Glossary

Corporate counsel is an in-house attorney or an outside law firm that handles corporate matters for a business client.

Corporate governance is a system specifying the division of duties, rights, and responsibilities among various participants in a corporation, such as the board of directors, the various committees within the board of directors, operating managers, and shareholders. Corporate governance enumerates the rules, guidelines, and procedures for making decisions affecting corporate affairs. The term has received particular attention because of massive lawsuits against the directors and officers of a number of high-profile corporations that filed for bankruptcy. Many business commentators, as well as insurance industry observers, believe that a breakdown of corporate governance, especially in the area of financial and accounting controls, was largely responsible for such failures.

A corporate override agreement is an arrangement between an entity or corporation (usually large) and an auto rental company for employees of the corporation to use the rental company for all or most of its corporate needs in exchange for certain concessions in rental contract provisions.

Corporate reimbursement coverage can be found under a directors and officers (D&O) liability policy covering the corporate organization's obligation to indemnify its directors and officers for claims resulting from their acts in conjunction with the organization. This obligation is usually stated in either the corporate charter or the corporate bylaws and, in some cases, is mandated by state statute. The coverage provided by this section of a D&O policy is also referred to as "Side B" coverage.

A corporation, in an insurance context, is an "artificial person," created under the laws of a given state. A corporation has an identity and an existence distinct and independent from that of its individual owners. Corporations have the power to (1) act; (2) contract; (3) sue and be sued; and (4) own, manage, and buy/sell property. The profits (and losses) of the corporation are distributed according to the ownership interest (i.e., the percentage of total shares) held by each shareholder. The defining feature of a corporation is its legal independence from the people who create it. This means that if a corporation fails, shareholders only stand to lose their investment in the company (i.e., the amount of money they paid for shares of stock in the company) but will not be liable for any remaining debts owed to the corporation's creditors. Corporations are chartered by all 50 of the United States and by the federal government in certain instances (e.g., national banks and savings and loan institutions).

Correlation, in an insurance context, is the extent to which multiple risk profiles move in relation to each other. Correlated risk profiles move in concert when affected by the same set of stimuli. For example, there is substantial correlation between the Dow Jones Industrial Average (DJIA) and the Standard & Poor's (S&P) 500 Index because both are affected by the same factors. In contrast, uncorrelated risk profiles (e.g., a book of ocean marine business and a book of products liability coverage) react to entirely different stimuli. The combination of uncorrelated risk profiles results in lower combined volatility.

A corridor deductible is a deductible applied to an excess loss layer, calculated as a percent of the loss above the attachment point or as a per occurrence or aggregate dollar amount.

A corridor self-insured retention (SIR), also known as a "bikini deductible," is a self-insured layer, separating the primary layer of risk—whether insured, self-insured, or funded in a captive—from the layer immediately excess of the primary. It was first used in health insurance, inserting a deductible (a real deductible, not an SIR) between a first dollar insured health plan and major medical coverage, which is excess of the primary health insurance policy. The structure resembles a bikini because there's defined protection on the bottom and on the top but nothing in the middle. Corridor SIRs migrated from health insurance to property and casualty applications when risk managers, brokers, and creative excess insurance underwriters were looking for more sophisticated methods of allocating and funding risk. Typically, the corridor SIR layer is unfunded. It's used to lower the cost of (or provide access to) excess or umbrella insurance while relieving the insured from the requirement to fund for expected losses. It is also used in structured insurance arrangements. Corridor SIRs can be designed to cover non-aggregated per occurrence limits or a combination of per occurrence and aggregate limits. A typical corridor SIR will include per occurrence limits perhaps subject to an annual aggregate, depending on the risk and the excess insurance pricing.

Cost and freight (C and F) is one of several standard terms of sale for exports and imports. C and F indicates that the buyer must obtain transit insurance on the newly purchased goods, since the price paid by the buyer includes the cost of goods and all freight charges but not insurance.

Cost, insurance, and freight (CIF) is one of several standard terms of sale for exports and imports. CIF indicates that the seller must obtain transit insurance on the goods, since the price paid by the buyer includes the cost of goods, insurance while they are in transit, and all freight charges.