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Word
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Definition
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Cafeteria Plan
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Cafeteria Plan: An employee benefit plan that permits employees to choose from among a group of life, medical and other benefit plans; also known as a flexible benefit plan.
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Calendar Year
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Calendar Year: A twelve-month period, January through December, when losses are incurred by an insurer, regardless of the effective date of the original policies.
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California State Disability Insurance (SDI) Law
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California State Disability Insurance (SDI) Law: Mandates a non-occupational, short-
term disability plan funded through a tax-supported state fund; in effect since 1946.
Employers may substitute a private, self-insured plan exceeding state fund standards;
additional cost is funded by employer, employees, or both.
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Cancellation
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Cancellation: Termination of an insurance policy by the insurer or the insured prior to the policy's scheduled expiration date.
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Capacity
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Capacity: The amount of insurance available from a single insurer or from an insurer within a particular market. In Lloyd's, capacity refers to the historical basic unit of measurement within Lloyd's of the level of premium a syndicate is able to underwrite; a function of the capital pledged to support that syndicate by the capital providers.
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Capitation
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Capitation: A payment system whereby managed care plans pay health care providers a fixed, per-capita amount (usually on a monthly basis) to care for a patient over a given period. Providers are not reimbursed for services that exceed the allotted amount. The rate may be fixed for all members or it can be adjusted for the age and gender of the members, based on actuarial projections of medical utilization.
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Captive Agent
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Captive Agent: An insurance agent who has agreed to provide exclusive representation to one insurer. A captive agent usually is an employee of the insurer.
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Captive Insurer
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Captive Insurer: An insurer controlled by an insured or a group of insureds, formed for the purpose of insuring risks associated with the activities of its stockholders or members.
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Carrier
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Carrier: A synonym for insurer.
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Carrying Value
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Carrying Value: The dollar amount allowed by the NAIC Securities Valuation Office for any invested asset included in an insurer's statutory financial statement. Allowable values for different classifications of assets may vary.
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Case Management
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Case Management: The process by which all health-related matters of a case are managed by a physician or nurse or designated health professional. Physician case managers coordinate designated components of health care, such as appropriate referral to consultants, specialists, hospitals, ancillary providers and services. Case management is intended to ensure continuity of services and accessibility to overcome rigidity, fragmented services and the misutilization of facilities and resources. It also attempts to match the appropriate intensity of services with the patient's needs over time, and is a component of utilization management.
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Case Management (Integrated)
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Case Management (Integrated): Coordination of short and long-term disability, health
care, workers' compensation, ergonomics, and return-to-work programs to improved care
delivery, streamline claims administration, and return employees to work.
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Case Reserves
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Case Reserves: Reserves established with respect to specific reported claims that are intended to reflect the ultimate liability and expense of settling a claim.
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Cash Balance Plan
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Cash Balance Plan: A type of defined benefit plan, sometimes referred to as a hybrid plan because it mimics some of the characteristics of defined contribution plans. Employees receive credits in their own account, based on a percentage of their salary and a credited interest rate, and are provided periodic statements that track their accumulating balance. Although the account is more hypothetical than real, the funds are subject to the same rules as defined benefit plan assets and form part of the company's asset pool.
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Cash Flow Underwriting
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Cash Flow Underwriting: The process of underwriting in which the insurer seeks to compensate for underwriting losses by investment income derived from the cash flow of its premiums.
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Cash Surrender Value
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Cash Surrender Value: The amount of cash available to a policyholder upon surrender of a life insurance policy or annuity contract.
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Casualty Actuarial Society (CAS)
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Casualty Actuarial Society (CAS): An Arlington, Virginia-based professional organization that promotes actuarial science for lines of insurance other than life insurance.
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Casualty Catastrophe Cover
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Casualty Catastrophe Cover: See Clash Reinsurance or Cover.
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Casualty Insurance
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Casualty Insurance: A synonym for liability insurance.
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Cat Cover
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Cat Cover: See Catastrophe Reinsurance.
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Catastrophe
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Catastrophe: A loss or series of losses expected to exceed $25,000,000 in insured property damage. The definition was revised from a $5,000,000 threshhold effective January 1, 1997.
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Catastrophe Reinsurance
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Catastrophe Reinsurance: A form of reinsurance, usually in the form of excess-of-loss reinsurance, that indemnifies the ceding insurer from losses arising from a natural disaster. The actual reinsurance document is referred to as a "catastrophe cover.
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CCN
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CCN: See Community Care Network.
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Cedant
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Cedant: A term for an insurer that has underwritten insurance and transfers all or part of its risk to a third party by purchasing reinsurance; also known as a reinsured.
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Cede
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Cede: The act of purchasing reinsurance.
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Ceded Premiums
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Ceded Premiums: Primarily, refers to premiums paid for reinsurance policies and transferred to the reinsurer. May also refer to premiums transferred by an individual company under a pooling arrangement.
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Ceding Commission
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Ceding Commission: An amount payable by a reinsurer to a cedant to cover its acquisition costs plus an anticipated profit margin.
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Ceding Company
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Ceding Company: See reinsurance.
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Census Data
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Census Data: Information such as date of birth, sex, income, or occupation on persons
eligible for or insured by a group policy; used to determine premium rates or benefits.
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CERCLA
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CERCLA: See Comprehensive Environmental Response, Compensation, and Liability Act of 1980.
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Certificate of Authority
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Certificate of Authority: See License.
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Certificate of Insurance
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Certificate of Insurance: A document issued to individuals insured under a group policy setting forth the essential terms of coverage.
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Cession
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Cession: The amount of insurance ceded to a reinsurer.
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CGL
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CGL: See Commercial General Liability Insurance.
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Chartered Life Underwriter (CLU)
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Chartered Life Underwriter (CLU): A person with a minimum of three years of experience in the life and health insurance business who has passed a series of ten professional examinations.
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Chartered Property and Casualty Underwriter (CPCU)
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Chartered Property and Casualty Underwriter (CPCU): A person with a minimum of three years of experience in the property-casualty insurance business who has passed a series of ten professional examinations.
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Chronic Care
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Chronic Care: Long-term care of individuals with longstanding, persistent diseases or conditions. It includes care specific to the problem as well as other measures to encourage self-care, to promote health and to prevent loss of function.
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Chronic Disease
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Chronic Disease: A condition whose symptoms may be ameliorated with treatment but
the underlying condition cannot be cured.
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Claim
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Claim: 1) A demand to an insurer or third-party administrator by, or on behalf of, a covered
person of disability or workers' compensation benefits requesting payment under the terms
of the policy. 2) A written request by a health care provider to receive payment for services
provided.
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Claim
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Claim: A demand for payment under an insurance policy for a loss covered by that policy.
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Claim Adjuster
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Claim Adjuster: An individual or firm, whose functions typically include the on-site examination, evaluation and settlement of insurance claims. May be an independent contractor or employee of an insurance company.
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Claim Department
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Claim Department: A unit within an insurance organization responsible for the evaluation and settlement of claims.
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Claim, Closed
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Claim, Closed: A claim under which all contractual benefits have been paid.
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Claim, Controverted
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Claim, Controverted: In workers' compensation, a claim that has been questioned in whole or part
by the insurer, third-party administrator, or self-insured employer.
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Claim, Incurred
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Claim, Incurred: The dollar amount of an insurer's liability at a certain point in time: the
sum of paid claims, open claim reserves, and incurred but unreported claim reserves,
discounted for interest earnings.
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Claimant
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Claimant: An individual who submits a claim.
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Claimant
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Claimant: One who submits a claim or suffers a loss.
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Claims-Made Policy
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Claims-Made Policy: An insurance policy covering only those claims that occur and are reported during the policy period. In certain instances, a claims-made policy may cover claims arising prior to the policy's inception date. See also Prior Acts Coverage.
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Clash Reinsurance or Cover
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Clash Reinsurance or Cover: A form of reinsurance that indemnifies the ceding insurer for losses affecting multiple policies. Such coverage is designed to protect the cedant from multiple catastrophic losses.
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Closed Network HMO
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Closed Network HMO: An HMO in which all the primary care providers are its employees, i.e., the HMO does not contract with outside providers for primary care.
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Closed Panel
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Closed Panel: Medical services that are delivered in an HMO-owned health center or satellite clinic by physicians who belong to a specially formed, but legally separate, medical group that serves only the HMO. This term usually refers to group or staff HMO models.
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CLU
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CLU: See Chartered Life Underwriter.
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CMP
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CMP: See Commercial Multi-Peril Insurance or see Competitive Medical Plans.
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Coinsurance:
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Coinsurance: This term refers to (1) a relationship between two insurers that agree to share a risk proportionally and (2) those instances in which an insured assumes a portion of the risk.
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COLI
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COLI: See Corporate-Owned Life Insurance.
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Collateral Assignment
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Collateral Assignment: The use of a life insurance policy as collateral for a loan.
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Collision Insurance
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Collision Insurance: A form of insurance that covers damage to an insured's automobile resulting from an accident.
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Combined Ratio
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Combined Ratio: The sum of an insurer's loss ratio, expense ratio and policyholder dividend ratio, which may be determined in accordance with statutory accounting practices or generally accepted accounting principles. A combined ratio under 100% generally indicates an underwriting profit, and a combined ratio over 100% generally indicates an underwriting loss.
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Commercial General Liability (CGL) Insurance
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Commercial General Liability (CGL) Insurance: A form of insurance policy that includes a variety of coverages for liability exposures applicable to businesses. New standard-form policies exclude pollution coverage, although such coverage may be available through endorsement or separate policies. Also known as Comprehensive General Liability Insurance.
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Commercial Lines Insurance
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Commercial Lines Insurance: Insurance that covers commercial and governmental activities.
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Commercial Multi-Peril (CMP) Insurance
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Commercial Multi-Peril (CMP) Insurance: A form of insurance that provides comprehensive protection to businesses, including coverage for property damage from fire, windstorm and certain other perils, for losses from crime, and for liability for personal injury to others.
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Commercial Package Policy (CPP)
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Commercial Package Policy (CPP): A package policy designed to meet the needs of larger, more complex businesses.
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Commission
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Commission: Compensation paid to a producer for originating business; primary insurers also are paid a commission for ceding business to a reinsurer.
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Common Law
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Common Law: Legal principles established by the courts that are used as precedent for deciding future cases. This contrasts with statutory law that is enacted by legislative bodies.
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Community Care Network (CCN)
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Community Care Network (CCN): A health care vehicle that provides coordinated, organized and comprehensive care to a community's population. Hospitals, primary care physicians and specialists link preventive and treatment services through contractual and financial arrangements, producing a network that provides coordinated care with continuous monitoring of quality and accountability to the public. While this term often is used interchangeably with Integrated Delivery System (IDS), the CCN tends to be community-based and nonprofit.
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Community Rating
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Community Rating: The practice of some prepayment plans whereby rates are calculated using a broad range of populations in a community or region. Thus, premiums for subscribers are reasonably uniform and not dependent on individual or group claim experience. This is the rating methodology required of federally qualified HMOs and of HMOs under the laws of many states, and occasionally indemnity plans under certain circumstances. Plans are permitted to factor in differences for age, sex, mix (average contract size) and industry factors; not all factors are necessarily allowed under state laws.
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Commute
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Commute: The process of estimating, paying and discharging an insurer's present and future obligations. Frequently, an insurer and a reinsurer will commute their obligations to each other rather than maintain an ongoing relationship over a number of years.
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Company Adjuster
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Company Adjuster: An adjuster who is an employee of an insurer. See Claim Adjuster.
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Comparative Negligence
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Comparative Negligence: A legal doctrine that enables a claimant to recover damages notwithstanding a finding that the claimant may have a degree of culpability. Damages are apportioned in accordance with degrees of culpability.
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Compensatory Damages
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Compensatory Damages: Damages awarded to a claimant that compensate the claimant for losses sustained and are designed to make the injured party "whole." This contrasts with punitive damages, which are intended not merely to compensate the claimant but to punish the wrongdoer as well.
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Competitive Fund
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Competitive Fund: A state-run workers' compensation insurance facility that competes with private insurers for primary business.
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Competitive Medical Plans (CMPs)
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Competitive Medical Plans (CMPs): A type of Medicare private managed care plan, provided for under TEFRA. See Risk HMO.
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Complete Preemption
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Complete Preemption: Complete Preemption arises under the section 502 civil-enforcement provisions of ERISA when a state-law cause of action duplicates, supplements, or supplants one of the remedies provided in that section. See Aetna Health Inc. v.. Davila, 542 U.S. 200, 207-08, 124 S.Ct. 2488, 2495 (2004). If an individual, at some point in time, could have brought his claim under ERISA § 502, and where there is no other independent legal duty that is implicated by a defendant's actions, then the individual's cause of action is completely pre-empted by ERISA Section 502. See Davila, 542 U.S. at 210. In the case of complete preemption, a claim which comes within the scope of ERISA Section 502, even if pleaded in terms of state law, "is in reality based on federal law." Complete preemption permits removal to federal court because the cause of action "arises under" federal law.
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Completed Operations
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Completed Operations: The imposition of liability for faulty construction arising after the work has been completed.
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Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA or Superfund)
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Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA or Superfund): Legislation enacted by the federal government to provide funds to clean up hazardous waste sites. The legislation, which was amended and extended in 1986, also holds certain responsible parties liable for the expenses of cleaning up hazardous waste sites. Through the legislation's "joint and several liability" provisions, insurers have been required to pay for the cost of clean-up in certain instances.
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Comprehensive General Liability Insurance
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Comprehensive General Liability Insurance: See Commercial General Liability Insurance.
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Comprehensive Major Medical Insurance
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Comprehensive Major Medical Insurance: A group health policy that combines basic health care coverage with major medical insurance in a single policy. See Major Medical Insurance.
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Compulsory Insurance
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Compulsory Insurance: Insurance coverage that is required by law, such as automobile liability insurance for drivers or workers' compensation insurance for employers.
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Concurrent Causation
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Concurrent Causation: A legal doctrine that holds that when a property loss may be attributable to multiple causes, the loss shall be covered by insurance as long as one cause is covered by insurance.
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Concurrent Review
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Concurrent Review: Monitoring, under the direction of a medical professional (usually a nurse), of the medical treatment and progress toward recovery once a patient is admitted to a hospital. Its purpose is to assure timely delivery of services and to confirm the necessity of continued inpatient care. This is a component of utilization management.
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Condition
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Condition: A substantive provision of an insurance contract.
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Confidentiality
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Confidentiality: The degree of protection afforded individually identifiable health
information. When sharing information and records about an individual, insurers and
employers must respect an individual's right to privacy.
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Conflict Preemption
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Conflict Preemption: Conflict preemption arises when state-law claims are asserted that "relate to any employee benefit plan described in section 1003(a) of this title and are not exempt under section 1003(b) of this title." 29 U.S.C. § 1144(a). A state-law claim may "relate to" a benefit plan even if the state law is not specifically designed to affect such plans and the effect is only indirect. Once the defense of conflict preemption is raised, § 1144(a) "governs the law that will apply to the state-law claims, regardless of whether the case is brought in state or federal court." Conflict preemption is insufficient to produce federal removal jurisdiction.
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Consequential Loss
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Consequential Loss: A loss resulting from, but not caused directly by, an act. This contrasts with the proximate cause of a loss, which refers to an event that is the direct and immediate cause of a loss.
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Contingent Commission
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Contingent Commission: A supplemental commission payable by an insurer based upon the loss ratio or experience of the business being placed.
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Contingent Liability
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Contingent Liability: A liability that may occur in the future but has not yet occurred.
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Contract Performance Bond
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Contract Performance Bond: A surety bond that guarantees the performance of specific contractual obligations between the principal and the obligee, as well as payments to suppliers of labor and material.
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Contractor's License Bond
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Contractor's License Bond: A surety bond that guarantees the principal will meet the requirements of such licensing laws as may be applicable to contractors.
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Contributory Insurance
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Contributory Insurance: A type of employer-sponsored coverage for which the covered
employee pays a portion of the premium cost. The same portion of any benefit received is
tax-free to the employee.
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Contributory Negligence
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Contributory Negligence: A legal doctrine that precludes recovery for damage if the plaintiff has contributed to the loss.
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Contributory Plan
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Contributory Plan: A group life or health policy in which the beneficiary pays a portion of the premium.
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Convention Blank or Statement
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Convention Blank or Statement: See Annual Statement.
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Conversion Annuity
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Conversion Annuity: A group annuity contract that at one time shared in the payment of dividends as a participating policy but which subsequently was converted to a non-dividend paying, non-participating policy.
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Convertible Term Insurance
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Convertible Term Insurance: Term life insurance that, by its provisions, is convertible to permanent life insurance without evidence of insurability. See Term Life Insurance.
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Corporate Name
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Corporate Name: A new participant in Lloyd's of London, started in 1994, where liability is limited and capital is provided on a corporate basis.
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Corporate-Owned Life Insurance (COLO)
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Corporate-Owned Life Insurance (COLO): A life insurance policy covering an employee, with the corporation owning the policy.
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Corporation of Lloyd's
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Corporation of Lloyd's: Provides administrative support functions for all Lloyd's syndicates, and is paid for by all syndicates.
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Cost Containment
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Cost Containment: Refers to the practice of controlling health care costs through the elimination or reduction of inefficiencies in the health care delivery system.
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Cost HMOs
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Cost HMOs: A type of Medicare private managed care plan, provided for under TEFRA, which is essentially a Point-of-Service plan, except that Medicare bears all risk and pays for out-of-network care.
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Cost Shifting
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Cost Shifting: Charging one group of patients more in order to make up for underpayment by others. Most commonly, charging some privately insured patients more in order to make up for underpayment by Medicaid or Medicare.
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Co-Surety
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Co-Surety: One of two or more sureties participating in a surety bond and sharing liability.
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Council of Lloyd's
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Council of Lloyd's: The 28-member governing body of Lloyd's.
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Country Risk
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Country Risk: See Political Risk Insurance.
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Court Bond
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Court Bond: A surety bond that guarantees that the principal will discharge obligations set by a court.
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Cover Note
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Cover Note: Same as binder; used primarily outside the United States.
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Coverage
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Coverage: The protection provided by an insurance policy.
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Covered Participant
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Covered Participant: A person who meets the eligibility requirements of a pension plan or a group life or health insurance policy and either is receiving or is eligible to receive benefits.
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CPCU
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CPCU: See Chartered Property and Casualty Underwriter.
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CPP
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CPP: See Commercial Package Policy.
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Credentialling
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Credentialling: The process used by managed care companies of reviewing a practitioner's credentials (training, experience or demonstrated ability) for the purpose of determining if criteria for clinical privileging are met, i.e., before admitting the practitioner to the health network.
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Credit Enhancement
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Credit Enhancement: Use of a financial guaranty to upgrade the credit quality of a security. Credit enhancement may be provided through insurance or a letter of credit.
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Credit Life Insurance
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Credit Life Insurance: A form of decreasing term insurance that covers the life of a debtor and pays the proceeds to the creditor. See Decreasing Term Insurance.
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Crediting Rate
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Crediting Rate: The interest rate applied to life insurance policies and annuity contracts, whether contractually agreed upon or declared for a specific period.
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Crop-Hail Insurance
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Crop-Hail Insurance: A form of insurance that provides protection from damage to crops by hail and certain other named perils, such as fire, lightning and wind. Also referred to as Multiple Peril Crop.
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Current Procedural Terminology (CPT)
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Current Procedural Terminology (CPT): A list of descriptive terms and identifying codes
for medical, surgical, and diagnostic services and procedures. Provides a uniform language
for reporting and billing purposes.
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Cut-Through Endorsement
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Cut-Through Endorsement: An amendment to an insurance policy for the benefit of a policyholder providing that, in the event of an insurer's insolvency, reinsurance payments shall be made by the reinsurer directly to the policyholder. Such payment bypasses or "cuts through" the usual payment route.
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Cycle
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Cycle: See Underwriting Cycle.
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Cycle Turn
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Cycle Turn: A change in the property-casualty underwriting cycle suggesting the arrival of either a hard insurance market or a soft insurance market. See also Underwriting Cycle, Hard Insurance Market and Soft Insurance Market.
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