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Glossary of Termsr Rate Discrimination The use of different rates for insureds or risks of the same class and general characteristics.Prohibited by all state insurance laws. Rebate A portion of the producer’s commission returned to an insured or anything else of value given to an insured as an inducement to buy.The payment of policy dividends, retroactive rate adjustments, and reduced premiums that reflect savings of direct payment to an agent or home office are not usually considered rebates.In many cases rebates are illegal, both for the producer and the insurer to give a rebate and for an insured to receive one. Rescission Repudiation of a contract.A party whose consent to a contract was induced by fraud, misrepresentation or duress may repudiate it.A contract may also be repudiated for failure to perform a duty.The termination of an insurance contract by the insurer when material misrepresentation has occurred.
Risk Uncertainty as to the outcome of an event when two or more possibilities exist. Risk Management Management of the pure risks to which a company might be subject.It involves analyzing all exposures to the possibility of loss and determining how to handle these exposures through such practices as avoiding the, reducing the risk, retaining the risk, or transferring the risk. s Salvage Property taken over by an insurer to reduce its loss. Self-Insured Retention That portion of a risk or potential loss assumed by an insured.It may be in the form of a deductible, self-insurance, or no insurance. Solicitor An individual appointed and authorized by an agent to solicit and receive applications for insurance as his representative.Solicitors are not usually given the power to bind coverage but are required to be licensed. Speculative Risk Uncertainty as to whether a gain or loss will occur.An example is the uncertainty as to whether a business will make money or lose it. Speculative risks are not normally insurable. t Term The period of time for which a policy or bond is issued. |
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