remaining maturity, plus the overall anticipated capital gain or loss that will be incurred when the financial asset is held to maturity. Real vs. Nominal Interest Rates The yield to maturity measure of an interest rate, as examined to date, has been quotnominalquot in the sense that it has not been adjusted for expected changes in prices. What actually concerns a quotrationalquot saver considering the purchase of a financial asset is not the nominal payment stream he or she expects to earn in future periods but rather the command over purchasing power that this nominal payment stream is expected to entail. This purchasing power depends on the behavior of prices. Let infe(t) denote the expected inflation rate at time t, and let i(t) denote the (nominal) yield to maturity for some financial asset at time t. Then the real interest rate associated with i(t) is defined by the following quotFisher equation:quot That is, the real interest rate is the nominal interest rate minus the expected inflation rate. Note:The real interest rate defined by (14) is more precisely called the ex ante real interest rate because it adjusts for expected changes in the price level. If the expected inflation rate in (14) is replaced by the actual inflation rate, one obtains the ex post real interest rate. Real interest rates provide a more accurate measure of the true costs of borrowing and the true gains from lending than nominal interest rates, and hence provide a better indicator of the incentives to borrow and lend. In particular, for any given nominal interest rate i on a debt instrument D, the incentive to borrow (issue D) will be higher if the real interest rate associated with i is lower (i. e. the expected inflation rate is higher). This is so since a higher expected inflation rate means the borrower (issuer of D) can expect to pay off his future nominal debt obligations using cheaper dollars than he borrowed. For this same reason, the incentive to lend (purchase D) will be lower if the real interest rate associated with i is lower. A similar distinction is made between the (nominal) return rate defined by (13), which has not been adjusted for expected changes in prices, and the quotreal return ratequot which is subject to such adjustment. More precisely, the real return rate on any asset A over any holding period from t to t1 is defined to be the (nominal) return rate (13) minus the expected inflation rate infe(t). Copyright 169 2012 Leigh Tesfatsion. All Rights Reserved. How Professional Day Traders Make Money In The Stock Market wanderingtrader/day-trading-blog/Day Trading Blog How professional day traders really make money in the stock market is a question that I get quite frequently. 160I even announced a QampA session recently via the facebook/wanderingtraderWanderingTrader Facebook page and most questions were actually about wanderingtrader/day-tradingday trading160rather than travel. There is an aura around Wall Street and the stock market that involves a lot of money. Most people are vaguely acquainted with the stock market and only understand that theres a lot of money involved. Some of us in recent years have even160begun to dislike everyone associated with the stock market because they have all the money that we are supposed to have. If you can beat them join them right As I continue to get more and more questions about day trading I plan on explaining a bit more on what day trading is and how I make a living doing it. What Day Traders Really Do. Basics of How Professional Day Traders Make Money in the Stock Market The financial system is significantly more complex than it used to be even 10 or 20 years ago. The basic premise behind why the stock market exists is because companies need money to grow. After a company gets to a certain point they need more money to grow. A private company turns into a public company and that is when a company first appears in the stock market. The stock market can be compared to eBay. EBay is the 21st century version of a garage sale, we have things we dont need that still have value and we want money for them. The stock market is essentially the same thing but with companies that need capital (money) to continue growing. Eventually a company gets so large that they stop lending money from their friends, local banks, and family. They go public to receive a cash infusion they need to keep growing and compete in their industry. 160Once a person initially invests in a company via stock market we become part owners of the company. Stock markets deal in shares of stock. If there are 100 shares of Google and I buy one share I therefore own 1 of Google. This is relative because there are actually millions of shares of stock for certain companies. Every company is placed in a group of stocks called stock indexes much like categories on eBay. If we want to purchase a camera or laptop we will look in the electronics section. When one wants to purchase a new bed we look in the furniture section. 160Categories on eBay vary a bit to stock indexes but to the untrained eye we can look at it the same way. The NASDAQ composite index for example is mostly known for having technology stocks. The SampP 500 index is an index of the 500 largest public companies in the United States. So once a company goes from private to public we begin to invest in it. The left over shares have value and the general public decides what that value is based on the stock market. With anything that has value one can determine a future value. This is the reason why the stock market exists and the fundamental way that professional day traders really make money in the stock market. They buy and sell stocks based on their future value. What our day trading charts look like Fundamental vs Technical Analysis In order to determine the value of a stock or company traders and investors used two typical models, fundamental analysis and technical analysis. It is important to note that these two types of analysis are the main forms of investing/ wanderingtrader/day-trading-blogtrading160in the stock market. Fundamental analysis involves someone understanding concepts like the health of a company via its competition, revenue and profit, its management, and potential for future growth (think Warren Buffet). The concept here is to understand a company is in a good position to grow and increase value. Once a company increases its value it pleases investors and professional traders. A trader or investor would have purchased the stock at a lower price and since the company has a higher value (higher priced stock) it makes a person money. Technical analysis does not include any of the above. Technical analysis strictly involves looking at a chart with a set of indicators and recognizing patterns. One random example would be if a certain company goes up during a certain time of year. If we assume that Apple will make more sales during the holiday season then we may be able to assume that its stock price will go up during that time of year. A professional trader that is looking at Apple stock might look for patterns in changes in price during a specific date or time of year. Technical analysis does not involve analyzing the companys financials or management. 160It simply involves looking at a chart and making decisions. An example of two reversal patterns which is part of technical analysis Professional day traders have advantages and disadvantages with both types of analysis but it also depends on what kind of trader a person is. If one is looking to invest in a company long-term we may look more at fundamental analysis. I prefer strictly a technical analysis approach due to the uncertain economic times we are in.160 I simply prefer to not have my money in the markets when something erratic or volatile can happen. It also takes a lot of work to look at news and connect the dots with all of the different opinions and news sources online. Instead I turn on my computer and begin looking at a chart, do a few minute pre market analysis, and begin trading. Most people that we call day traders look at the market which strictly technical analysis. They are normally classified into three different types of traders scalpers, intraday traders, and swing traders.160 All three types of professional day traders are looking to do the same thing, make a profit based on a different in value. The only difference between the three is the amount of time they are involved in positions. Professional day traders that make money in the stock market with high frequency and lower profit are called scalpers. The goal is to take advantage of small inconsistencies in the market in addition to quick movements (changes in value in a matter of seconds or minutes). A scalper may only be in a position for five or 10 seconds or possibly a minute. A scalper also tends to place a higher frequency of trades and as their profit is normally lower per trade. 160160A higher frequency of positions (entering and exiting trades) is needed in order to make higher profits. Types of day traders Professional day traders that make money in the stock market on a daily basis are considered intraday traders. An intraday trader never holds a position overnight hence the term intra-day. Intraday traders are typically in positions from within a few minutes to possibly a few hours. 160Intraday traders are typically not as high frequency as scalpers but due trade more often than swing traders. I would consider myself an intraday trader as I normally trade between an hour or two a day with TheDay thedaytradingacademy/TradingAcademy. Most of our traders make their money within an hour or two a day. Our live classes are normally a few hours as well since the best activity in the markets come within the first few hours. Professional day traders that make their money swing trading involves a much longer period of time. A swing trader uses fundamental or technical analysis but stays in trades over a few days or even weeks. To compare the differences between a scalper or intraday trader, a swing trader may be in a position for a few days or weeks whereas an intraday trader never holds a position overnight. This swing trader term infers that someone plays the swings in the stock market rather than the quicker movements. There are also much longer term day traders called position traders which hold trades for several weeks or even months. 160We wont highlight these kinds of traders on todays post. The whole basis of a professional trade day trader making money in the stock market involves accurately gauging the value of a stock. 160A stock of a company is in essence the price at which the general public says its worth. Since the financial system has changed it has become more complex and there are more investment vehicles than just stocks to invest in. These can be160stocks, futures, options, and even forex (currency fluctuations). 160The basic premise of making money in the stock market is simple, gauging the value of something and making a profit when your estimation was correct. (Check out the youtube/daytradingacademyDay Trading Academy YouTube to see how we actually trade) One of the most important things to understand is that a day trader can make money when the market goes up or down. If we are estimating the value on something we can also estimate that the value is going down and make a profit on it. Day traders can actually make more money when the market is going down, when the economy is in a recession, or when there is a crisis. One of the reasons I love to make a living day trading is because we actually make more money and an economic downturn and a crisis than we do when things are going well. I do still hope the best for you So there you have it A bit of novice background of how I make a living day trading amp wanderingtrader/travel-blogtraveling around the world. FREE REPORT - INTRODUCTION chartadvisor/freereport/freereportpg4.aspxHead amp Shoulders1604 So youre a believer. You believe there are profits to be made in stocks. You believe you dont have to pay a high-profile Wall Street banker to make money. You believe the average Joe can earn a healthy fortune using the right system. And you are dead-set on figuring that system out. We agree with you. We believe that with the right tools, anyone can make consistent money in stocks. And we are going to give you those tools. A Simple Toolkit for Reliable Returns In this simple-to-follow, eight-page guide, ChartAdvisor introduces you to five of the most powerful, profitable investopedia/terms/p/pattern. asppatterns in stocks. These stock patterns pave the way 10, 15, even 20 gains for each winning trade. True, not the 2000 some people are touting. But its darn good money, made using an established strategy, and attainable at relatively low risk. Its realistic money. And you dont have to trust your hard-earned cash to some brokers favorite fad. In the next few pages, youll learn all the skills you need to recognize proven money-making stock patterns, and youll get to see these patterns in action. quotI39ve used a variety of. systems, and lost 25 of my portfolio over a 2-3 year period crazily trading hundreds of stocks. When I began using ChartAdvisor and sticking to the rules it made all the difference. The stress of watching stocks is gone, I can do my job without constantly worrying, and I39ve made a 26 return on my portfolio just in the last three months on just a few tradesquot B. Hiebert, Canada Well also introduce you to our ChartAdvisor system Three Simple Steps to Stock Profits. Whether you decide to continue with ChartAdvisor or not, after reading this guide, youll Discover How To: 1. Identify profitable stock patterns 2. Minimize your risk 3. Maximize your return in up and down markets Make money on the stock market Youll learn how to make big money on stocks using a technical analysis toolkit that has been wielded successfully for hundreds of years. Thats no exaggeration. That makes these patterns some of the most time-tested strategies in finance. You can feel secure that you are trusting your investments to a highly refined system not a new craze or an analysts hunch. There are hundreds of patterns in stock charts that traders can look for, but at ChartAdvisor, we focus only on the most trusted. chartadvisor/contactform. aspxContact Us Copyright 169 2015, Investopedia, LLC. chartadvisor/corp/copyright. aspxAll Rights Reserved chartadvisor/termsofuse. aspxTerms of Use chartadvisor/datacollection. aspxWeb Site Policy ltimg srcquotb. scorecardresearch/pc12ampc26034722ampc4chartadvisor/freereport/reportindex. aspxampcv2.0ampcj1quot /gt chartadvisor/freereport/freereportpg4.aspxHead amp Shoulders1604 Profitable Pattern Number One The Symmetrical Triangle: A Reliable Workhorse Youll recognize the investopedia/terms/s/symmetricaltriangle. aspsymmetrical triangle pattern when you see a stocks price vacillating up and down and converging towards a single point. Its back and forth oscillations will become smaller and smaller until the stock reaches a critical price, breaks out of the pattern, and moves drastically up or down. The symmetrical triangle pattern is formed when investors are unsure of a stocks value. Once the pattern is broken, investors jump on the bandwagon, shooting the stock price north or south. Symmetrical Triangle Pattern To form your symmetrical triangle pattern, draw two converging trendlines that bound the high and low prices. Your trendlines should form (you guessed it) a symmetrical triangle, lying on its side. How to Profit from Symmetrical Triangles Symmetrical triangles are very reliable. You can profit from upwards or downwards breakouts. Youll learn more about how to earn from downtrends when we talk about If you see a symmetrical triangle forming, watch it closely. The sooner you catch the breakout, the more money you stand to make. Sideways movement, a period of rest, before the breakout. Price of the asset traveling between two converging trendlines. Breakout 190 of the way to the apex. Set Your Target Price: As with all patterns, knowing when to get out is as important as knowing when to get in. Your target price is the safest time to sell, even if it looks like the trend may be continuing. For symmetrical triangles, sell your stock at a target price of: Entry price plus the patterns height for an upward breakout. Entry price minus the patterns height for a downward breakout. ChartAdvisor Symmetrical Triangles in Action ChartAdvisor has a long history of identifying symmetrical triangle patterns. Over the last two and one-half years, ChartAdvisor has brought to its readers over 20 symmetrical triangle patterns. Thats an average of one every month and a half. Our readers earned an amazing 40 profit on our Nortel Networks Inc ( investopedia/markets/stocks/NTNT) pick. Those who followed our call on Rochester Medical Corp ( investopedia/markets/stocks/ROCMROCM) in September of 2004 earned 15 in 33 days. And in October of 2004, our members earn 11 in 19 days when ChartAdvisor noticed Pan American Silver Corp ( Our members earned 11 in 19 days on the PAAS symmetrical triangle pattern. If youre not sure you can recognize a symmetrical triangle on your own, be sure to visit chartadvisor/ChartAdvisor daily for out Charts of the Day. chartadvisor/freereport/freereportpg3.aspxLearn How to Profit from our Next Set of Profitable Patterns: The Ascending and Descending Triangles gt chartadvisor/freereport/freereportpg4.aspxHead amp Shoulders1604 Pattern Number Two Ascending and Descending Triangles: The Traditional Bull and Bear When you notice a stock has a series of increasing troughs and the price is unable to break through a price barrier, chances are you are witnessing the birth of an investopedia/terms/a/ascendingtriangle. aspascending triangle pattern. Ascending Triangle Pattern Confirm your ascending triangle pattern by drawing a horizontal line tracing the upper price barrier and a diagonal line tracing the series of ascending troughs. investopedia/terms/d/descendingtriangle. aspdescending triangle is the bearish counterpart to the ascending triangle. Descending Triangle Pattern Confirm your descending triangle by drawing a horizontal line tracing the lower price barrier and a diagonal line tracing the series of descending troughs. The ascending and descending patterns indicate a stock is increasing or decreasing in demand. The stock meets a level of investopedia/terms/r/resistance. aspresistance (the horizontal trendline) several times before breaking out and continuing in the direction of the developing up or down pattern. How to Profit from Ascending and Descending Triangles Ascending and descending triangles are short-term investor favorites, because the trends allow short-term traders to earn from the same sharp price increase that long-term investors have been waiting for. Rather than holding on to a stock for months or years before you finally see a big payday, you can buy and hold for only a period of days and reap in the same monster returns as the long-time stock owners. As with many of our favorite patterns, when you learn to identify ascending and descending triangles, you can chartadvisor/freereport/freereportpg7.aspxprofit from upwards or downwards breakouts. That way, youll earn a healthy profit regardless of where the market is going. An ascending or descending pattern forming over three to four weeks. Set Your Target Price: For ascending and descending triangles, sell your stock at a target price of: Entry price plus the patterns height for an upward breakout. Entry price minus the patterns height for a downward breakout. ChartAdvisor Ascending and Descending Triangles in Action Ascending and descending triangles are some of our most popular patterns, because their features are so clear and the breakouts are almost always fast and furious. investopedia/markets/stocks/FLDRFLDR) earned our readers 28 in 18 days. Dominos Pizza ( investopedia/markets/stocks/FLDRDPZ) jumped 12 in 20 days after we pinpointed the breakout point on June 13, 2005. Another of our winning picks in 2005, Dril-Quip Inc ( investopedia/markets/stocks/DRQDRQ) jumped 12 in just 6 days. On Boyd Gaming ( community. investopedia/q. aspxsBYDBYD), investors following our pick earned a whopping 29 in 35 days. Our readers earned 29 in 35 days on the BYD ascending triangle pattern. chartadvisor/ChartAdvisor regular you would have reaped incredible profits on the 60 ascending and descending triangle picks weve made since our programs beginning. We features an average of two of these cash cows per month, making them one of the most prevalent and predictable patterns in your toolbox. chartadvisor/freereport/freereportpg4.aspxLearn How to Profit from our Next Profitable Pattern: The Head and Shoulders gt chartadvisor/freereport/freereportpg4.aspxHead amp Shoulders1604 Profitable Pattern Number Three Head and Shoulders: A ChartAdvisor Staple The head and shoulders pattern is a prevailing pattern among investopedia/terms/s/shortselling. aspshort sellers, investors who profit from downtrends. After three peaks, the stock plummets, offering a textbook, high-return opportunity to traders who catch the trend early. Head and Shoulders Pattern Head and shoulder patterns are characterized by a large peak bordered on either side by two smaller peaks. Draw one trendline, called the neckline, connecting the bottom of the two troughs. The first trough is a signal that buying demand is starting to weaken. Investors who believe the stock is undervalued respond with a buying frenzy, followed by a flood of selling when traders fear the stock has run too high. This decline is followed by another buying streak which fizzles out early. Finally, the stock declines to its true worth below the original price. How to Profit from the Head and Shoulders Pattern Short sell as soon as the price moves below the neckline after the descent from the right shoulder. Set Your Target Price: For the head and shoulders pattern, buy shares at a target price of: Entry price minus the patterns height (distance from the top of the head to the neckline). ChartAdvisor Head and Shoulders Pattern in Action Profiting from a downtrend can seem counterintuitive at first, but chartadvisor/ChartAdvisor readers soon learn the benefits of being able to profit in up OR down markets. This head and shoulders pattern on PAWC shot up an astonishing 27 in just 33 days. chartadvisor/freereport/freereportpg5.aspxLearn How to Profit from our Next Set of Profitable Patterns: Double and Triple Bottoms and Tops gt chartadvisor/freereport/freereportpg4.aspxHead amp Shoulders1604 Profitable Patterns Number Four and Five Triple and Double Bottoms and Tops: Reversals upon reversals When you see a W or M pattern forming, you may have just discovered a money-making investopedia/terms/d/doublebottom. aspdouble bottom or investopedia/terms/d/doubletop. aspdouble top pattern. These patterns are common reversal patterns used to suggest the current stock trend may be likely to shift. But dont panic if your double bottom or double top patterns do not develop as you had originally thought. You havent lost your chance for cash. If your W or M pattern reverses for a fourth time, you could now be working with the profitable triple bottom or triple top. Double Bottom Pattern Double Bottom Pattern A small peak is surrounded by two equal troughs. The price exceeds the middle-peak price. A price increase of 10 to 20 from the first trough to the middle peak. Two equal lows, not to differ by more than 3 or 4. Set Your Target Price: For the double bottom pattern, sell your stock at a target price of: Entry price plus the patterns height (distance from the peak to the bottom of the lowest trough). Double Top Pattern Double Top Pattern A small trough is surrounded by two equal peaks. Short Sell When: The price drops below the middle-trough price. A price decrease of 10 to 20 from the first peak to the middle trough. Two equal highs, not to differ by more than 3 or 4. Set Your Target Price: For the double top pattern, buy shares at a target price of: Entry price minus the patterns height (distance from the trough to the top of the highest peak). Triple Bottom Pattern Triple Bottom Pattern Three equal troughs amid a series of peaks. The price exceeds the resistance established by the prior peaks. A series of three identical troughs at the end of a prolonged downtrend. Set Your Target Price: For triple bottom patterns, sell your stock at a target price of: Entry price plus the patterns height (distance from the resistance to the bottom of the lowest trough). Triple Top Pattern Triple Top Pattern Three equal peaks amid a series of troughs. The price falls below the support that formed from the prior troughs. A series of three peaks at relatively the same level. Set Your Target Price: For triple top patterns, buy shares at a target price of: Entry price minus the patterns height (distance from the support to the top of the highest peak). The five most profitable stock patterns: ascending and descending triangles head and shoulders double top and double bottom triple top and triple bottom Youre halfway through your ChartAdvisor toolbox. But you still need a couple more nuts and bolts to ensure high-dollar profits in the market. Before youre ready to invest, youll want to learn how best to cut your losses and maximize your returns. chartadvisor/freereport/freereportpg6.aspxLearn How to Minimize Your Stock Market Losses gt How to Minimize Your Risk No investment advisor likes to admit it, but no stock picking system is perfect. Sometimes, the stocks we think will explode, dont. Sometimes, the stocks we feature lose money. There may not be a foolproof system to predicting the stock market, but we do have a foolproof system for managing risk. chartadvisor/ChartAdvisor follows one of the safest risk reduction systems available. Using these three simple steps, you can reduce the risk in your stock picking plan: Three Ways to Take Risk Out of the Stock Market Screen Your Picks. This might seem obvious, but patterns that look like they are developing into predictable trends do not always follow through. After combing over thousands of stock charts a day, ChartAdvisor will often not fetures a single stock. Get In. Get Out. ChartAdvisor preaches setting realistic target exit prices for all stocks. We lock in high returns while the stock is high, and we get out before the market has a chance to change its mind. investopedia/terms/s/stop-lossorder. aspStop Losses. This step is absolutely critical to minimizing your risk in the stock market. If a sure-fire winner turns out to be a fizzled-out dud, your system needs to have a built-in, abandon-ship trigger. That is, you need to know when to cut your losses and move on to brighter prospects. ChartAdvisor sets its stop-loss trigger around 3. So if a trade starts to go sour, you will almost never lose more than 3 of your investment. I am glad I took a second look at chartadvisor/ChartAdvisor. I keyed in your data from the 2nd of Feb 04 into a spread sheet with 20 of capital allocated to each symbol and came up with the 38 annualized return which is better than a poke-in-the-eye-with-a-sharp-stick, considering quotthe marketquot has been a sideways affair since the starting date. What I must mention is how inspired and relaxed I am after an in-depth study of your real trading account making that amount of return. I can more fully appreciate the much-lectured quotcut your losses short nowquot, seeing just how early it pays to get out when the trade goes against you, rather than the quotgive-it-roomquot systems I have tried. quot - P. Cameron, New Zealand chartadvisor/freereport/freereportpg7.aspxLearn the Final Key To the ChartAdvisor System: Maximizing Your Profit in Up or Down Marketsgt FREE REPORT - MAXIMIZING PROFIT chartadvisor/freereport/freereportpg4.aspxHead amp Shoulders1604 How to Maximize Your Return In Up or Down Markets Remember at the beginning of this report when we said wed show you the Three Simple Steps to Stock Profits We already learned about step one: picking profitable stock patterns. Weve also covered step two: minimizing your risk. Now weve come to the final step that makes the chartadvisor/ChartAdvior system so unique: how to profit from stocks, even when the stock goes down. Its a common misconception that traders can only make money when the price of a stock rises. Investors can make money anytime they can predict a stocks future movement up or down. Its time to learn about short selling. Short selling is the secret to making cash in a down market. Heres how it works: Identify a stock pattern that suggests a stock is headed down. Example: The Cleveland Cliffs descending triangle pattern in April of 2005 was perfect for short selling. Borrow shares of the soon-to-decline stock from your brokerage. Example: Lets say, right before the Cleveland Cliffs pattern (above) breaks out and moves downwards, you borrow 100 shares of the stock. Immediately sell these borrowed shares. Example: You immediately sell these borrowed shares of Cleveland Cliffs at the price just below the support line: 70 per share, 100 shares 7,000. You are now sitting on 7,000. But, of course, you still owe the brokerage 100 shares, which you dont currently have anymore. Wait for the stock to drop to your target price. Example: You wait for the stock to reach the target price, which in this example, is 63 per share. Buy the shares at the target price. Example: You use the 7,000 you made earlier to purchase 100 shares at 63 per share. That costs you 6,300 dollars and leaves you with an extra 700 in your account. You return the shares to your brokerage. Example: Return the 100 shares of Cleveland Cliffs to your brokerage. Enjoy your profits. Example: You earned 700, a 10 profit on 7,000. And even better, you made 700 when the price of investopedia/markets/stocks/CLFCLF declined and all other investors were losing money chartadvisor/freereport/freereportpg8.aspxLearn The Top 5 Reasons To Try ChartAdvisor gt chartadvisor/contactform. aspxContact Us Copyright 169 2015, Investopedia, LLC. chartadvisor/corp/copyright. aspxAll Rights Reserved chartadvisor/termsofuse. aspxTerms of Use chartadvisor/datacollection. aspxWeb Site Policy ltimg srcquotb. scorecardresearch/pc12ampc26034722ampc4chartadvisor/freereport/freereportpg7.aspxampcv2.0ampcj1quot /gt Chart Advisor for August 28, 2015 investopedia/contributors/68/Justin Kuepper August 28, 2015 AAA 160 The U. S. markets were mixed over the past week, with the Nasdaq posting a 1.69 gain and the investopedia/terms/r/russell2000.aspRussell 2000 Index, a benchmark of small-cap stocks, losing 1.12 as of Thursdays close. After suffering from a six-day losing streak, the market recovered sharply to end the week on a much higher note than on which it started. The economy seems to have grown much faster than expected between April and June, with the government raising growth estimates from 2.5 to 3.7, citing higher consumer, business and government spending. investopedia/terms/n/nikkei. aspNikkei 225 Stock Average fell 2.93, Germanys investopedia/terms/d/dax. aspDAX 30 rose 1.89 and Britains investopedia/terms/f/ftse. aspFTSE 100 fell 0.09. In the Eurozone, manufacturing and services purchasing managers39 indices ( investopedia/terms/p/pmi. aspPMIs), indicators of the health of the manufacturing sector, both expanded. The exception was France, which continues to lag behind the rest of the region. In Asia, Chinas stock market continued to experience extreme volatility that has left investors guessing just how severe the countrys economic downturn could be beneath the central governments headline figures. The SPDR SampP 500 ETF (ARCA: investopedia/markets/etfs/spy/SPY) rose 0.73 over the past week as of Thursdays close. After breaking down sharply lower, the ETF, which is based on the SampP 500 Index, briefly traded as low as 182.50 before rebounding to its S2 support at around 200.19. Traders should watch for a breakout above these levels back to its former support and S1 support at 205.35. Traders could also watch for a breakdown to test its lows. Looking at technical indicators, the relative strength index ( investopedia/terms/r/rsi. aspRSI) recovered to neutral levels, while the moving average convergence divergence ( investopedia/terms/m/macd. aspMACD) experienced a bearish crossover. The SPDR Dow Jones Industrial Average ETF (ARCA: investopedia/markets/etfs/dia/DIA) rose 0.01 over the past week as of Thursdays close. After breaking down sharply lower, the ETF briefly traded below 152.50 before rebounding sharply higher. Traders should watch for a breakout higher to its S2 support at 169.32 or a breakdown lower to retest its lows of around 152.50. Looking at technical indicators, the relative strength index appears neutral at 42.14, while the MACD experienced a bearish crossover. The PowerShares QQQ Trust (NASDAQ: investopedia/markets/etfs/qqqQQQ), an ETF based on the investopedia/terms/n/nasdaq100.aspNasdaq 100 Index (the 100 largest and most actively traded companies on Nasdaq), rose 1.69 over the past week as of Thursdays close. After breaking sharply lower, the ETF briefly touched 85.00 before rebounding back above 100.00 and towards its key support levels. Traders should watch for a rebound above its S1 support and 200-day moving average at around 106.50 or a move back down to its S2 support at 102.16. Looking at technical indicators, the relative strength index appears neutral, while the MACD looks bearish. The iShares Russell 2000 ETF (ARCA: investopedia/markets/etfs/iwm/IWM), which offers exposure to 2000 small-cap U. S. companies, fell 1.12 over the past week as of Thursdays close. After breaking down sharply lower, the index briefly touched the 110.00 levels before recovering a bit by the end of the week. Traders should watch for a breakout from its S2 support at 115.61 or a move lower to retest its lows at around 110.00. Looking at technical indicators, the relative strength index appears a bit oversold at 38.55, but the MACD remains in a bearish downtrend. The Bottom Line The major U. S. indexes were mixed over the past week amid extreme volatility, as of Thursdays close. Next week, traders will be closely watching a number of domestic economic indicators, including the investopedia/terms/i/ism-mfg. aspISM Manufacturing Index data on September 1, jobless claims on September 3 and employment data on September 4. Of course, traders will be also closely watching the central bank for any hints on interest rates. All charts courtesy of StockCharts investopedia/stock-analysis/cotd/082815/chart-advisor-august-28-2015-spy-dia-iwm-qqq. aspxChart Advisor for August 28, 2015 (SPY, DIA, IWM, QQQ) investopedia/stock-analysis/cotd/082815/chart-advisor-august-28-2015-spy-dia-iwm-qqq. aspxinvestopedia/stock-analysis/cotd/082815/chart-advisor-august-28-2015-spy-dia-iwm-qqq. aspxixzz3kDPECR6b Follow us: ec. tynt/b/rfidarwjQmCEqr4l6Cadbi-bnqampuInvestopediaInvestopedia on Facebookcom/terms/f/ftse. aspFTSE 100 fell 0.09. In the Eurozone, manufacturing and services purchasing managers39 indices ( investopedia/terms/p/pmi. aspPMIs), indicators of the health of the manufacturing sector, both expanded. The exception was France, which continues to lag behind the re
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