General

SA.
See Society of Actuaries.

SAA.
See Surety Association of America.

SAP.
See Statutory Accounting Principles.

SBA.
Small Business Administration.

SEC Liability.
The Federal Securities Act of 1933 and the Federal Securities Exchange Act of 1934 place very stringent obligations on those offering stock issues to the public to disclose full information on the offering. If misrepresentations, intended or not, are made, liability can attach to them.

SEUA.
See Southeastern Underwriters Association.

SIR.
See Self-Insured Retention.

Safety Responsibility Law.
See Financial Responsibility Law.

Salvage.
Property taken over by an insurer to reduce its loss.

Schedule P Reserve.
(1) A reserve required in Automobile Liability, other Liability, and Workers Compensation by the NAIC Convention Blank. (2) A formula set up for the calculation of such reserves.

Seasonal Risk.
A risk which is present only during certain parts of the year. Examples might be manufacturing concerns such as canners who have operations only during the summer and seasonal dwellings such as cottages used for vacations.

Securities.
Evidences of a debt or of ownership, as stocks, bonds, and checks.

Securities Act of 1933.
A federal law which requires full and fair disclosure and the use of a prospectus in the sale of securities.

Securities Exchange Act of 1934.
A federal law which requires the registration of companies and agents with the federal government if they are selling securities.

Selection.
The choosing by an underwriter of risks acceptable to an insurer.

Selection of Risk.
See Selection.

Self-Insurance.
Making financial preparations to meet pure risks by appropriating sufficient funds in advance to meet estimated losses, including enough to cover possible losses in excess of those estimated. Few organizations are large or dispersed enough to make this a sound alternative to insurance.

Self-Insured Retention (SIR).
That portion of a risk or potential loss assumed by an insured. It may be in the form of a deductible, self-insurance, or no insurance.

Settlement.
Usually, a policy benefit or claim payment. It connotes an agreement between both parties to the policy contract as to the amount and method of payment.

Sherman Antitrust Act.
An antitrust law from which insurance is exempted to the extent that it is regulated by state law.

Shock Loss.
A catastrophic loss so large that it has a material effect on the underwriting results of a company.

Short Rate Cancellation.
A cancellation procedure in which the premium returned to the insured is not in direct proportion to the number of days remaining in the policy period. In effect, the insured has paid more for each day of coverage than if the policy had remained in force for the full term. Contrast with Pro Rata Cancellation.

Short Rate Premium.
The premium required for issuing a policy for a period less than its normal term.

Short-Term Policy.
A policy written for a period of less time than is normal for that type of policy.

Simple Probability.
See Probability.

Single Limit.
Any insurance coverage which is expressed as a single amount of insurance, or a single limit of liability. Contrast with Split Limit.

Slip.
A paper submitted by a broker to the underwriters at Lloyd's of London which identifies syndicates accepting the risk and notes the extent of their participation.

Social Insurance.
Compulsory insurance legislated to provide minimum economic security for large groups of people, particularly those with low incomes. It is primarily concerned with the costs and loss of income resulting from sickness, accidental injury, old age, unemployment, and the premature death of the head of a family. See also Legislated Coverages and Social Security.

Social Security.
(1) The programs provided under the United States Social Security Act of 1935, plus amendments and additions thereto. It is now called Old Age, Survivors, Disability, and Health Insurance. (2) Any government program which provides economic security for portions of the public, e.g., Social Insurance, Public Assistance, Family Allowances, and Grants-in-Aid.

Society of Chartered Property and Casualty Underwriters.
The society of people who have been awarded the CPCU (Chartered Property and Casualty Underwriter) designation. Its primary purpose is the continuing education of its members. It also encourages insurance research.

Society of Insurance Research.
An organization which encourages insurance research and promotes the exchange of ideas and methods of research.

Sole Proprietorship.
A business enterprise owned by one person who is its manager and employee.

Solicitor.
An individual appointed and authorized by an agent to solicit and receive applications for insurance as his representative. Solicitors are not usually given the power to bind coverage but are required to be licensed.

Solvency.
With regard to insurers, having sufficient assets (capital, surplus, reserves) and being able to satisfy financial requirements (investments, annual reports, examinations) to be eligible to transact insurance business and meet liabilities.

Southeastern Underwriters Association (SEUA).
A Property Insurance rating organization which was the defendant in the 1944 United States Supreme Court decision declaring insurance to be commerce and thus subject to regulation by federal law. This pronouncement was later modified by Public Law 15. See also Public Law 15.

Special Agent.
An insurer's representative in a territory. He services the insurer's agents and in is responsible for the volume and quality of the business written in that territory. In the Property and Liability fields this person is a special agent or marketing representative, and in the Life field he is known as a sales representative.

Speculative Risk.
Uncertainty as to whether a gain or loss will occur. An example would be a business enterprise where there is a chance that the business will make money or lose it. Speculative risks are not normally insurable. Contrast with Pure Risk.

Split Limit.
Any insurance coverage which is expressed in different amounts for different types of losses. For example, automobile liability of 50/100/50 means bodily injury limits of $50,000 per person, $100,000 per accident, and a property damage limit of $50,000 per accident. Contrast with Single Limit.

Stamping Bureau.
See Audit Bureau.

Standard Industry Code (SIC).
This is a coding system which assigns separate codes for different types of industries.

Standard Limit.
See Basic Limit.

Standard Policy.
(1) Coverage which has identical provisions regardless of the issuing insurer. Many common policies are standardized. (2) Insurance issued to a standard risk.

State Agent.
An outmoded term meaning an agent who has an exclusive territory of one or more states. Also, an obsolete term for special agent. See Special Agent.

State Associations of Insurance Agents.
Each state may have one or more associations of insurance agents. These organizations are made up of individual agents who have joined forces to discuss common problems and promote the American agency system.

State Fund.
A fund set up by a state government to finance a mandatory insurance system, such as Workers Compensation, nonoccupational disability benefits, or, in Wisconsin, state-offered Life Insurance. Such a fund may be monopolistic, i.e., purchasers of the type of insurance required must place it in the state fund; or it may be competitive, i.e., an alternative to private insurance if the purchaser desires to use it.

Statement Blank.
See Convention Blank.

Statutory.
Required by or having to do with law or statute.

Statutory Accounting Principals (SAP).
Those principals required by statute which must be followed by an insurance company when submitting its financial statement to the state insurance department. Such principles differ from generally accepted accounting principles (GAAP) in some important respects. For one thing SAP requires that expenses must be recorded immediately and cannot be deferred to track with premiums as they are earned and taken into revenue.

Statutory Earnings (or Losses).
Earnings or losses shown on the NAIC convention blank, in contrast to earnings or losses that would be shown if generally accepted accounting procedure statements were used.

Statutory Reserve.
A reserve, either specific or general, required by law.

Stock Insurer.
An incorporated insurer with capital contributed by stockholders, to whom the earnings are distributed as dividends on their shares. Contrast with Mutual Insurer.

Stock Option Plan.
Surviving stockholders have the option to purchase or not purchase the shares of a deceased stockholder.

Stock Purchase Agreement.
A formal buy-sell agreement whereby each stockholder is bound by the agreement to purchase the shares of a deceased stockholder and the heirs are obligated to sell.

Stock Redemption Agreement.
A formal buy-sell agreement whereby the corporation is bound by the agreement to purchase the shares of a deceased stockholder and the heirs are obligated to sell.

Stop Loss.
Any provision in a policy designed to cut off an insurer's losses at a given point. In effect, a stop loss agreement guarantees the loss ratio of the insurer.

Sub-Agents.
Agents reporting to other agents or agents, and not directly to the company.

Subchapter S Corporation.
A corporate form of business in which all profits and losses are shared by the stockholders and thus the corporation is taxed on an individual basis as opposed to corporate taxation.

Sublimit.
Any limit of insurance which exists within another limit. For example, special classes of property may be subject to a specified dollar limit per occurrence, even though the policy has a higher overall limit; a health insurance policy may limit certain benefits to fixed dollar amounts or maximum amounts per day, even though the overall coverage limit is higher.

Submitted Business.
Applications for insurance submitted to an insurer but not yet acted upon by it.

Subrogation Clause.
A clause giving an insurer the right to pursue any course of action, in its own name or the name of a policy owner, against a third party who is liable for a loss which has been paid by the insurer. One of its purposes is to make sure that an insured does not make any profit from his insurance. This clause prevents him from collecting from both his insurer and a third party. It is never part of a Life Insurance policy.

Subrogation Release.
A release taken by an insurer upon indemnifying an insured. It contains a provision specifying that the insurer will be subrogated to the rights of recovery that the insured has against any person responsible for the loss.

Subscription Policy.
A policy to which two or more insurers may subscribe, indicating in the policy the share of the risk to be borne by each insurer.

Substandard Risk.
A risk not measuring up to underwriting standards. It may still be written but usually at a surcharged premium.

Superintendent of Insurance.
The title of the head of a state or provincial insurance department used in some jurisdictions. In most states the title "commissioner" is used.

Surplus.
The amount by which assets exceed liabilities.

Surplus Lines.
A risk or a part of a risk for which there is no market available through the original broker or agent in its jurisdiction. Therefore, it is placed with nonadmitted insurers on an unregulated basis, in accordance with the surplus or excess lines provisions of the state law.

Surplus to Policyholders.
See Policyholder's Surplus.

Syndicate.
A group of insurers or underwriters who join to insure property that may be of such total value or high hazard that it can be covered more safely or efficiently on a cooperative basis. See also Pool.