Glossary

Discrimination in an insurance context is the act or process of evaluating insurable risks and determining premiums on the basis of likelihood of loss. Insurance laws prohibit "unfair discrimination"—that is, the formulation of rates on the basis of criteria that do not fairly measure the actual risk involved. Unfair or illegal treatment of or denial of rights to persons on the basis of certain arbitrarily chosen attributes or characteristics, including race, gender, religion, creed, age, medical condition, pregnancy, sexual orientation/preference, physical appearance, marital status, physical or mental disability, or national origin. Discrimination does not usually fall within the coverage terms of the commercial general liability policy (and may even be specifically excluded by endorsement) but may be covered as a form of personal injury under some umbrella policies. However, employment practices liability insurance covers a variety of employment-related claims, including discrimination.

Disease loading is an additional premium charge included in certain workers compensation classification code rates that reflects specific disease hazards relative to the operations involved and therefore the increased exposure to loss.

Disintermediation risk refers to the potential that policyholders may relinquish policies due to rising interest rates. If interest rates rise too rapidly, then policyholders may surrender policies faster than expected, potentially resulting in cash flow obligations that exceed returns on investment assets. Alternatively, during persistent periods of low interest rates when policy surrender rates tend to decrease, insurers face the risk that investment returns will decline to the point that they are unable to service ongoing liabilities. In either scenario, the sensitivity of investment income and policy obligations to interest rate changes could have a considerable impact on equity value.

In accident and health insurance policies, dismemberment encompasses loss of limbs or sight. A fixed benefit is paid to insureds who suffer certain types of dismemberment under these policies. The policy will typically pay the principal sum for loss of both hands, both feet, the sight of both eyes, one hand and one foot, or the sight of one eye and one hand or foot. For loss of any one, it will usually pay a percentage (e.g., 50 percent) of the principal sum.

A dismissal is an order or judgment disposing of an action, suit, motion, etc., without a judgment or trial.

Disparagement of goods is an untrue or misleading statement about a competitor's goods made with the purpose of inducing consumers not to buy the product. Under some nonstandard general liability coverage forms, disparagement of goods is a specifically defined personal injury offense.

Disparate impact discrimination claims involve apparently neutral policies that have the effect of discriminating against a certain class of persons, even though such discrimination may not be intentional. For example, if a city required all police officers to be at least 5'10" tall, a female applicant would be likely to allege disparate impact discrimination because the vast majority of women are considerably shorter. Claims alleging disparate impact discrimination are covered under employment practices liability insurance policies.

Disparate treatment discrimination claims involve illegal, deliberate discrimination against an individual, such as failing to promote an otherwise qualified employee based upon race, age, sex, or national origin. Claims alleging disparate treatment discrimination are covered under employment practices liability insurance policies.

Dispersion is a statistical term denoting the variability of a distribution around the mean or other central tendencies. Actuaries and risk managers often develop and analyze this to determine the variability of risk. The less dispersion of the distribution, the greater the likelihood that actual results or losses will fall within a specified range of that central tendency and the result is a lower variability of risk. Wide dispersion of results means less certainty in predicting a particular outcome. Statistics that are measures of this variability include the range, variance, and standard deviation.

A distribution system in an insurance context refers to the method by which an insurer reaches its insureds—that is, as direct writer, wholesaler, agency system, or broker market.