Glossary

Index-based insurance is coverage under which an entity assuming risk (the "insurer") agrees to pay the indemnitee (the "insured") an agreed amount upon the occurrence of a specified event, such as an earthquake or hurricane of specified intensity.

An index is a database used to standardize the trading prices of a commodity and act as the "underlying asset" for the creation of a derivative.

An indexed deductible is the amount deducted from each loss payment that is not fixed in relation to the policy limit but determined by variables (the index) affecting the insured's retention ability.

Indexed universal life refers to a universal life policy where the cash accumulation is credited with interest based on an index such as the S&P's index.

Indexing, or indexation, refers to the adjustment of a cedent's retention and the reinsurance limit by a measure of economic activity such as the consumer price index (CPI).

An index bureau is a clearinghouse where insurers and self-insured companies file reports of claims.

An index clause, also referred to as an inflation clause, a stability clause, or an indexation clause, redistributes inflation-related increases in the costs of claims between the ceding insurer and its reinsurer.

Indirect damage loss is loss that results from direct damage to property—for example, loss of income and increased expenses resulting from the insured's inability to use the damaged property while it is being repaired or replaced.

Individual health insurance refers to a health insurance policy covering one person, as opposed to a group of people.

Individual life insurance refers to a life insurance policy covering a single life, in contrast to group life insurance, which covers many lives.