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ALAE (Allocated Loss Adjustment Expenses)
Claim adjustment costs directly attributable to a specific claim (legal fees, investigation, expert witnesses). Builders record ALAE as a separate field on each claim, not combined with the loss payment, to support loss ratio analysis that splits pure loss from adjustment expense.
Cat Model (Catastrophe Model)
A probabilistic simulation model (e.g., RMS, AIR, CoreLogic) that estimates insured losses from natural catastrophes. Outputs include Annual Exceedance Probability (AEP) and Occurrence Exceedance Probability (OEP) curves, Average Annual Loss (AAL), and Probable Maximum Loss (PML) at various return periods. Builders integrate cat model output by storing per-location loss estimates and EP curve data as structured records.
CSM (Contractual Service Margin)
An IFRS 17 balance sheet component representing the unearned profit in a group of insurance contracts - the difference between the present value of expected cash inflows (premiums) and expected cash outflows (claims, expenses) at contract inception. The CSM is recognised in profit and loss as insurance service is provided. Builders implement the CSM as a cohort-level field updated on every transaction.
DoI (Department of Insurance)
A US state insurance regulatory agency responsible for licensing insurers, approving rates and forms, conducting examinations, and handling consumer complaints. Each state has its own DoI (e.g., California Department of Insurance). Builders implementing rate and form filing workflows must track the filing status by DoI, with state-specific approval workflow states.
EIOPA (European Insurance and Occupational Pensions Authority)
The EU supervisory authority for insurance and occupational pensions, responsible for issuing Solvency II guidelines, QRT specifications, and XBRL taxonomies. Builders must consult EIOPA's published QRT templates and XBRL DPM (Data Point Model) when implementing Solvency II regulatory reporting.
GAAP (Generally Accepted Accounting Principles - Insurance)
US statutory accounting for insurance is SAP (Statutory Accounting Principles), distinct from US GAAP. SAP is more conservative than GAAP: acquisition costs are expensed immediately, policy reserves use conservative actuarial assumptions, and there is no deferred acquisition cost (DAC) asset. Builders must implement dual accounting books for US insurers that report on both SAP and GAAP bases.
IDD (Insurance Distribution Directive)
EU Directive 2016/97 regulating the distribution of insurance products, introducing product oversight and governance requirements, demands for advice suitability documentation, and pre-contractual disclosure (IPID - Insurance Product Information Document). Builders implementing insurance distribution platforms must generate IPID-compliant pre-sale disclosure documents and record advice suitability assessments.
IPID (Insurance Product Information Document)
A standardised pre-contractual disclosure document required by the EU IDD (Directive 2016/97) for non-life insurance products, presented in a standardised format to enable consumer comparison. The IPID must be generated at point-of-sale before binding coverage. Builders must implement IPID generation as a document output of the quote/bind workflow, stored with the policy record and timestamped as of delivery.
LAE (Loss Adjustment Expenses)
Total costs of investigating, adjusting, and settling claims, comprising ALAE (directly attributable) + ULAE (shared overhead). Reported separately from loss payments in both internal management accounting and regulatory filings. Builders split LAE into its two components in the claims data model to support actuarial analysis.
LDF (Loss Development Factor)
A multiplier applied to cumulative losses at a given development age to project them to ultimate value, derived from a loss triangle. The chain-ladder method uses a sequence of LDFs. Builders must supply claims data in the format required for triangle construction: cumulative paid/incurred by accident year and development quarter.
LOB (Line of Business)
A category of insurance product (e.g., General Liability, Workers Compensation, Homeowners, Auto Liability). Regulatory filings and management reporting are organised by LOB. Builders must implement LOB as a mandatory attribute on policies, claims, and financial records, with a controlled vocabulary aligned to state filing requirements and Solvency II LOB classifications.
MCR (Minimum Capital Requirement)
Solvency II minimum capital floor. Calculated as a linear function of technical provisions and written premium, floored at an absolute minimum (€2.5M for non-life). Reported quarterly. Must be covered 100% by Tier 1 Basic Own Funds. Builders report MCR separately from SCR.
NAIC Model Act
A model law or regulation published by the NAIC as a template for adoption by individual US state legislatures. Model acts are designated by number (e.g., Model Act 440 - Insurance Holding Company System Regulatory Act). Builders must reference the NAIC model act number in compliance documentation when implementing state insurance requirements.
ORSA (Own Risk and Solvency Assessment)
A forward-looking internal risk and solvency self-assessment required by Solvency II and NAIC Model 505. Conducted annually and upon material change. The ORSA report documents the insurer's risk profile, risk tolerance, and prospective capital adequacy under multiple scenarios. Builders support ORSA by providing scenario modelling and stress testing tools fed by the company's live risk and capital data.
PAA (Premium Allocation Approach)
An IFRS 17 simplified measurement model applicable when the coverage period is one year or less. The liability for remaining coverage is essentially an unearned premium liability, making PAA similar to the pre-IFRS 17 unearned premium approach. Builders implementing IFRS 17 must determine and document whether each group of contracts qualifies for PAA and apply the appropriate measurement model.
PML (Probable Maximum Loss)
The largest loss that an underwriter considers likely to occur from a single event, used to set policy limits, aggregate accumulations, and reinsurance purchase decisions. PML is typically expressed as a percentage of total insured value (TIV) or in absolute dollar terms at a specified return period (e.g., 1-in-250 year PML = $50M). Builders store PML estimates per location per peril with the model name, version, and return period.
QRT (Quantitative Reporting Template)
Solvency II standardised data reporting forms submitted to the national supervisor as XBRL files. QRT S.01–S.39 cover balance sheet, own funds, SCR modules, technical provisions, and premium/claims data by LOB. Builders map their internal data to EIOPA QRT cell references and generate XBRL output conforming to the published DPM and taxonomy.
RBC (Risk-Based Capital)
The US insurance capital adequacy framework, modelled on the NAIC RBC system, which calculates the minimum capital requirement using risk factors applied to asset values, premium, reserves, and receivables. RBC levels trigger regulatory action: Company Action Level (100%), Regulatory Action Level (75%), Authorized Control Level (50%), Mandatory Control Level (35%). Builders compute RBC as a periodic regulatory calculation.
SFCR (Solvency and Financial Condition Report)
The public annual disclosure report required of Solvency II insurers, containing summary financial and solvency information, risk profile, valuation bases, and capital management narrative. The SFCR is published on the insurer's website and submitted to the supervisory authority. Builders supporting SFCR production must extract and format the required narratives and quantitative data from the internal data model.
SLIP (Slip Policy)
A summary document used in the London market and Lloyd's to evidence the binding of reinsurance or large commercial insurance risks, preceding the formal policy issuance. Contains the key terms: risk description, coverage, limit, premium, and participating markets' subscriptions. Builders in London market systems must support SLIP-to-policy conversion as a document workflow.
Stop Loss Ratio
The aggregate loss ratio percentage at which a stop loss reinsurance treaty triggers, limiting the ceding company's net losses for the period. For example, a stop loss with an attachment at 80% loss ratio means the reinsurer bears all aggregate losses above 80% of earned premium. Builders compute the stop loss attachment by dividing aggregate incurred losses by earned premium for the treaty period.
TIV (Total Insured Value)
The declared value of all assets covered under a policy or portfolio, representing the maximum potential loss. TIV is a key input to catastrophe modelling (determining modelled loss as a percentage of TIV), reinsurance placement (setting programme limits relative to TIV), and premium rating (for property risks). Builders store TIV per location per risk at the policy level.
UPR (Unearned Premium Reserve)
The portion of written premium attributable to future coverage periods. Calculated as written_premium × (remaining_coverage_days / total_coverage_days). A balance sheet liability under both SAP and Solvency II. Builders compute UPR for each in-force policy at reporting date and aggregate by LOB for financial reporting.
XBRL (eXtensible Business Reporting Language)
A machine-readable XML-based standard for financial reporting, used for Solvency II QRT filing. EIOPA publishes the insurance XBRL taxonomy and DPM (Data Point Model) annually. Builders implementing Solvency II reporting must generate XBRL instance documents conforming to the current taxonomy version, with every reported data point tagged to the correct EIOPA concept.
XL (Excess of Loss)
A non-proportional reinsurance type covering losses above a per-occurrence retention up to a defined limit. Written as XL $X xs $Y (e.g., $5M xs $1M = covers losses between $1M and $6M per occurrence). Multiple XL layers form a reinsurance tower. Builders model the XL programme as a configuration table of layers, each with attachment and limit, applied sequentially to gross losses.