| Actuary |
A person who uses complex mathematical methods and technology to analyze loss data and other statistics and develop systems for determining insurance rates.
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| Admitted Insurer (Licensed Insurer) |
An insurer authorized by the state insurance department to transact business within that state.
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| Allocated Loss Adjustment Expenses (ALAE) |
Expenses directly attributable to specific claims. Includes payments for defense attorneys, medical evaluation of patients, expert medical reviews and witnesses, investigation, record copying, etc.
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| Annual Aggregate Limit (claims made) |
The maximum amount the carrier will pay for all claims arising from incidents that occurred and were reported during a given policy year.
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| Assessability |
A policyholder’s obligation to pay additional money, in excess of premiums, to cover past company losses for which reserves have proven to be inadequate. Trust arrangements and joint underwriting associations are generally assessable. AMD will not assess policyholders
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| Claim |
A written notice, demand, lawsuit, arbitration proceeding or screening panel in which a demand is made for money or a bill reduction.
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| Claims-Made Coverage |
The most common type of professional liability coverage available, it provides protection for claims that occur and are reported while the policy is in effect (coverage period). Within the conditions of a claims-made policy, a claim must be reported to the carrier in writing by the insured.
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| Coverage Period |
length of the policy period dating from the retroactive date to the expiration date stated in the declarations page, and or extending beyond the expiration of the policy by endorsement and payment of additional premium.
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| Damages |
Monetary compensation claimed by a person who has suffered a loss or injury to his person, property or rights as a result of the negligence or unlawful conduct of another.
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| Date of Incident |
The date on which a situation of alleged malpractice took place. Also called "date of occurrence."
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| Date of Reporting |
The date of reporting is the date on which the incident was reported to the insurance company.
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| Declaration |
Also called "Declarations Page," this portion of the policy states information such as the name and address of the insured, the policy period, the amount of insurance coverage, premiums due for the policy period, and any coverage restrictions.
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| Economic Damages |
Out-of-pocket damages, such as incurred medical expenses, lost wages, etc.
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| Effective Date |
Date that the policy becomes effective and from which date and time coverage is effective.
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| Endorsement |
A document that amends an insurance policy by adding or deleting coverage or otherwise modifying the coverage.
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| Extended Reporting Coverage |
See Tail Coverage
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| Incident |
Professional service, act, and/or omission arising out of treatment to a patient which could or did result in bodily injury, sickness, disease, disability of death to any person for which damages may reasonably be expected or should have known to be sought against the Insured. Written notice to the Insurer in required.
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| Indemnity |
An insurance company's payment to a plaintiff in settlement or adjudication of a claim.
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| Informed Consent |
An agreement obtained voluntarily from a patient for the performance of specific medical, surgical or research procedures after the material risks and benefits of these procedures and their alternatives have been fully explained in nontechnical terms.
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| Insurance Gap |
When a physician has professional liability insurance under a claims-made policy, once the coverage period has expired without renewal, claims that have not yet been made and reported to the carrier (insurance company) during the "active" policy period are not covered. In such cases, a physician is said to be "bare" (uninsured), unless he or she has purchased an extended reporting endorsement (tail coverage) from the former carrier, or has obtained "prior acts" (nose) coverage from a new carrier.
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| Limit |
The maximum amount paid under the terms of a policy. A professional liability insurance policy usually has two limits, a per-claim limit and an annual aggregate limit. (See Annual Aggregate Limit)
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| Locum Tenens |
A substitute physician who temporarily takes the place of a named insured policyholder or physician member of a medical group.
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| Malpractice or Professional Negligence |
An abrogation of a duty owed by a health care provider to the patient; the failure to exercise the degree of care used by reasonably careful practitioners of like qualifications in the same or similar circumstances. For a plaintiff to collect damages in a court of law, the plaintiff's attorney must show that the provider owed the patient a duty and that the provider's violation of the standards of practice caused the patient's injury.
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| Mature Premium |
A step rating system may be used to set premiums for its claims-made policies. The mature premium is the fee a policyholder will pay during the fourth year with AMD in which the policy matures. The first level premium is substantially lower than a mature premium. It is designed for policyholders that do not need coverage for any prior exposure. The mature level premium reflects the fact that the prior years of coverage are still exposed.
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| Mutual Insurance Company |
an insurer that is owned by its policyholders in the form of a corporation for the purpose of providing insurance to its policyholder-owners
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| Non-assessable |
A condition under which an insurance company is sufficiently funded so that policyholders are not obligated to pay additional money for past losses.
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| Non-Economic Damages |
Pain, suffering, inconvenience, loss of consortium, physical impairment, disfigurement, and other non-pecuniary damages.
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| Nonstandard Risk |
Those persons or entities that must pay higher premiums and be subject to special coverage restrictions based on underwriting standards.
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| Nose Coverage |
See Retroactive Coverage
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| Occurrence Insurance |
A type of policy in which the insured is covered for any incident that occurs (or occurred) while the policy is (or was) in force, regardless of when the incident is reported or when it becomes a claim. Occurrence insurance for medical liability coverage is rarely offered today because of the difficulty in projecting long-term claims under this type of policy
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| Policy |
The contract between an insurance company and its insured. The policy defines what the company agrees to cover for what period of time and describes the obligations and responsibilities of the insured.
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| Policy Term |
The length of time for which a policy is effective.
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| Premium |
The amount of money a policyholder pays for insurance protection.
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| Premium Credits |
A credit included in the premium computation that recognizes a reduction in hazard, which makes the account a better risk.
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| Punitive Damages |
Also called "Exemplary Damages." Optionally covered by professional liability insurers. A few states require that punitive damages be covered. Other state laws prohibit insurance companies from covering punitive damages because such damages are intended to punish the defendant for willful, fraudulent, oppressive, malicious, or otherwise outrageous behavior that should not be covered by insurance.
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| Rate Maturation |
In the early period of coverage, typically the first four to seven years, (AMD is four years), claims-made insurance rates step annually until they are considered "mature." Increasing the premium is necessary because the longer the physician is insured, the greater the potential for a claim. That is due to the delay between incidents occurring and patients filing claims from those past incidents.
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| Reciprocal |
An unincorporated association formed to provide insurance coverage to its members. One of the distinguishing features of a reciprocal is that the subscribers (members) empower an attorney-in-fact to manage the association.
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| Retroactive (Prior Acts) Coverage |
Under a claims-made policy, this coverage provides insurance for claims arising from incidents that occurred while a previous claims-made policy or policies were in effect, but that were not reported until that policy (or the last in a succession of policies) was terminated. With retroactive coverage, the new policy covers such claims. With such coverage, purchase of tail coverage from the previous carrier is not necessary.
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| Re-underwriting |
The process by which the company re-evaluates policyholders and, as necessary, imposes surcharges, deductibles, or non-renewal in cases where the policyholder's claims history or other experience presents a consistent pattern that creates an unfavorable liability risk.
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| Risk Management |
A systematic approach used to identify, evaluate, and reduce or eliminate the possibility of an unfavorable deviation from the expected outcome of medical treatment, and thus prevent the injury of patients due to negligence and the loss of financial assets resulting from such injury.
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| Standard Risk |
A person who, by the company's underwriting standards, is eligible for insurance without restrictions or surcharges.
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| State Guaranty Fund |
A state fund that provides a system to pay the claims of insolvent admitted insurers; the money in the Guaranty Fund comes from assessments collected from all insurance companies licensed in the state. Texas’ guaranty fund is currently set at $300,000 per claim.
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| Stock Insurance Company |
An insurer that is capitalized by its stockholders and formed as a corporation. (AMD is a stock insurance company)
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| Surplus |
The amount by which a company's assets exceed its liabilities. A company's surplus allows it to assume risk and serves as a cushion in the event that the losses from that risk exceed the premiums intended to cover the risk. Stated another way, surplus can be used to make up for deficiencies in loss reserves that were set aside from earned premiums. Thus, surplus serves to provide strength and to maintain fiscal integrity in the face of adverse loss experience that was not actuarially anticipated.
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| Tail Coverage |
This supplemental insurance covers incidents that occurred during the "active" period of a claims-made policy but are not brought as claims against an insured, nor reported to the insurer, by the time the claims-made policy has been terminated. Needed at various times including when leaving a claims-made carrier, upon the decision to change claims-made carriers, at the time of retirement, or due to death or total disability of the member. Tail coverage is purchased from an insured's previous claims-made carrier
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| Trust |
A not-for-profit, non-corporate entity which is owned by policyholders. Trusts are not admitted insurers regulated by state insurance departments and do not participate in the state Guaranty fund.
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| Unearned Premium |
That portion of a premium that is paid in advance of a coverage period. Insureds usually pay an annual premium in advance of an actual coverage period; that payment is initially unearned and starts to become earned on the first day of the coverage period and incrementally thereafter during the ensuing coverage period.
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| Vicarious Liability |
Liability for the acts of others.
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