CPCU 500 - independent subject foundations key terms

A person, asset, activity or financial interest subject to a possible loss, which must be identified before treatment alternatives are compared.

The number or rate of loss events over a defined exposure and period, distinct from the size of each loss.

The monetary or other defined magnitude of an event’s consequences, requiring a consistent unit and scope when observations are compared.

Keeping specified financial consequences within the organization or household rather than transferring those consequences through an external contract.

Allocation of specified financial consequences to another party under an arrangement, with residual contractual and counterparty risks potentially remaining.

An amount of covered loss retained by the policyholder under the contract’s stated calculation, which must not be assumed identical across products.

A contractual upper boundary on specified payments or coverage, applied using the actual wording, aggregation period and relevant sublimits.

Contract wording removing a specified circumstance or cause from coverage, subject to the actual policy and applicable legal interpretation.

A contractual amendment that can alter a policy’s terms, so coverage analysis must read it together with the relevant base wording.

Evaluation of a proposed exposure and the terms on which protection may be offered, using appropriate information and applicable constraints.

The contractual amount charged for defined insurance protection, distinct from a guaranteed investment return or the amount payable for every loss.

A request for a benefit or payment arising from an alleged insured event, requiring examination of coverage and supporting evidence.

A principle relating some insurance payments to a covered financial loss, whose operation and exceptions depend on product and law.

A concept concerning an insurer’s pursuit of certain recovery rights after payment, dependent on the actual contract and applicable law.

A separate arrangement transferring specified insurer exposure to another insurer, without automatically releasing the original policyholder obligation.

An arrangement allocating specified premiums and losses in agreed proportions, with the contract defining the exact scope and calculation.

A specified loss interval above an attachment amount and subject to a limit, rather than automatic cover of every consequence.

The premium amount attributed to expired coverage under a specified accounting model, distinct from the entire premium written or cash received.

An estimate of obligations associated with claims under a defined measurement framework, rather than necessarily an equivalent dedicated cash asset.

A measure combining defined loss and expense ratios to analyze underwriting, whose components and denominators must be checked before calculation.

A framework classifying growth options by existing or new products and markets. It supports comparison of strategic changes, but the actual risk depends on capabilities, commitment and the particular situation.

The long-term plan of action a firm adopts to achieve its objectives and gain advantage over rivals, given its resources and environment. It involves choices about markets, products and methods of competing.

A review of a firm's internal strengths and weaknesses and external opportunities and threats. It informs strategy by matching capabilities to the environment, though it can become a static list if not updated.

An examination of political, economic, social and technological influences on a business. It helps anticipate external change and shape strategy, but it is descriptive and does not by itself prescribe action.

Acquiring control of another business by buying enough of its shares, often as a faster route to growth than internal expansion. It brings immediate capacity but risks overpaying and clashing cultures.

The joining of two businesses into a single organisation, usually presented as a partnership of equals. It can create synergies and market power, but integration problems often erode the expected benefits.

The number of employees reporting directly to one manager. Its width can affect workload, communication and supervision, but does not alone determine every layer or the degree of delegation.

An organisational design with several layers of management and a clear chain of command from senior to junior staff. It offers clear authority and promotion paths but can slow communication and raise costs.

Removing one or more levels of management from an organisation's hierarchy to cut costs and shorten communication channels. It widens spans of control and may reduce promotion opportunities, affecting morale.

Passing authority to a subordinate to carry out a task while the manager keeps overall accountability. It develops staff and frees managers' time but risks poor decisions if training and control are inadequate.