I

IBNR. See Incurred But Not Reported Reserves.

IDS. See Integrated Delivery System.

Illinois Insurance Exchange. A marketplace established in 1982 to underwrite large or unusual insurance and reinsurance risks. Located in Chicago, Illinois. Renamed INEX Insurance Exchange in 1997.

Immediate Annuity. An annuity on which payment begins one period (30 days, but not more than one year) after purchase. Immediate annuities often are purchased by retirees investing funds from a savings account, investment maturity or the cash value of a life insurance policy. Immediate annuities also are purchased to fund the payment of litigation settlements and generally are referred to as structured settlements.

Immediate Participation Guarantee Plan (IPGP). A type of defined benefit plan, similar to Deposit Administration plans, except that participation in gains or losses for mortality and investments are realized as they occur, rather than spread over the life of the contract.

Impaired Capital. A condition that exists if the difference between an insurer's assets and liabilities is less than the minimum capital required by regulators. An insurer may be impaired without necessarily being insolvent. If an insurer's capital is impaired, its authority to transact business may be suspended by regulators.

Imputed Negligence. The legal principle that one party may be held liable for the negligence of another due to the special relationship existing between the two parties.

IMR. See Interest Maintenance Reserve.

In Force. The aggregate amount of insurance in effect as of a certain date for an insurer.

Inception Date. The date coverage under an insurance policy begins.

Inchmaree. An ocean marine policy clause to cover loss due to boiler explosion and other mechanical failures as well as navigation errors and faulty management of the ship.

Incontestable Clause. A provision in a life insurance policy stating that the insurer cannot contest a policy once it has been in force two years during an insured's lifetime.

Incurred But Not Reported (IBNR) Reserves. Reserves for claims that have occurred but have not yet been reported to the insurer, including future development on claims that may have been reported already to the insurer.

Incurred Losses. The total losses sustained by an insurer, whether paid or unpaid. It includes a provision for IBNR.

Indemnification. The practice of compensating an insured for losses sustained.

Indemnitee. The person being compensated for losses.

Indemnitor. The person (such as an insurer) providing indemnification to one suffering a loss.

Indemnity Plan (Traditional). A health insurance plan where patients may select any doctor or hospital, and providers bill the patient or the insurance company their normal fees for their services. Providers have no relationship with the health plan, although most submit claims and accept payments from the plan on behalf of the patient. Coverage is usually provided for conditions caused by illness or injury and related diagnostic tests, and usually excludes routine screening and preventive care/checkups. "Fee-for-Service" sometimes is used as a synonym.

Indemnity. A principle of insurance that an insured should be fully reimbursed for a loss.

Independent Adjuster. An adjuster who is not an employee of an insurer. See Claim Adjuster.

Independent Agent. An agent who is not an employee of an insurer, but who usually represents a number of insurers. See Agent.

Independent Agency System. The system in which insurers grant independent contractors the right to sell insurance products. See also Agent and Captive Agent.

Independent Insurance Agents of America (IIAA). An Alexandria, Virginia-based trade organization representing independent insurance agents.

Indirect Loss. See Consequential Loss.

Individual (or Independent) Practice Association (IPA). An HMO model in which the HMO contracts with a physician organization, which, in turn, contracts with individual physicians. The IPA physicians practice in their own offices and continue to see fee-for-service patients. The HMO reimburses the IPA on a capitated basis; however, the IPA usually reimburses the physicians on a fee-for-service basis. This type of system combines prepayment with the traditional means of delivering health care.

Individual Retirement Account (IRA). An individual retirement plan that allows an individual to make annual contributions up to $2,000 ($2,250 for one-income married couples). In certain instances, such contributions are tax-deductible.

Industrial Life Insurance. Life insurance issued in small amounts for which premiums are collected on a weekly or monthly basis by an agent (or debit agent); also known as debit insurance.

Inflation Guard Endorsement. An amendment to a homeowners insurance policy that provides for automatic increases in coverage to take into account increases in value resulting from inflation.

Initial Public Offering (IPO). The process by which a private company advertises and sells shares of stock in order to become publicly held.

Inland Marine Insurance. A form of insurance that provides protection for goods shipped on land and coverage for commercial and personal property floater risks.

Innocent Capacity. See Naïve Capacity.

Inside Build-Up. The tax-deferred accumulation value of permanent life insurance policies and annuity contracts.

Insolvency Fund. See Guaranty Fund.

Insurability. The availability of coverage to an applicant for insurance.

Insurable Interest. The principle that an insured must suffer an actual loss in order to make a claim under an insurance policy.

Insurance. An arrangement in which an insured passes risk and obligations to an insurer for the payment of a premium.

Insurance Accounting and Systems Association (IASA). A Durham, North Carolina-based organization that researches and disseminates information regarding insurance accounting and statistics.

Insurance Cycle. See Underwriting Cycle.

Insurance Guaranty Fund. See Guaranty Fund.

Insurance Information Institute (III). A New York City-based educational and public relations organization representing primarily property-casualty insurers.

Insurance Regulatory Information System (IRIS) Tests. A set of eleven financial ratios developed from financial information filed annually by most insurers to serve as an early warning system to identify problems and trends in financial solvency. When a financial ratio falls within the parameters designated by each IRIS Test, it is designated a "usual value"; those falling outside such parameters are designated "unusual values." For a more detailed discussion of the IRIS Tests, see Chapter 12.

Insurance Services Office (ISO). A New York City-based rating organization that prepares forms and provides loss cost data for property-casualty insurers.

Insured. A purchaser of insurance; one who enjoys protection under an insurance policy; also known as a policyholder.

Insured Life. The person on whose life a life insurance policy is issued.

Insurer. A person or entity that provides insurance.

Integrated Delivery System (IDS). See Community Care Network.

Integration. The coordination of disability income insurance benefits with Social Security payments and other disability income benefits to provide income maintenance.

Interest Maintenance Reserve (IMR). A reserve established in interim form by the National Association of Insurance Commissioners in December, 1991. IMR was established as a liability on a life insurer's statutory financial statements beginning in 1992. IMR applies to all fixed-income investments and captures the net gains realized from the sale of such investments and from interest rate changes and will amortize them over the remaining life of the instrument.

Interest-Sensitive Life Products. Life insurance policies in which interest earned in excess of a stipulated amount is credited to the policy.

Intermediary. A broker, agent or other entity through which insurance arrangements are established.

Invested Assets. Those assets of an insurance company that are invested in cash, bonds, common and preferred stock, mortgages and real estate.

Investment Expense Ratio. The ratio of an insurer's investment expenses to net premiums earned.

Investment Expenses. The expenses incurred by an insurer in connection with the management of its investment portfolio.

Investment-Grade Securities. For insurers, this term refers to fixed-income securities held in an insurer's investment portfolio with a Class (2) or higher rating by the Securities Valuation Office of the National Association of Insurance Commissioners.

Investment Income Ratio. The ratio of net investment income to earned premiums. May also include other income.

IPA. See Individual Practice Association.

IPO. See Initial Public Offering.

IPGP. See Immediate Participation Guarantee Plan.

IRA. See Individual Retirement Account.

IRIS. See Insurance Information Regulatory System Tests.

Irrevocable Beneficiary. The beneficiary under a life insurance policy not subject to change by the owner without consent of the beneficiary.