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M

Malpractice Insurance

Professional Liability coverage for physicians, lawyers, and other specialists against suits alleging negligence or errors and omissions that have harmed clients.

Managed Care

Arrangement between an employer or insurer and selected providers to provide comprehensive health care at a discount to members of the insured group and coordinate the financing and delivery of health care. Managed care uses medical protocols and procedures agreed on by the medical profession to be cost effective, also known as medical practice guidelines.

Managing General Agent (MGA)

A person or firm authorized by an insurer to transact insurance business who may have authority to bind the insurer, issue policies, appoint producers, adjust claims and provide administrative support for the types of insurance coverage pursuant to an agency agreement.

Manual

A book published by an insurance or bonding company or a rating association or bureau that gives rates, classifications, and underwriting rules.

Manufacturer's Penalty Insurance

A commercial policy covering losses due to the unavailability of a product the insured has contracted to supply or manufacture. Coverage is purchased in amounts based on the contract between the insured and the buyer of the product. The objective is to protect the insured against responsibility for delays in completion due to non-delivery. Coverage is usually a percentage (i.e., 90%) of the penalty amount, but excludes coverage for delays due to a labor dispute.

Marine Insurance

Coverage for goods in transit, and for the commercial vehicles that transport them, on water and over land. The term may apply to inland marine but more generally applies to ocean marine insurance. Covers damage or destruction of a ship’s hull and cargo and Perils include collision, sinking, capsizing, being stranded, fire, piracy, and jettisoning cargo to save other property. Wear and tear, dampness, mold, and war are not included. (See Inland marine and Ocean marine)

Master policy

A policy issued to cover more than one location, often with underlying policies issued in respective states to meet legal requirements.

MCCARRAN-FERGUSON Act

Federal law signed in 1945 in which Congress declared that states would continue to regulate the insurance business. Grants insurers a limited exemption from federal antitrust legislation.

Mechanic’s lien

A statutory lien imposed on property to secure payment for a person who furnishes labor or material to build or repair the property. A typical situation involves a landowner who has a house built and pays the contractor, but the contractor neglects to pay subcontractors, laborers or suppliers. All these people can perfect a lien on the landowner's property to secure payment of the money due them. The landowner can protect himself/herself through procedures designed to find the potential lienholders and pay them directly or assure their payment.

Mediation

Nonbinding procedure in which a third party attempts to resolve a conflict between two other parties.

MEDICAID

A federal/state public assistance program created in 1965 and administered by the states for people whose income and resources are insufficient to pay for health care.

Medical Malpractice Insurance

See Malpractice insurance

Medical Payments Insurance

A coverage in which the insurer agrees to reimburse the insured and others up to a certain limit for medical or funeral expenses as a result of bodily injury or death by accident. Payments are without regard to fault.

Medical Utilization Review

The practice used by insurance companies to review claims for medical treatment.

MEDICARE

Federal program for people 65 or older that pays part of the costs associated with hospitalization, surgery, doctors’ bills, home health care, and skilled-nursing care.

MEDIGAP/MEDSUP

Policies that supplement federal insurance benefits particularly for those covered under Medicare.

Mine Subsidence Coverage

An Endorsementto a homeowners insurance policy, available in some states, for losses to a home caused by the land under a house sinking into a mine shaft. Excluded from standard homeowners policies, as are other forms of earth movement.

Minimum Cession

The smallest cession that a reinsurer will accept automatically. The minimum size is set to avoid the expenses associated with small cessions.

Minimum Continuing Capital and Surplus Requirement (MCCSR)

Canadian regulatory capital requirement.  Set by using required factors against certain risk elements of the business.  Some amounts are set through stochastic analysis.

Minimum Premium

An amount of premium which will be charged (usually for an Excess of Loss Reinsurance contract), notwithstanding that the actual premium developed by applying the rate to the Subject Premium could have produced a lower figure. See Deposit Premium.

Mod-co

See Modified Coinsurance.

Mod-co Adjustment Interest Rate

In modified coinsurance, the interest rate used to calculate the amount payable by the Ceding Company in consideration of the reserves being transferred back to the Ceding Company by the reinsurer. See Mod-co Reserve Adjustment.

Mod-co Interest Rate

The interest rate used to determine the interest Credited on the beginning reserves in a mod-co transaction.

Mod-co Reserve Adjustment

The net of two modified coinsurance items: the interest on reserves (payable by the Ceding Company to the reinsurer) and the increase in reserves (payable to the Ceding Company by the reinsurer). See Mod-co Adjustment Interest Rate

Modified Coinsurance

Indemnity life reinsurance that differs from coinsurance only in that the reserves are transferred back to the Ceding Company while the risk remains with the reinsurer; the Ceding Company is required to pay interest to replace that which would have been earned by the reinsurer if it had held the assets corresponding to the reserves in its own investment portfolio. Used to permit reserve Credit to be taken with respect to a non-admitted reinsurer, to secure Credit, and to retain control of investments. See Funds Withheld and Coinsurance. Commonly known as Mod-co.

Money Supply

Total supply of money in the economy, composed of currency in circulation and deposits in savings and checking accounts. By changing the interest rates the Federal Reserve seeks to adjust the money supply to maintain a strong economy.

Mortality and Expense (M&E) Risk Charge

A fee that covers such Annuity contract guarantees as death benefits.

Mortgage Guarantee Insurance

Coverage for the mortgagee (usually a financial institution) in the event that a mortgage holder defaults on a loan. Also called private mortgage insurance (PMI).

Mortgage Insurance

A form of decreasing Term Insurance that covers the life of a person taking out a mortgage. Death benefits provide for payment of the outstanding balance of the loan. Coverage is in decreasing Term Insurance, so the amount of coverage decreases as the debt decreases. A variant, mortgage unemployment insurance pays the mortgage of a policyholder who becomes involuntarily unemployed. (See Term Insurance)

Mortgage-Backed Securities

Investment grade securities backed by a Pool of mortgages. The issuer uses the cash flow from mortgages to meet interest payments on the bonds.

Multiple Peril Policy

A package policy, such as a homeowners or business insurance policy, that provides coverage against several different Perils. It also refers to the combination of property and liability coverage in one policy. In the early days of insurance, coverages for property damage and liability were purchased separately.

Municipal Bond Insurance

Coverage that guarantees bondholders timely payment of interest and principal even if the issuer of the bonds defaults. Offered by insurance companies with high Credit ratings, the coverage raises the Credit rating of a municipality offering the bond to that of the insurance company. It allows a municipality to raise money at lower interest rates. A form of financial guarantee insurance. (See Financial guarantee insurance)

Municipal Liability Insurance

Liability insurance for municipalities.

Mutual Fund Insurance

A form of financial guaranty insurance that guarantees the repayment of the principal invested in a mutual fund.

Mutual Holding Company

An organizational structure that provides mutual companies with the organizational and capital raising advantages of stock insurers, while retaining the policyholder ownership of the mutual.

Mutual Insurance Company

A company owned by its policyholders that returns part of its profits to the policyholders as dividends. The insurer uses the rest as a surplus cushion in case of large and unexpected losses.