AIC key terms

A trend in which claim costs rise faster than general inflation because of factors such as larger jury awards, aggressive litigation tactics, and shifting public attitudes toward corporations and insurers.

A jury award so large, often far above the actual economic damages, that it pressures defendants to settle similar cases and can reshape claim reserving and settlement strategy across an industry.

A practice in which a third-party investor pays a plaintiff's legal costs in exchange for a share of any settlement or judgment, which can extend litigation and raise claim severity.

Coverage that pays a set amount when a measurable index, such as wind speed or earthquake magnitude, meets a threshold, rather than paying based on an adjusted loss.

Technology that transmits data from vehicles or other insured property about usage, location, and operating behavior, which insurers use to price risk and investigate claims.

Use of machine learning and related tools to triage, route, evaluate, and detect fraud in claims; it can speed handling but raises questions about bias, transparency, and accountability.

Coverage for losses from data breaches, ransomware, network interruption, and privacy violations, including response costs, notification, and third-party liability claims.

Coverage that reimburses lost income and extra expenses when a covered physical loss shuts down or slows an insured's operations.

Computer simulation of the frequency and severity of events such as hurricanes, floods, and earthquakes, used to estimate potential losses, set reserves, and buy reinsurance.

An interruption in the flow of goods or services, often triggered by a distant event, that produces contingent business interruption and delay-in-performance claims for insureds.

The question of who bears legal responsibility when a vehicle operating with automated driving features causes harm, shifting analysis toward manufacturers, software suppliers, and vehicle data records.

Handling claims remotely using video, photos, drones, and shared platforms instead of in-person visits, which shortens cycle time but requires strong documentation and fraud controls.

Risk arising from workers who take assignments through platforms, creating questions about employee versus contractor status, workers compensation, and liability coverage.

The sum of insurance premiums, retained losses, administrative costs, and risk control spending; it measures the full financial impact of risk rather than premium alone.

A quick assessment at first notice that sorts claims by severity, complexity, and coverage issues so staff and resources go to the claims that need them most.

An estimate of claims that have occurred but have not yet been reported, plus development on known claims; it is a major liability on an insurer's balance sheet.

The pattern in which claim estimates change over time as more information emerges, used to project ultimate costs from paid and reported amounts.

The right of an insurer that paid a claim to pursue the responsible party for reimbursement, reducing ultimate loss and helping hold wrongdoers accountable.

A team that investigates suspected fraudulent or exaggerated claims, coordinating with adjusters, vendors, and law enforcement while protecting legitimate claimants.

Involvement of a nurse to coordinate medical care for injured workers, promoting appropriate treatment, faster recovery, and controlled claim costs.

A structured plan that brings injured employees back to modified or full duty as soon as medically safe, lowering disability duration and claim cost.

Systematic review of provider charges for accuracy, coding, fee schedule compliance, and relatedness before payment, which reduces claim costs and identifies billing errors.

A firm that handles claims, and often other administrative tasks, for a self-insured organization or insurer under contract, with authority defined by the agreement.

A licensed insurer owned by a non-insurance company to finance its own risks, giving the owner control over claims handling, cash flow, and coverage design.

The amount an insured pays on each claim, or in aggregate, before its excess insurance responds; the insured typically controls the handling of claims within it.

A structured review of claim files against standards for coverage analysis, reserving, documentation, and compliance, used to improve quality and detect problems.

The process of selecting and directing defense counsel, setting strategy and budgets, and monitoring costs so litigated claims resolve efficiently and consistently.

An insurer's failure to act fairly and in good faith toward its insured, such as unreasonable delay or denial, which can expose the insurer to extra-contractual damages.

Regulated conduct such as misrepresenting policy provisions, failing to investigate promptly, or offering unreasonably low settlements; such acts can trigger penalties and bad-faith exposure.

A legal obligation to act in the best interest of another party, putting that party's interests ahead of one's own and avoiding self-dealing.

A situation where a personal, financial, or other interest could improperly influence professional judgment; it must be disclosed and then managed or avoided.

An ethical framework that judges an action by its consequences, favoring the choice that produces the greatest overall benefit or the least harm for affected parties.

An ethical framework that judges actions by duties and rules rather than outcomes, holding that some acts are right or wrong regardless of their results.

An ethical framework focused on the character of the decision maker, asking what a person of honesty, fairness, and integrity would do in the situation.

The duty to protect nonpublic personal and claim information from unnecessary disclosure, sharing it only with those who need it for legitimate purposes.

Reporting wrongdoing inside or outside an organization, often protected by law when done in good faith and through proper channels.

The tendency for insurance to change behavior, because a protected party may take fewer precautions or use more services knowing a loss will be covered.

An undisclosed payment or benefit given to influence a referral or decision, such as steering claims to a vendor in exchange for consideration; generally illegal and unethical.