Glossary

A preamble is an introductory paragraph in a contract that identifies the parties by name and the date on which the parties entered into the contract and typically includes the place of residence of an individual or the place of business of a corporation or other entity. It is also a preliminary statement or clause at the beginning of a statute stating its purpose and often explaining the reason for its enactment.

A preauthorized check plan is where the insured authorizes an insurer to periodically debit his bank account for the purpose of making premium payments.

Precedent is a case that provides guidance or authority for deciding subsequent cases involving identical or similar facts, or similar legal issues.

Predecessor firm coverage refers to a provision found in professional liability policies written mainly for lawyers or accountants that affords coverage for the acts of the firm that preceded the current insured organization. For example, assume that two accountants, "A" and "B," form a partnership. After 5 years, they merge their practice with an existing partnership consisting of accountants "C," "D," and "E." The predecessor firm provision in the professional liability policy purchased by this new combination would provide coverage for errors and omissions committed during the AB partnership even if claims arising from those errors or omissions are not made until after the merger of the two firms.

Predictive analytics (PA) or modeling is the discipline that analyzes current and historical facts to make predictions about future events. It is a much deeper dive than traditional reports. And PA involves more than just claims data as it also seeks information from as many divergent sources affecting claims as possible. In reviewing claims leakage, PA will focus on areas such as fraud detection: either missed through inadequate investigation or identification of actual fraud (i.e., revealing a coterie of law firms, chiropractors, auto body shops, and professional claimants working together).

A predominate cause is the peril having the most significant impact in bringing about the loss in a situation involving two independent perils that operate concurrently to produce the loss, as determined by the courts. The predominant cause is then selected as the proximate cause.

A preexisting condition is a health or physical condition that existed prior to the effective date of a medical insurance policy. Some health and disability policies contain provisions that preclude coverage for loss arising from preexisting conditions.

A preferred provider organization (PPO) is a group of doctors and hospitals that join together to dispense medical services to specified user groups at discounted costs. This type of organization differs from a health maintenance organization (HMO) in that the medical care providers are not economically tied to one another but rather to fee schedules.

Any preferred risk is considered as having lower potential loss frequency and severity than the standard or "average" risk upon which premium rates are calculated.

The Pregnancy Discrimination Act (PDA) of 1978 is an amendment to Title VII of the Civil Rights Act of 1964. The PDA brought "pregnancy, childbirth, or related medical conditions" within the purview of "sex" as a characteristic protected by Title VII. This legislation created a new "protected class"—pregnant women—and gave them the right to bring claims for discrimination. The PDA allows a pregnant woman to recover equitable relief (e.g., job reinstatement following termination), compensatory relief, and, at times, punitive damages to remedy acts of discrimination on the part of her employer. Coverage for such claims is available under employment practices liability insurance (EPLI) policies.