Risk-based Capital Ratio
Definition of "Risk-based capital ratio"
Measurement of the amount of capital (assets minus liabilities) an insurance company has as a basis of support for the degree of risk associated with its company operations and investments. This ratio identifies the companies that are inadequately capitalized by dividing the company's capital by the minimum amount of capital that the regulatory authorities feel is necessary to support the insurance operations. A ratio of 1.00 or greater is deemed to be satisfactory. This standard can be used to identify inadequately capitalized life and health companies, thereby enabling regulatory authorities to intervene before a company becomes insolvent.
Popular Insurance Terms
In health insurance, the applicable average rate charged for a semiprivate room in the geographical area in which the charge is incurred. ...
Provision that excludes from coverage under Form No. 3: flood damage, except if the flood causes a fire, explosion, or theft; water damage from the backup of sewers; earthquake, except if ...
Costs associated with first-year expenses, claims expense, administrative expenses, and renewal expenses. ...
Chart published in 1868 by Sheppard Homans, an actuary with the Mutual Life Insurance Company of New York, based on insured lives from 1843 to 1858. Historically, it was widely used for ...
Insurance policy for which the required premium has been paid. ...
Circumstance in which no agent is servicing a debit. ...
Same as term Contingency reserve: percentage of total surplus retained, in insurance company operations, that serves as a reserve to cover unexpected losses as well as to cover the ...
Fee paid to an agent as compensation for his or her collecting premiums for debit insurance (home service insurance, industrial insurance). ...
Situation in which several liability insurance policies are in force to cover the same risk, thereby resulting in higher limits of coverage than is required to adequately insure the risk. ...
Have a question or comment?
We're here to help.