Glossary

The cost of debt is the after-tax value of the rate of return paid to the creditor. It is an indicator of creditworthiness and barometer of risk.

Cost of risk (COR) is the total cost of managing risks and losses incurred by an organization. Total COR is the sum of all aspects of an organization's operations that relate to risk, including retained (uninsured) losses and related loss adjustment expenses (LAEs), risk control costs, insurance and other risk transfer costs, and administrative costs.

Cost of suit coverage is coverage for defense of suits that fall within a self-insured retention (SIR) or deductible where the basic policy does not provide the defense.

Counseling liability coverage provides protection for claims arising from counseling activities. The term is most often used in the context of religious institutions that provide various kinds of counseling, the negligent performance of which can produce liability for the institution. In addition, psychologists, therapists, and social workers face a similar exposure to allegations of professional negligence in providing counseling services. Specialized professional liability policies are available to cover this exposure.

A counsel selection provision is sometimes found in professional liability insurance policies and gives the insured the right to select or approve defense counsel if a claim is made against the insured during the policy term. Such provisions are important because an insured may understand that a particular counsel may be a better choice for a particular claim.

A counterclaim is a claim for relief filed by the defendant in opposition to the claim of the plaintiff. If the defendant makes a claim against the plaintiff, such claim is called a counterclaim. For example, after a bank sues a customer to recover an unpaid debt, the customer files a counterclaim against the bank alleging fraud in procuring the debt.

A counterparty is an individual or organization willing to assume risk in a capital market transaction such as a catastrophe bond. For every seller of a marketable security, there must be a buyer, a counterparty. When risk is offloaded in the capital markets, it must be picked up by a counterparty willing to assume the risk. Because of the need for noncorrelating high-risk positions in diversified investment portfolios, risk-taking counterparties exist.

Countersignature refers to state insurance laws that require an insurance policy to be signed by not only the insurer issuing the policy but also an agent residing in the state where the risk is located. Risk retention groups (RRGs) have resisted compliance with countersignature laws, since this increases the cost of policy issuance.

The coupon interest is the rate of interest paid to the holders of a bond. This rate can be either a floating variable or a fixed rate. Often, zero coupon bonds are issued that pay no interest until the bond is redeemed to guarantee repayment of the principal of the bond or specific tranche.

Course of the employment means the period when employees are presumed to be acting in their employer's interests and thus covered by workers compensation. Typically, this means while they are on the employer's premises, a reasonable time before or after their work shift, or from the time they leave home for work-related travel until they return. The presumption can be rebutted by showing that the employee made a significant deviation.