Long-tail Liability
One where an injury or other harm takes time to become known and a claim may be separated from the circumstances that caused it by as many as 25 years or more. Some examples: exposure to asbestos, which sometimes results in a lung disease called asbestos; exposure to coal dust, which might cause black lung disease; or use of certain drugs that may cause cancer or birth defects. These long-tail liabilities became very expensive for many corporations in the 1970s and 1980s, also causing problems for insurers because it was unclear when the situation that gave rise to the claim happened and who should pay the claim. One theory, the MANIFESTATION/INJURY THEORY, states that the insurer is responsible whenever the disease is diagnosed. The other view, the OCCURRENCE/INJURY THEORY, states that the insurer must pay only when the person is injured.
Popular Insurance Terms
method of gaining illegal entry to perform a criminal act. If a policyholder makes a claim for loss of jewelry or rugs under a homeowners policy, or if a business owner makes a claim for ...
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Measure used in the retrospective rating method for workers compensation insurance. A factor is applied to the incurred losses during the rating period in question in order to generate a ...
Rating system under which a specific premium rate, rather than a manual or class rate, is assigned to each unit of exposure. ...
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State law by which insurance companies are permitted to establish deferred tax assets and liabilities subject to maximum limitations. ...
Interest adjusted method that measures the cost of life insurance. Named for the late distinguished actuary M. Albert Linton. This method compares a whole life policy with a combination of ...
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