Glossary

Loss reserve stability refers to an actuary's ability to predict future loss reserves based on a specific set of circumstances. For example, once a viable risk retention group (RRG) has been operating for at least 5 years, the collective loss experience for future periods can be predicted with greater certainty than was possible for the earlier periods. This is because the majority of the data used to predict future losses were experienced RRG format, as opposed to those periods prior to the formation of the group.

A loss run refers to periodic reports of claim information provided by insurance companies to their insureds.

Loss sensitive plans are insurance rating plans for which the final premium is dependent on the actual losses during the period the plan is in effect. This risk financing technique places upper limits on the insured's costs if its losses are high but also requires the payment of a minimum premium in the event it experiences low losses or is loss-free. Thus, the risk financing costs tend to vary based on actual loss experience. This type of plan provides an incentive for insureds to emphasize safety and loss control activities. Deductible plans, retrospective rating plans, dividend plans, and retention plans are all examples of loss sensitive plans.

Loss trending is the adjusting of historical losses to account for inflationary trends so that their value is in current dollar amounts. Historical loss amounts are multiplied by "trending factors" to convert historical loss amounts to current dollar amounts.

A loss triangle is a table of loss experience showing total losses for a certain period at various, regular valuation dates, reflecting the change in amounts as claims mature. Older periods in the table will have one more entry than the next youngest period, leading to the triangle shape of the data in the table. A loss triangle can show paid losses or total incurred losses. Loss triangles can be used to determine loss development for a given risk.

A lost policy release is a statement signed by the named insured releasing the insurer from all liability under a lost or mislaid contract of insurance in cases in which the insured wishes to cancel the policy. At one time, many insurance policies required that the original policy be returned to the insurer to effect cancellation, and a lost policy release served in place of the original policy.

A lost time accident is a workplace incident that produces an injury that results in an employee missing time on the job beyond the date of injury.

The lowest achievable emission rate, under the Clean Air Act, is the rate of emissions that reflects the most stringent emission limitation in the implementation plan of any state for such source unless the owner or operator demonstrates such limitations are not achievable; or the most stringent emissions limitation achieved in practice, whichever is more stringent. A proposed new or modified source may not emit pollutants in excess of existing new source standards.

A low speed vehicle (LSV) is a four-wheeled motor vehicle, other than a truck type, having a top speed of more than 20 miles per hour but not more than 25 miles per hour on paved surfaces. LSVs are often modified, higher-powered golf cart-type vehicles with greater maximum speeds than standard golf carts or they are manufactured as an LSV. The personal auto policy (PAP) definition of "your covered auto" includes any LSVs shown on the declarations if the LSV endorsement is attached. The LSV is a federally approved street-legal vehicle classification that was developed in 1998 under federal motor vehicle safety standards.

Litigation risk insurance (LRI) is a line of coverage that works from the same premises as third-party litigation funding. LRI essentially estimates the outcome of litigation and monetizes it to reduce the level of uncertainty for the party insured. In the process, LRI reduces the impact of pending litigation on the insured's balance sheet.