Glossary

An adhesion contract (also known as a contract of adhesion) is a contract between two parties, where the terms and conditions are drafted by the party with superior bargaining power (typically a business) and the other party (typically a consumer) has little or no ability to negotiate more favorable terms and, as a result, the consumer is placed in a "take-it-or-leave it" position. The courts carefully scrutinize adhesion contracts and will sometimes void certain provisions on the basis that the provisions are unconscionable or the product of unequal bargaining power.

The adjustable feature refers to a cost modification provision found in some reinsurance agreements. Parties agree to adjust final premium rate or final ceding commissions retrospectively, in accordance with the loss experience, by formulas set forth in the agreement.

Adjusted earnings are estimated earnings of an insurer based on the growth in premiums written plus net earnings from operations.

The adjusted net worth is an estimated value for a book of business and unrealized capital gains (less potential income tax on the gains), plus the capital surplus and voluntary reserves of an insurer. Other adjustments are frequently made as well.

An adjuster is one who settles insurance claims. This typically involves investigation of the loss and a determination of the extent of coverage. In the context of first-party (e.g., property) insurance, the adjuster negotiates a settlement with the insured. In liability insurance, the adjuster coordinates the insured's defense and participates in settlement negotiations. Adjusters may be employees of the insurer (staff adjusters) or of independent adjusting bureaus (independent adjusters) that represent insurers and self-insureds on a contract basis. Public adjusters are consultants who specialize in assisting insureds in presenting claims to insurance companies in a manner that will maximize their recovery.

Administrative law is the body of law that governs the administration and regulation of federal or state administrative agencies. Administrative law is considered a branch of public law. Administrative law normally takes the form of rules and regulations, such as those promulgated by state insurance departments.

An administrative order is a legal document issued by an administrative agency such as the Environmental Protection Agency (EPA) directing an individual, business, or other entity to take corrective action or refrain from an activity. It describes the violations and actions to be taken and can be enforced in court. Such orders may be issued, for example, as a result of an administrative complaint whereby the respondent is ordered to pay a penalty for violations of a statute.

An Administrative Order on Consent (AOC) is an agreement signed by an administrative agency such as the Environmental Protection Agency (EPA) and an individual, business, or other entity through which the violator agrees to pay for correction of violations, take required corrective or cleanup actions, or refrain from an activity. An AOC describes the actions to be taken, may be subject to a comment period, applies to civil actions, and can be enforced in court.

An administrative services only (ASO) program is a group health self-insurance program for large employers wherein the employer assumes responsibility for all the risk, purchasing only administrative services from the insurer. Administrative services provided in an ASO program include such activities as the preparation of an administration manual, communication with employees, determination and payment of benefits, preparation of government reports, preparation of summary plan descriptions, and accounting. Most employers would also purchase stop-loss insurance to protect against catastrophic losses.

An administrator is a person or organization appointed as fiduciary in the settlement of an estate.