Common underwriting terms you will hear from our underwriters.

What Is? Account "AAL"

The Estimate of the amount of premium required to balance catastrophe risk over time, after deductible and reinsurance have been applied.

What Is? "PML"

Abbreviation for probable maximum loss, which represents a probabilistic approach and yields a smaller loss estimate under the most unfavorable circumstances. In a great disaster, a few risks will exceed the PML, a greater number will be at or near the PML, but the majority will be less than the PML. The aggregate of all PML losses is conservative if the PML evaluation is properly factored.

What Is? "a Portfolio"

A set of accounts of accounts to be analyzed together. The user decides the criteria for accounts included in the portfolio. Typical portfolios include all accounts for an insurer may include all accounts in one geographic region, are produced by one   agent/producer, or that are covered by a single reinsurance treaty structure.

What Is? "a Stochastic Storm"

A simulated windstorm or storm generated using event tree simulation.

What Is? "Secondary Structural Characteristics AKA-Secondary Modifiers"

What Is? "Storm Surge"

Quickly rising ocean water levels associated with windstorms that can cause widespread flooding. Ultimate height of the "storm tide" is a continuation of the astronomical tide and surge. The worst effect of a surge is bringing storm-whipped  waves far inland. The faltering of the waves causes more damage than high water alone. The amount of surge depends on a storm's strength, the path it is following, and the contours of the ocean and bay bottoms as well as the land that will be flooded.

What Is? "Modifier"

What Is? "Construction Class"

What Is? "Facultative Reinsurance"

Procedure by which insurance companies reinsure risks on an individual basis, with a reinsurer having the option to accept or decline each risk.

What Is? "Geocoding"

Geocoding is the process of finding the latitude and longitude of a location based on its address, city, or postal code. The highest level of geocoding is finding the latitude and longitude for an exact address--exact coordinates, building location, or street address--this is called high-resolution geocoding. Lower levels of geocoding are also available; for example, ZIP Code level geocoding finds the latitude and longitude of a ZIP Code centroid (the approximate "center of gravity" for the distribution of insured value in a ZIP Code). Geocoding is required in order to perform hazard data lookups on locations and DML analyses on accounts. Low resolution geocoding--meaning ZIP Code and lower--is sufficient for DML loss analyses but high resolution produces more accurate results.

What Is? "Occupancy type"

Occupancy type is highly recommended for RiskBrowser analyses. When construction class is unknown, occupancy type is used to infer the expected construction class based on regional databases of building inventory information.

What Is? "ZIP Code"

The postal code.

What Is? "ZIP-Code Centroid"

The approximate "center of gravity" for the distribution of insured value in a ZIP Code. Where information about that distribution is available, RMS has "weighted" the centroid toward higher concentrations of exposure: if more value is focused in one corner of the ZIPCode area, the centroid gravitates in that direction. Where no information is available, the centroid may be the "unweighted," geographic center of the ZIP-Code area.

What Is? "TIV"

Sum of all values for the peril specified.

What Is? "Saffir-Simpson Scale"

What Is? "A Wrap Policy"

Wrap policies generally provide additional limits coverage for Coverages C and D to supplement that offered in a Mini policy. For example, where the value of contents is $100,000., and $5,000 coverage is included in the Mini policy, the Wrap policy could include up to $95,000 coverage, with a 5,000 deductible. The deductible amount will exclude loss that would be covered by the Mini policy. For Additional Living Expense, a limit is generally provided over a $1,500 deductible, again to exclude the loss covered by the Mini policy. As with Mini policies, the Wrap coverage generally does not insure Coverage C, until the Coverage A loss exceeds its deductible. Deductible buy-back coverage is not modeled.

What Is? "Catastrophe Reinsurance"

Excess of loss reinsurance which, subject to a specified limit and insurer  retention, indemnifies the ceding company for the amount of   loss from all accounts in a portfolio, net of facultative, quota share, surplus share, and working excess reinsurance in a single event. The actual reinsurance document is referred to as "a catastrophe cover".

What Is? "Cede"