Glossary

A loss payable clause is an insurance provision authorizing payment in the event of loss to a person or entity other than the named insured with an insurable interest in the covered property or, in some cases, jointly to the insured and the other person or entity.

The loss payee is a person or entity that is entitled to all or part of the insurance proceeds in connection with the covered property in which it has an interest.

A loss payout curve is a representation of the delay between the time a loss is incurred and the date of the actual loss payments—that is, for liability and workers compensation claims.

A loss pick is an underwriter's (or actuary's) estimation of future losses based on past losses.

Loss portfolio agreements refer to retroactive reinsurance undertaken for "surplus relief" or "spread loss"—that is, the intent is either to transfer premiums from the primary company to a reinsurer as a means to increase policyholders surplus or to improve cash flow and stabilize income, without actually transferring risk.

A loss portfolio transfer (LPT) is a financial reinsurance transaction in which loss obligations that are already incurred and will ultimately be paid are ceded to a reinsurer.

Loss rating is a rating technique often used for larger insureds in which that insured's past loss history is used to establish a prospective rate.

The loss ratio is the proportionate relationship of incurred losses to earned premiums expressed as a percentage.

Loss ratio coverage refers to a form of stop loss reinsurance under which the reinsurer pays a portion of the claims represented by a loss ratio in excess of a specified loss ratio.

Loss reduction is a control activity focusing on reducing the severity of losses.