Glossary

A canine liability exclusion is a homeowners policy exclusion that precludes personal liability and medical payment losses for canines described in the endorsement schedule that are owned by or in the care, custody, or control of an insured. It specifically excludes bodily injury (BI) or property damage (PD) arising out of direct physical contact with the described canine. The need for this endorsement arose because many insurers were reluctant to insure homeowners who owned or had control of certain breeds of dogs they considered aggressive, such as chows, Doberman Pinschers, rottweilers, husky types, malamutes, German shepherds, pit bulls, or wolf hybrids/wolf dogs; or insureds who owned dogs with a biting or clawing history.

Cannabinoid is any one of a large number of chemical compounds that act on cannabinoid receptors in the brain. Cannabinoids may be naturally occurring or synthetic.

Cannabis is any part of the plant Cannabis sativa L. or derivative thereof with a delta-9 tetrahydrocannabinol concentration greater than 0.3 percent on a dry weight basis. Insurance Services Office, Inc. (ISO), defines cannabis as "Any good or product that consists of or contains any amount of Tetrahydrocannabinol (THC) or any other cannabinoid , regardless of whether any such THC or cannabinoid is natural or synthetic." [Emphasis added.]

A cap is an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a reference price (or level) or the performance (or value) of one or more underlying interests exceeds a predetermined number, sometimes called strike rate or strike price.

Capacity refers to the largest amount of insurance or reinsurance available from a company or the market in general. Capacity is determined by financial strength and is also used to refer to the additional amount of business (premium volume) that a company or the total market could write based on excess (unused) capital—that is, surplus capacity.

In captive insurance, capital has one of three different meanings: the amount initially needed to set up a captive or the initial amount paid in; the total of this paid-in capital plus other forms of capital, like letters of credit; or the sum of these two plus accumulated surplus. The difference between capital in a captive and other forms of insurance capital is that the owners usually consider it risk capital, ready to be used up by adverse results of the business. This is why one seldom hears about "impairment of capital" in captive financial discussions. Instead, one hears about "reduction in capital."

Capital adequacy refers to the funding required of a risk financing vehicle, such as a captive insurance company, to meet the liabilities insured. With regard to enterprise risk management (ERM), the term refers to the amount of capital needed to satisfy a specified economic capital constraint (e.g., a certain probability of ruin), usually calculated at the enterprise level.

Capital allocation is the actual deployment of capital to different business segments.

A capital asset pricing model (CAPM) is an asset valuation model that describes the relationship between expected risk and expected return for marketable assets. The CAPM states that the intercept of a regression equation between an asset's returns and the returns of systematic factors equals 0 percent in an efficient market, but it does not necessarily assume a single source of systematic risk.

Capital attribution is the assignment of enterprise-level capital to the various business segments (e.g., lines of business, regions, projects) that make up the enterprise in recognition of the relative risk of each segment for purposes of measuring segment performance on a risk-adjusted basis. This analysis can be useful in enterprise risk management (ERM).