Glossary

Screening risk refers to the risk that a proposal for foreign investment will not be accepted following a government review (screening) of it. The process of undergoing screening can be quite time-consuming and costly, and screening risk insurance provides compensation for at least some of those costs in the event a proposal is rejected.

The standard market is a term often used to refer to licensed or admitted insurers. In contrast, unlicensed or nonadmitted insurers are considered part of the nonstandard market, which is commonly called the excess and surplus lines market.

Insurers may exclude or limit coverage for strikes, riots, and civil commotion (SRCC) perils on policies covering retailers, hotels, and other vulnerable businesses. Such businesses can obtain separate coverage for riot and civil commotion by purchasing a political violence policy.

A surcharge in the construction context is where you place more of something than is natural; for example, they will add 20 feet of stone over a construction site to "surcharge" the soil underneath from the weight. This is a common term for adding more weight to the edge of an excavation where there was no weight before. These additional vertical loads or weights placed on the ground surface near an excavation can include spoil piles, equipment, vehicles, or other materials. The closer a surcharge load is to the edge of the excavation, the greater the potential for destabilizing the soil and causing a cave-in.

The Sutton rule is named for a 1975 Oklahoma case where a tenant's 10-year-old son, while using his chemistry set, damaged a rented home owned by the Suttons. The Suttons' insurer paid for the damage and then attempted to subrogate against the tenant. The court ruled that subrogation was not permitted because the tenant, absent an express agreement to the contrary, is an implied coinsured under the landlord's policy. Part of the rationale is that the tenant pays the premium indirectly through the payment of rent.

Coverage for cyber exposures that are neither explicitly covered nor specifically excluded by the language in liability policies or open perils property policies. The absence of language addressing cyber exposures often leads to a situation where an insurer provides coverage for cyber exposures it never intended to cover.

The sharing economy is an economic model where personally owned goods, property, vehicles, space, or services are offered to others, typically for a fee. Digital platforms, e.g., apps, are generally used to accomplish this transaction. For example, ridesharing, home sharing, peer-to-peer vehicle rentals, equipment rentals, delivery services, and task-based services are common sharing economy services. These activities can create coverage issues because they may blur the line between personal and commercial use, involve multiple parties, and fall outside the scope of standard homeowners, renters, personal auto, or other commercial insurance policies. Specialized insurance is often necessary to address liability, property damage, bodily injury, and other exposures arising from the sharing activity.

A smart contract is a self-executing digital agreement whose terms are written into computer code and usually stored on a blockchain or other distributed ledger. As long as predefined conditions are met, the code automatically performs the required action without the need for manual processing or third-party intervention. Examples include transferring funds, recording ownership, verifying compliance, or triggering a payment. In an insurance context, smart contracts may be used to automate parts of underwriting, policy administration, parametric claim payments, reinsurance transactions, or other data-driven processes. While smart contracts generally improve the speed, consistency, and transparency of such transactions, they may also create risks related to legal and coding errors, cyber security, data accuracy, and regulatory treatment.

A staff underwriter is an insurance company underwriting professional who helps develop, interpret, and apply underwriting policy, guidelines, pricing standards, and risk selection practices for a line of business or product area. Compared to a line underwriter, who typically evaluates individual submissions and renewals, a staff underwriter often supports underwriting management by analyzing loss experience, reviewing market and regulatory developments, conducting underwriting audits, training field or line underwriters, and recommending changes to forms, rates, eligibility rules, or authority levels. The staff underwriter helps promote consistent underwriting decisions and profitable risk selection, adheres to regulatory compliance, and provides alignment between an insurer's underwriting strategy and operations.

Stress testing refers to a structured process used to evaluate the resilience, performance, or stability of a system, organization, process, or asset under adverse, extreme, or unexpected conditions. It is used to help identify vulnerabilities, assess potential impacts, and determine the ability to withstand and recover from challenging scenarios. For example, stress testing may be used to assess whether an organization's cyber-security controls can withstand a significant increase in attack activity.