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TriTech Services Insurance Tax

  • Tax Glossary



    TriTech Services, Inc. - Tax Glossary
     
           

     

    Occurrence:

    An event that results in an insured loss. In some lines of business, such as liability, an occurrence is distinguished from accident in that the loss doesn't have to be sudden and fortuitous and can result from continuous or repeated exposure which results in bodily injury or property damage neither expected not intended by the insured.

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    Off-balance-sheet risk:

    Measures the risk from excessive growth rates, contingent liabilities, or other items not reflected on the balance sheet.

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    Operating Cash Flow:

    Measures the funds generated from insurance operations, which includes the change in cash and invested assets attributed to underwriting activities, net investment income and federal income taxes. This measure excludes stockholder dividends, capital contributions, unrealized capital gains/losses and various noninsurance related transactions with affiliates. This test measures a company's ability to meet current obligations through the internal generation of funds from insurance operations. Negative balances might indicate unprofitable underwriting results or low yielding assets.

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    Operating expenses:

    The cost of maintaining a business, including property, insurance, taxes, utilities and rent, but excludes income tax, depreciation, and other financing expenses.

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    Operating Ratio (IRIS):

    Combined ratio less the net investment income ratio (net investment income to net premiums earned). The operating ratio measures a company's overall operational profitability from underwriting and investment activities. This ratio doesn't reflect other operating income/expenses, capital gains or income taxes. An operating ratio of more than 100 indicates a company is unable to generate profits from its underwriting and investment activities.

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    Options:

    Contracts that allow, but do not oblige, the buying or selling of assets at a certain date at a set price.

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    Ordinary Life Insurance:

    The most common type of permanent life insurance, in which premiums generally remain constant over the life of the policy and must be paid periodically in the amount specified in the policy. Also known as Whole Life Insurance.

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    Ordinary life insurance:

    A life insurance policy that remains in force for the insured's lifetime, usually for a level premium. Also referred to as whole life insurance. In contrast, term life insurance only lasts for a specified number of years (but may be renewable).

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    Other Income/Expenses:

    This item represents miscellaneous sources of operating income or expenses that principally relate to premium finance income or charges for uncollectible premium and reinsurance business.

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    Out-of-Pocket Limit:

    A predetermined amount of money that an individual must pay before insurance will pay 100% for an individual's health-care expenses.

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    Overall Liquidity Ratio:

    Total admitted assets divided by total liabilities less conditional reserves. This ratio indicates a company's ability to cover net liabilities with total assets. This ratio doesn't address the quality and marketability of premium balances, affiliated investments and other un-invested assets.

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    Own Occupation:

    Insurance contract provision that allows policyholders to collect benefits if they can no longer work in their own occupation.

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