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Insurance terms
Actuarial work, underwriting, claims, telematics and catastrophe models.
Actuarial modeling Statistical modeling of future insurance losses, used to set premium prices and reserve for future claims. Catastrophe model (cat model) A model that simulates potential natural disasters and estimates the resulting financial losses across an insured portfolio. Claims analytics Applying analytics to insurance claims data to speed processing, control cost, and detect fraud. Combined ratio An insurer's total claims and expenses as a share of premium earned, the standard measure of underwriting profitability. Exposure data The detailed inventory of assets, locations, values and characteristics at risk that a catastrophe or risk model runs against. Loss ratio The share of insurance premium collected that is paid out in claims, a core measure of underwriting profitability. Physical climate risk The risk to assets, operations or people from climate-related physical hazards, both sudden events and long-term shifts. Probable maximum loss (PML) The largest loss an insurer or asset owner expects from a single severe event, at a specified probability threshold. Return period The average time expected between two events of a given severity, such as a 100-year flood, based on historical frequency. Risk adjustment Statistically normalizing outcome or cost comparisons to account for how sick, old, or otherwise high-risk a population is. Underwriting analytics Data analysis used to decide whether to accept a risk and at what price, in insurance and lending alike. Usage-based insurance (UBI) Insurance priced from how, how much, or how safely a policyholder actually behaves, rather than fixed demographic factors alone.