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Risk Management terms
How businesses see, price and reduce their risk.
RetentionThe share of a loss a business pays itself, through a deductible, self-insured retention or captive, before insurance responds.Risk managementIdentifying, assessing and treating threats to an organization by avoiding, reducing, transferring or retaining them; insurance is one tool among several.Self-insured retention (SIR)The amount of a loss the insured must pay itself, often including defense costs, before the insurer's liability policy begins to pay.Total cost of risk (TCOR)The full annual cost of carrying risk: insurance premiums, losses you retain, and loss-control and administrative spending, often shown as a share of revenue.Captive insurance companyA licensed insurer owned by the business or group it insures, formed to underwrite their own risks rather than buying all coverage from outside insurers.Risk purchasing groupA group of businesses with similar liability exposures that buys liability insurance together under federal law, without forming its own insurer.Risk retention groupA member-owned liability insurer formed under the federal Liability Risk Retention Act, licensed in one state but allowed to cover members in every state.Third-party administrator (TPA)An outside firm hired to run claims and administration for a self-funded plan, captive or self-insured program without taking on the insurance risk.Named storm deductibleA separate deductible, usually a percentage of insured value, for wind damage from a named hurricane or tropical storm, replacing the flat deductible.Pollution exclusionA policy exclusion removing coverage for injury, damage and clean-up from the release of pollutants, leaving spills to a separate pollution policy.