Glossary

Registered mail coverage covers items, including money and securities, that are lost when sent through registered mail. Usually written on a reporting form and purchased by businesses such as bank trust departments that frequently send valuable items through the mail.

A regression analysis is a statistical tool for predicting one variable (known as the dependent variable) based on its relationship with one or more other variables (known as independent variables). For example, the dependent variable of workers compensation losses is often predicted on the basis of the independent variable of workers compensation payroll.

Regulated asbestos-containing material (RACM) is any friable asbestos material or nonfriable asbestos-containing material (ACM) that will be or has been subjected to sanding, grinding, cutting, or abrading or has crumbled, pulverized, or reduced to powder in the course of demolition or renovation operations.

Under the Medical Waste Tracking Act of 1988, regulated medical waste is any solid waste generated in the diagnosis, treatment, or immunization of human beings or animals, in research pertaining thereto, or in the production or testing of biologicals. Included are cultures and stocks of infectious agents; human blood and blood products; human pathological body wastes from surgery and autopsy; contaminated animal carcasses from medical research; waste from patients with communicable diseases; all used sharp implements, such as needles and scalpels, etc.; and certain unused sharps.

Regulation 114 trust refers to Regulation 114 of the Insurance Department of the State of New York, which details standards for the use of trust funds for reinsurance. When applied to captives, a trust agreement is entered into between the captive, the fronting company, and a bank. The bank acts as the trustee for the fund. The captive deposits cash and/or allowable securities into the trust. The fronting company, as the beneficiary of the trust, must approve the assets in the trust. The fronting company can demand, at any time, assets from the trust to meet the captive's obligations under the reinsurance agreement. The assets are delivered as securities, which are converted to cash by the fronting company. A Regulation 114 trust can be used to collateralize both the loss fund and the risk gap or used in combination with a letter of credit.

The regulatory agency exclusion is an exclusion found in directors and officers (D&O) liability policies that precludes coverage for suits by national and state banking authorities against directors and officers. The exclusion came into use during the mid-1980s when, in the wake of widespread financial institution insolvencies, regulators such as the Federal Deposit Insurance Corporation (FDIC) took control of failed banks. In their attempts to recover lost assets, regulators frequently initiated lawsuits against former directors and officers, recognizing that D&O policy proceeds would be available. However, the exclusion is no longer common, since the kinds of losses experienced during the savings and loan crisis of the late-1980s are much more unusual and therefore do not pose the same type of large-scale underwriting exposure as was once the case.

Regulatory defense and penalties coverage refers to an insuring agreement contained within policies written to cover claims caused by data breaches. Such policies are most often termed "cyber and privacy insurance," "information security and privacy insurance," or "cybersecurity insurance." This insuring agreement covers the costs of dealing with state and federal regulatory agencies (which oversee data breach laws and regulations), including (1) the costs of hiring attorneys to consult with regulators during investigations and (2) the payment of regulatory fines and penalties that are levied against the insured (as a result of the breach). Regulatory defense and penalties coverage is one of the rare types of insurance that affirmatively covers fines and penalties. (Most types of insurance exclude these items because covering fines and penalties is usually considered contrary to public policy.) Since data breaches typically involve customers residing in multiple states and because each state has its own unique set of laws and rules, regulatory defense and penalties coverage is especially valuable, given the need for insureds to deal with multiple sets of regulators. Similar to other cyber and privacy insurance policies, regulatory defense and penalties coverage is subject to an annual aggregate limit and an annual aggregate deductible.

Regulatory estoppel is a form of equitable estoppel whereby insurers are prevented from asserting an interpretation of an insurance policy provision that is contrary to the insurer's explanation of that policy provision to state insurance regulators when originally seeking approval of the policy form from the department of insurance.

Regulatory risk is the risk that a change in laws and regulation will significantly impact an institution. A change in laws or regulations enacted by a governmental or regulatory body can dramatically increase the costs of conducting a business, decrease the attractiveness of an investment, or change the competitive landscape. For example, regulatory risks arising from climate change concerns include (1) more vigorous disclosure requirements regarding a manufacturer's emissions and (2) the emergence of minimum performance standards tied into energy consumption and greenhouse gas emission controls.

The rehabilitation clause is a provision in many health and disability insurance policies that extends coverage to include vocational rehabilitation of disabled policyholders.