Insurance & Claims Management Glossary

  • A
    Actual Cash Value (ACV)

    The value of an insured asset just before it is lost, destroyed, or damaged (as opposed to its replacement cost, which is the cost of replacing the insured asset with a newer asset).

    Adjudication

    The process of evaluating an insurance claim and determining how much the insurance provider is required to pay the claimant (and, if relevant, any third parties).

    AI Recommendations

    Suggestions given to a person, based on a machine learning algorithm for automatically analyzing relevant data (such as by using claims data to determine next steps for a claims adjuster to take).

    API-based Platform

    A software solution that interacts directly with other online resources to gather data (via an application programming interface, or API), which it then processes and uses to deliver results to the end user.

    Auto Insurance

    Insurance for a vehicle, which may (depending on the policy) cover damage, loss, and personal injury, both for the insured customer and for affected third parties.

  • B
    Bike Insurance

    (Also: two-wheeler insurance) A line of insurance that covers expenses related to two-wheel vehicles (such as bicycles, electric bikes, mopeds, scooters, and motorcycles), which can cover scenarios such as accidents, theft, and natural disasters, including third-party damage resulting from an accident.

  • C
    Claims Adjusters

    Professionals tasked with investigating insurance claims, evaluating how much should be paid out, and often negotiating to reach a settlement.

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    Claims Automation

    A digital approach to managing insurance claims that uses technologies such as machine learning to streamline the process while increasing its accuracy and reliability, helping insurers to increase their efficiency and offer a world-class claims experience to their customers.

    Claims Intelligence

    A rich collection of personalized and contextual recommendations based on all available data regarding a claim, which can help the claims adjuster achieve a better outcome...

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    Claims Investigation

    The process of verifying the details of a claim in order to determine whether it's legitimate and how much money the insurance provider is required to pay.

    Claims Management

    The entire process in which an insurance provider (or a third party acting on behalf of the insurance provider) handles insured customers' claims, starting with receiving first notice of loss (FNOL) and including disbursing payments.

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    Claims Quality Assurance

    The process of reviewing the way claims adjusters have handled a sample of claims in order to evaluate whether they were handled properly, whether they resulted in overpayment or underpayment, and whether there is room for improvement.

    Claims Resolution

    The process of handling a filed claim, ending with a settlement.

    Claims Settlements

    Sums of money paid by insurance providers to claimants in response to filed insurance claims, in order to fulfill the insurance providers' responsibilities under their written policies and close the filed claims.

    Claims Submission

    The process of filing insurance claims, whether using a digital platform or more traditional channels of communication.

    Cloud-based Claims

    An approach to filing and managing claims using a digital system in which the insurer stores the relevant details within cloud-based computer infrastructure.

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    Cloud-SaaS Scalability

    The flexibility and cost-effectiveness that SaaS (software-as-a-service) claims software offers insurance providers through its ability to handle any volume of claims.

    Combined Ratio

    A percentage indicating all of an insurance provider's expenses (including claims settlements, related expenses, and operating expenses) divided by the sum of premiums it has collected, so that a ratio of less than 100% indicates that the insurer is receiving more in payments than it is paying to settle claims and continue operating.

    Commercial Auto Insurance

    A type of auto insurance offered for cars and other motor vehicles (as well as trailers) used for business purposes, which are typically at greater risk than private cars.

    Coverage

    The scope of an insurance provider's responsibility to pay an insured customer, based on the customer's insurance policy.

    Cyber Insurance

    A line of insurance that provides businesses with coverage for a variety of types of damage stemming from data breaches and cyberattacks, including both first-party and third-party expenses.

  • D
    Damage Assessment

    The process of examining evidence and evaluating the financial worth of the damage for which a claimant has filed a claim.

    Data Governance

    The ways organizations regulate their use of digital information in order to achieve their business goals while steering clear of legal, cybersecurity, and other types of risks.

    Data Modeling

    The process of analyzing a set of information, categorizing its components, and diagramming the relationships between them in order to help people understand this information and use it effectively.

    Data Security

    The process of protecting digital information from risks such as loss, modification, and unauthorized access – whether caused by malicious attacks or by accidents.

    Data-Driven Claims Technology

    A type of software built to streamline and enhance the management of insurance claims, automatically analyzing information about the claim at hand (and often about past claims) in order to help claims adjusters maximize their accuracy and efficiency while delivering a world-class customer experience.

    Digital Claims

    Insurance claims filed through a website or mobile app, streamlining both the process of filing the claim (by the claimant) and the process of managing the claim (by a claims adjuster).

    Digital Claims Payments

    Disbursements made by insurance providers to claimants, which are transferred online rather than through more traditional payment methods.

  • E
    Exposure

    An exposure is an object associated with a claim which is used to track a potential payment or a set of related potential payments. Every exposure is linked to one coverage (where the money is "coming from") and one claimant (where the money is "going to").

  • F
    First notice of loss (FNOL)

    The moment at which a policyholder informs their insurer that they have cause to make a claim.

    Fraud Scoring

    A statistical method of evaluating the probability that a given claim is fraudulent, so that claims with high scores can be examined and verified with extra scrutiny.

  • G
    GDPR Regulations

    The rules of the General Data Protection Regulation, a groundbreaking set of laws setting limits on the ways organizations can gather, transmit, and use information gathered from individuals online, which went into effect in the European Union in 2018 and has impacted data privacy around the world.

    General Liability

    (Also: business liability insurance or commercial general liability insurance) A line of insurance for businesses that covers expenses stemming from certain kinds of damage caused to customers, employees, or others – such as bodily injury, property damage, or harm caused by advertising.

  • H
    Homeowners Insurance

    (Also: home insurance) A line of insurance that provides coverage for a home, typically including the home's structure and the homeowner's belongings, as well as protecting the homeowner from liability for harm caused to a third party.

  • I
    Indemnity

    The act of compensating somebody else for damage or loss that you have caused them.

    Insurance Premiums

    The costs of insurance policies, which insured customers regularly pay to their insurance providers.

    Insurtech

    A company that provides a technological innovation for the insurance industry, which could involve back-end architecture or a front-end application that consumers can use.

  • J
  • K
  • L
    Liability

    The share of responsibility for loss or damage assigned to a given person or organization, such as the amount of financial damage attributed to a specific driver involved in an accident.

    Litigation Management

    The use of software to streamline the processes that an insurance provider or other organization needs to perform due to the possibility that a disputed insurance claim will result in legal proceedings.

    Loss Adjustment Expense (LAE)

    The amount of money that an insurer pays to investigate claims before reaching settlements, including both general overhead expenses and costs specific to a given claim (which can include both in-house operating costs and payments made to third-party vendors).

    Loss Ratio

    A percentage indicating an insurance provider's losses (including claims settlements and related expenses) divided by the sum of premiums it has collected, so that a ratio of less than 100% indicates that the insurer is receiving more in payments than it is losing due to claims.

  • M
    Managing General Agent (MGA)

    An individual or organization selected by an insurance provider to administer certain services including underwriting, with a focus on specialized services for which insurance providers lack the necessary expertise and/or resources in a specific geographic region.

  • N
    No Code Notifications Builder

    A unique feature of Five Sigma's claims management solution (CMS) that enables users to configure and manage their claim-related notifications using an intuitive point-and-click interface.

  • O
    Omnichannel communication platform

    A comprehensive solution for communicating with customers via channels including email, text message, voice call, and video call, directly through Five Sigma's claims management solution (CMS) so that all communications are automatically documented and indexed.

  • P
    P&C insurance

    (Also: property and casualty insurance) A broad category of insurance types that cover specific assets and protect the policy owner from being required to pay a third party for damage attributed to those assets (including both property damage and personal injury), such as auto insurance and homeowners insurance.

    Personal Injury Protection (PIP)

    (Also: personal injury protection or no-fault insurance) A type of insurance that covers medical care (and in some cases lost wages) resulting from an incident, regardless of who is at fault for the incident.

    Pet Insurance

    A line of insurance that covers the policyholder in the event that their pet requires medication, vaccination, or surgery.

  • Q
  • R
    Reinsurance

    The process in which insurers buy insurance for themselves to cover against the possibility of large losses.

    Reserves

    An amount of money set aside by insurers for unexpected expenses, to make sure they have enough to pay out as required by their policies.

    Reserving

    The use of software to streamline the processes that an insurance provider or other organization needs to perform due to the possibility that a disputed insurance claim will result in legal proceedings.

  • S
    SaaS Claims Solutions

    Cloud-based software platforms for helping claims adjusters manage claims, which are licensed on a subscription-based model.

    Self-Insured

    An individual or organization that relies on its own reserves to cover certain risks, rather than obtaining coverage for these risks by buying insurance policies from insurance providers.

    Straight-Through Processing (STP)

    A digital approach to performing tasks (such as filing insurance claims or transferring money) that uses automation so that no human intervention is required, increasing the speed and efficiency of the process.

    Subrogation

    An insurance provider's process of trying to recover its losses resulting from a customer's claim (as well as the customer's deductible in many cases) by pursuing legal action against a third party considered to be liable for damages, such as a driver who caused an accident that damaged the customer's car.

  • T
    Third Party Administrator (TPA)

    A service provider that provides specific administrative services to insurance providers and/or self-insured companies, such as claims management, customer service, enrollment, billing, or managing employee benefits.

    Travel Insurance

    A line of insurance that can cover a variety of types of expenses related to travel, such as (depending on the policy) trip cancellation, loss or damage of luggage, and medical emergencies while traveling.

  • U
    Underwriting Profit

    An insurance provider's income from premiums minus its expenses (including claims settlements, related expenses, and operating expenses), so that a high underwriting profit is likely an indication of an insurer's good financial health.

  • V
  • W
    Workers' Compensation

    A line of insurance obtained by businesses in order to protect their employees in case they become injured or sick at work, covering expenses such as medical care, lost wages, and rehabilitation.

    Workflow Automation

    The use of computer technology to automatically perform certain processes (especially time-consuming and tedious tasks) that previously needed to be performed by an employee, in order to increase both efficiency and reliability.

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