Insurance Terms Glossary

Concept that money's value changes over time due to potential earning capacity.

The interest rate used to calculate the present value of future cash flows.

Margin for Adverse Deviations; a buffer in discount rate calculations.

The timing and structure of cash flows received over time.

A discount rate based on the risk-free rate adjusted for liquidity.

An entity can choose to defer or directly expense costs for short-term contracts, with different rules for explicit valuations.

The approach to determine the exact value of an asset or liability, allowing no deferral of DAC.

Refers to the allowable deferral of Digital Asset Costs that directly link to insurance contracts.

The process that necessitates applying a discount to the Loss Reserve Calculation (LRC) to reflect present value.

Contracts typically requiring fulfillment in a short time frame, affecting DAC deferral choices.

Present value of an insurer's liabilities, factoring in discounting and risk adjustments.

Adjustments made for claims development regarding non-financial risk.

Insurer's obligation to pay claims for events that have already occurred.

Insurer's obligation to provide insurance for future events.

Expected net outflow of an onerous insurance group.

Unearned profit from a group of insurance contracts.

Typically refers to reinsurance related to incurred claims.

Usually refers to reinsurance related to future coverage obligations.

Calculation of total insurance revenue minus service expenses and net reinsurance expenses.

Total investment return plus net financial income/expenses.

Measurement of contracts where costs exceed revenues, focusing on loss components (LC) and service margins (CSM).

Process of converting a non-onerous contract into an onerous one by reducing CSM to 0 and establishing LC.

Adjustments made to loss components and service margins based on favorable or unfavorable changes in contract assumptions.

Criteria for using the Premium Allocation Approach, specifically for short-term contracts without complex cash flow estimations.

Loss components (LC) track losses while contractual service margins (CSM) reflect the profit margin over the contract's life.

A value that divides a dataset into equal-sized groups.

A quantile method to assess potential loss in value of an asset.

A method that focuses on expected losses exceeding the VaR threshold.

Calculates required return based on investment commitments and risk level.

Future capital requirements reflecting non-financial risks.

Selects margins for compensation related to non-financial risk uncertainty.

Techniques to calculate risk adjustment in reinsurance scenarios.

Specific tools for assessing risks associated with catastrophic events in reinsurance.

A contract group that is expected to result in a loss.

Losses are recognized immediately when a group becomes onerous.

A cost recorded in financial performance due to onerous groups.

Onerous groups are recognized when bound, even pre-effective date.

Uninsured automobile funds are treated like a levy; IFRS 17 does not apply.

Member companies account for their share of FARM and UAF as direct business.

Member companies treat reinsurance using their collective membership.

Adjusts present value of cash flows for uncertainty compensation.