Glossary

Side A coverage refers to the section of coverage under a directors and officers liability insurance policy affording "direct" coverage of an organization's directors and officers. This portion of the policy provides direct indemnification to the directors and officers for acts for which the corporate organization is not legally required to indemnify the directors and officers.

Side B coverage is another term for what is known as the corporate reimbursement coverage section of a directors and officers liability policy.

Side C coverage is another term for what is known as the entity securities coverage section of a directors and officers liability policy.

Signaling capital refers to capital in excess of economic capital (the sum of operational and risk capital) to serve as a buffer for external stakeholders (e.g., indication of financial strength).

Significant deviation is a diversion from the course a traveling employee would naturally follow to further the employer's business. A significant deviation takes an employee out of the course of employment and beyond the scope of workers compensation. Minor deviations, such as an employee stopping in a coffee shop for lunch, are not significant and would not take an employee out of the course of employment.

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.

Silica is silicon dioxide, in the form of tiny, airborne crystals, which occurs naturally in soil and is present as an ingredient in many man-made substances such as brick, concrete, and asphalt. In sufficient concentrations, it can cause silicosis and other diseases. Silica and silica-related dust is commonly the subject of an exclusion in general and umbrella liability policies.

Silo factor refers to the fact that the management of an organization's risk typically is assigned to risk managers within departments. For example, the finance department monitors credit risk, public relations oversees reputation risk, facilities management supervises physical risk, information technology focuses on data security risk, and so on. Compartmentalizing risk managers in these silos results in a narrow, parochial view of risk and prevents top management from understanding risks facing the entire enterprise.

The simple inflation rider is a long-term care insurance policy rider that increases the benefits provided by a fixed amount per year. An example of how the simple inflation rider works is that if the policy maximum daily benefit was $100 and the insured had a 5 percent simple inflation rider, the maximum daily benefit would increase by $5.00 per year. Therefore, in year 2, it would be $105, in year 3 $110, in year 4 $115, etc. The difference between a compound and simple inflation rider is not significant in earlier years but becomes greater as time goes on.

Simulation risk modeling method is a risk modeling method that requires a large number of computer-generated "trials" to approximate an answer. These methods are relatively robust and flexible, can accommodate complex relationships (e.g., so-called path-dependent relationships commonly found in options pricing), and depend less on simplifying assumptions and standardized probability distributions. The principal advantage over analytic methods is the ability to model virtually any real-world situation to a desired degree of precision. This is often called the Monte Carlo method.