Glossary

Approval is the acceptance of a given risk by an insurer because the underwriting standards of the insurer have been met.

Arbitration is the process of resolving a dispute between two parties by an impartial third party chosen by the parties in the dispute who agree in advance to abide by the arbitrator's award issued after a hearing at which both parties have a chance to be heard.

An arbitration clause, also known as an alternative dispute resolution (ADR) clause, requires the contracting parties to resolve disputes arising out of or concerning the contract through arbitration as opposed to mediation or litigation. Usually, each party appoints an arbitrator. The two arbitrators select a third or an umpire, and a majority decision of the three becomes binding on the parties in the arbitration proceedings.

Architects and engineers (A&E) liability coverage is a form of liability insurance that insures design professionals against errors and omissions in their work. The policies normally exclude coverage for faulty construction work associated with projects.

Asbestos is a mineral fiber that can pollute air or water and cause cancer or asbestosis when inhaled. The Environmental Protection Agency (EPA) has banned or severely restricted its use in manufacturing and construction. Liability arising out of asbestos-related injuries is commonly excluded from coverage in umbrella policies and in some general liability policies.

Asbestos abatement is the term for procedures to control fiber release from asbestos-containing materials in a building or to remove them entirely, including removal, encapsulation, repair, enclosure, encasement, and operations and maintenance programs.

An asbestos program manager is a building owner or designated representative who supervises all aspects of the facility's asbestos management and control program.

An assessment company refers to an insurer that retains the right to assess additional charges above initial premium when those premiums are shown to be inadequate to cover the costs of operation. This is usually a mutual or reciprocal type of insurer.

Asset allocation refers to the makeup of the distribution of the various assets of an organization (usually to maximize expected reward within risk constraints). In advanced applications, the analysis reflects the nature and structure of both assets and liabilities.

An asset class is any type of financial transaction that can be converted into a standardized, quantifiable, negotiable asset. The use of derivatives has given rise to the creation of several significant asset classes, such as mortgage-backed securities. Insurance-linked securities (ILS) also represent a new asset class. Stocks and bonds are the best-known asset classes.