Evidences of a debt or of ownership, as stocks, bonds, and checks.


The choosing by an underwriter of risks acceptable to an insurer.


Making financial preparations to meet pure risks by appropriating sufficient funds in advance to meet estimated losses, including enough to cover possible losses in excess of those estimated. Few organizations are large or dispersed enough to make this a sound alternative to insurance.


Usually, a policy benefit or claim payment. It connotes an agreement between both parties to the policy contract as to the amount and method of payment.


A paper submitted by a broker to the underwriters at Lloyd's of London which identifies syndicates accepting the risk and notes the extent of their participation.

Social Insurance

Compulsory insurance legislated to provide minimum economic security for large groups of people, particularly those with low incomes. It is primarily concerned with the costs and loss of income resulting from sickness, accidental injury, old age, unemployment, and the premature death of the head of a family.

Social Security

The programs provided under the United States Social Security Act of 1935, plus amendments and additions thereto. It is now called Old Age, Survivors, Disability, and Health Insurance. Any government program which provides economic security for portions of the public, e.g., Social Insurance, Public Assistance, Family Allowances, and Grants-in-Aid.

Sole Proprietorship

A business enterprise owned by one person who is its manager and employee.


An individual appointed and authorized by an agent to solicit and receive applications for insurance as his representative. Solicitors are not usually given the power to bind coverage but are required to be licensed.


With regard to insurers, having sufficient assets (capital, surplus, reserves) and being able to satisfy financial requirements (investments, annual reports, examinations) to be eligible to transact insurance business and meet liabilities.

Special Agent

An insurer's representative in a territory. He services the insurer's agents and in is responsible for the volume and quality of the business written in that territory. In the Property and Liability fields this person is a special agent or marketing representative, and in the Life field he is known as a sales representative.

Speculative Risk

Uncertainty as to whether a gain or loss will occur. An example would be a business enterprise where there is a chance that the business will make money or lose it. Speculative risks are not normally insurable. Contrast with Pure Risk.

Split Limit

Any insurance coverage which is expressed in different amounts for different types of losses. For example, automobile liability of 50/100/50 means bodily injury limits of $50,000 per person, $100,000 per accident, and a property damage limit of $50,000 per accident. Contrast with Single Limit.

Standard Policy

Coverage which has identical provisions regardless of the issuing insurer. Many common policies are standardized. Insurance issued to a standard risk.

State Agent

An outmoded term meaning an agent who has an exclusive territory of one or more states. Also, an obsolete term for special agent.

State Associations of Insurance Agents

Each state may have one or more associations of insurance agents. These organizations are made up of individual agents who have joined forces to discuss common problems and promote the American agency system.

State Fund

A fund set up by a state government to finance a mandatory insurance system, such as Workers Compensation, nonoccupational disability benefits, or, in Wisconsin, state-offered Life Insurance. Such a fund may be monopolistic, i.e., purchasers of the type of insurance required must place it in the state fund; or it may be competitive, i.e., an alternative to private insurance if the purchaser desires to use it.


Required by or having to do with law or statute.

Statutory Accounting Principals (SAP)

Those principals required by statute which must be followed by an insurance company when submitting its financial statement to the state insurance department. Such principles differ from generally accepted accounting principles (GAAP) in some important respects. For one thing SAP requires that expenses must be recorded immediately and cannot be deferred to track with premiums as they are earned and taken into revenue.

Stop Loss

A form of reinsurance under which the reinsurer pays some or all of a cedant’s aggregate retained losses in excess of a predetermined dollar amount or in excess of a percentage of premium.

Stop Loss

Any provision in a policy designed to cut off an insurer's losses at a given point. In effect, a stop loss agreement guarantees the loss ratio of the insurer.


Agents reporting to other agents or agents, and not directly to the company.

Subchapter S Corporation

A corporate form of business in which all profits and losses are shared by the stockholders and thus the corporation is taxed on an individual basis as opposed to corporate taxation.


Any limit of insurance which exists within another limit. For example, special classes of property may be subject to a specified dollar limit per occurrence, even though the policy has a higher overall limit; a health insurance policy may limit certain benefits to fixed dollar amounts or maximum amounts per day, even though the overall coverage limit is higher.

Submitted Business

Applications for insurance submitted to an insurer but not yet acted upon by it.

Subrogation Clause

A clause giving an insurer the right to pursue any course of action, in its own name or the name of a policy owner, against a third party who is liable for a loss which has been paid by the insurer. One of its purposes is to make sure that an insured does not make any profit from his insurance. This clause prevents him from collecting from both his insurer and a third party. It is never part of a Life Insurance policy.

Subrogation Release

A release taken by an insurer upon indemnifying an insured. It contains a provision specifying that the insurer will be subrogated to the rights of recovery that the insured has against any person responsible for the loss.

Subscription Policy

A policy to which two or more insurers may subscribe, indicating in the policy the share of the risk to be borne by each insurer.

Substandard Risk

A risk not measuring up to underwriting standards. It may still be written but usually at a surcharged premium.

Superintendent of Insurance

The title of the head of a state or provincial insurance department used in some jurisdictions. In most states the title "commissioner" is used.


The amount by which assets exceed liabilities.

Surplus Lines

A risk or a part of a risk for which there is no market available through the original broker or agent in its jurisdiction. Therefore, it is placed with nonadmitted insurers on an unregulated basis, in accordance with the surplus or excess lines provisions of the state law.