Insurance Handbook - Alaska Department of Community and ...

Glossary
larger cushion of capital than a company
writing Main Street business, for example.
(See Risk-based capital; Solvency; Surplus)
CAPITAL MARKETS
The markets in which equities and debt are
traded. (See Securitization of insurance risk)
CAPTIVE AGENT
A person who represents only one insurance
company and is restricted by agreement
from submitting business to any
other company, unless it is first rejected by
the agent’s captive company. (See Exclusive
agent)
CAPTIVES
Insurers that are created and wholly owned
by one or more non-insurers, to provide
owners with coverage. A form of self-insurance.
CAR YEAR
Equal to 365 days of insured coverage for a
single vehicle. It is the standard measurement
for automobile insurance.
CASE MANAGEMENT
A system of coordinating medical services
to treat a patient, improve care and reduce
cost. A case manager coordinates health
care delivery for patients.
*CASH DIVIDEND OPTION
For participating insurance policies, a dividend
option under which the insurer sends
the policy owner a check in the amount of
the policy dividend. (See Dividend; Policy
dividend options)
*CASH PAYMENT OPTION
One of several nonforfeiture options
included in life insurance policies and
some annuity contracts that allows a policy
owner to receive the cash surrender value
of a life insurance policy or an annuity contract
in a single payment. Also known as
86 I.I.I. Insurance Handbook www.iii.org/insurancehandbook
cash surrender option. (See Cash surrender
value; Nonforfeiture options)
*CASH SURRENDER VALUE
(1) For life insurance, the amount, before
adjustments for factors such as policy
loans, that the owner of a permanent life
insurance policy is entitled to receive if
the policy does not remain in force until
the insured’s death. (2) For annuities, the
amount of a deferred annuity’s accumulated
value, less any surrender charges, that
the contract holder is entitled to receive if
the policy is surrendered during its accumulation
period. Also known as cash value
and surrender value.
*CASH VALUE
See Cash surrender value.
CATASTROPHE
Term used for statistical recording purposes
to refer to a single incident or a series of
closely related incidents causing severe
insured property losses totaling more than
a given amount, currently $25 million.
CATASTROPHE BONDS
Risk-based securities that pay high interest
rates and provide insurance companies
with a form of reinsurance to pay losses
from a catastrophe such as those caused by
a major hurricane. They allow insurance
risk to be sold to institutional investors in
the form of bonds, thus spreading the risk.
(See Securitization of insurance risk)
CATASTROPHE DEDUCTIBLE
A percentage or dollar amount that a
homeowner must pay before the insurance
policy kicks in when a major natural
disaster occurs. These large deductibles
limit an insurer’s potential losses in such
cases, allowing it to insure more property.
A property insurer may not be able to buy
reinsurance to protect its own bottom line