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Industry terms
The business of Homeowners Insurance.
Attorney-in-factThe company that manages a reciprocal exchange for its policyholders under a power of attorney, running underwriting, sales and claims in return for a fee.Combined ratioAn insurer's loss ratio plus its expense ratio, where a result under 100% means premiums covered claims and costs and over 100% means an underwriting loss.Direct premiums writtenThe total premium on the policies an insurer issues itself in a period, counted when written and before any share is passed to reinsurers.Expense ratioThe share of premium an insurer spends on commissions, salaries, marketing, taxes and other costs of selling and running its business, excluding claim payments.Fronting carrierA licensed, rated insurer that issues policies for another company's program and passes most of the risk to reinsurers, keeping a fee for lending its license.Loss ratioThe share of earned premium an insurer pays out or sets aside for claims, shown as a percentage and used to judge profitability and set rates.Managing general agent (MGA)An agency that a carrier authorizes to quote, underwrite, bind and often service policies for a defined book of business, paid by commission and profit share.Market shareAn insurer's portion of all premiums written in a given line, state and year, calculated by dividing its direct premiums written by the market total.Mutual insurance companyAn insurer owned by its policyholders rather than outside shareholders, which can return surplus to them as dividends or keep it to strengthen the company.Reciprocal exchangeAn unincorporated group of policyholders, called subscribers, who insure one another through an exchange run by a separate manager under a power of attorney.Stock insurance companyAn insurer owned by shareholders who supply its capital and receive its profits, as opposed to one owned by the people it insures.Underwriting profitWhat an insurer keeps from premiums after paying claims, claim-handling costs and operating expenses, before any investment income is counted.Building code upgradeWork local building rules require when a damaged home is repaired or rebuilt, beyond restoring what was there, such as updated wiring or wind bracing.Replacement cost estimateA calculation of what it would cost to rebuild a home today, from its size, construction details and local labor and material prices.Independent adjusterA claims adjuster who works for an adjusting firm or on contract, hired and paid by insurers to handle claims, especially surges after storms and wildfires.Staff adjusterA claims adjuster who is a direct employee of an insurance company and handles that insurer's claims under its own guidelines and settlement authority.Desk adjusterA claims adjuster who handles a claim from an office or home by phone, email, photos and estimating software, usually without visiting the property in person.InsurtechA company that uses software, data and automation to sell, price or service insurance, as a licensed insurer or as an agency or MGA backed by carriers.Parametric insuranceInsurance that pays a preset amount when a measured trigger, such as earthquake intensity or wind speed near your home, is hit, whatever your actual damage.