Glossary

Accountants professional liability insurance provides coverage for financial loss caused by professional accounting services. The policies typically exclude coverage for fraud, intentional acts, criminal acts, bodily injury (BI), and property damage (PD). Coverage for higher-risk activities, such as investment services and Securities and Exchange Commission (SEC) work, is available by endorsement.

Accounts receivable coverage insures against loss of sums owed to the insured by its customers that are uncollectible because of damage by an insured peril to accounts receivable records.

An account current is a monthly statement to the insurer by its agent showing policy numbers, premiums written, return premiums, commissions, and net amount due to or from the insurer.

Accreditation is the process in which a state or other standard-setting regulatory organization determines whether an entity seeking to provide services subject to that organization's authority meets acceptable standards for such purposes. For example, commercial insurers domiciled in a state that passes all the National Association of Insurance Commissioners (NAIC) model acts and otherwise passes muster will be acceptable security in other states.

Accredited Adviser in Insurance (AAI) is a professional designation sponsored through a joint effort of the Insurance Institute of America (IIA) and the Independent Insurance Agents of America (IIAA). The program leading to this designation consists of three 13-week courses with three national exams and is designed for all insurance production personnel in any distribution system.

In property-casualty (P&C) insurance, accumulation refers to the total combined risks that could be involved in a single loss event (involving one or more insured perils).

In life insurance, the accumulation period is the time during which an annuitant makes premium payments.

Acquisition costs refer to direct costs an insurer incurs to "acquire" the premium—for example, commissions paid to a broker or fronting company. These costs are required to be expensed in the same ratio as the premiums to which they relate are earned. For a calendar year policy, acquisition costs are expensed evenly each month, with the amount to be expensed in future periods recorded as deferred acquisition costs (an asset) in the balance sheet.

In reinsurance contracts, the act-as-one provision is included to avoid the situation where multiple reinsurers are all part of the same dispute and each wants to appoint its own arbitrator. The act-as-one provision compels the reinsurers to act in concert in the selection of the arbitration panel and in all major communications and decisions concerning the dispute. It reserves to the reinsurers the right to assert their own claims or defenses, and it is does not impair the several liability that typically exists under most reinsurance agreements. It allows the arbitration process to move forward without confusion as to how many arbitrators the disputing parties will appoint. Essentially, it treats the reinsured as one party (which it is) and the reinsurers' as one party when the dispute involves more than one reinsurer. This way, the two "parties" or sides can each appoint one arbitrator, and the party-appointed arbitrators can appoint the umpire, fulfilling the contractual requirement of a three-arbitrator panel.

Action levels are the maximum allowable value of a harmful contaminant after which some type of response must be taken. Action levels are commonly used by various governmental regulatory agencies such as the Occupational Safety and Health Administration (OSHA), Environmental Protection Agency (EPA), US Department of Agriculture (USDA), and Food and Drug Administration (FDA). For example: (1) Regulatory levels recommended by the EPA for enforcement by the FDA and USDA when pesticide residues occur in food or feed commodities for reasons other than the direct application of the pesticide. As opposed to "tolerances," which are established for residues occurring as a direct result of proper usage, action levels are set for inadvertent residues resulting from previous legal use or accidental contamination. (2) In the Superfund program, the existence of a contaminant concentration in the environment high enough to warrant action or trigger a response under the Superfund Amendments and Reauthorization Act (SARA) of 1986 and the National Oil and Hazardous Substances Contingency Plan. The term is also used in other regulatory programs.