LOMA Glossary

The LOMA Glossary of Insurance and Financial Services Terms

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OAS Act. See Old Age Security Act.

OASDHI Act. See Old Age, Survivors, Disability and Health Insurance Act.

occupational rating classes. For purposes of underwriting disability income coverage, groupings of occupations according to the relative degree of risk the occupations present.

Occupational Safety and Health Administration (OSHA). A United States federal agency that develops and enforces mandatory job safety and health standards to reduce safety hazards and health hazards in the workplace.

Office of the Superintendent of Financial Institutions (OSFI). In Canada, a federal regulatory agency responsible for supervising all federally chartered, licensed, or registered insurance companies.

Old Age Security (OAS) Act. A Canadian federal universal public pension plan that provides a pension to virtually all Canadian residents who are age 65 or older, whether or not they have been employed.

Old Age, Survivors, Disability, and Health Insurance (OASDHI) Act. In the United States, federal legislation that protects covered individuals from loss of income resulting from retirement, death, or disability. Commonly known as the Social Security Act.

open contract. A contract that identifies the documents that constitute the contract between the parties, but the enumerated documents are not all attached to the contract. Contrast with closed contract.

open enrollment period. In group insurance, a period of time—typically a specified 30 or 31 days per year—during which eligible people who did not join a group insurance plan at the first opportunity subsequently may join the plan without providing evidence of insurability.

open perils coverage. A type of property insurance that covers all types of losses to the property except for those perils specifically excluded from the coverage. For example, loss due to flooding might be excluded in the policy. Contrast with named perils coverage.

open-end credit. A type of noninstallment credit that allows a person to borrow money repeatedly up to a prearranged limit and to make at least minimum payments, allowing the credit balance to continue to accrue interest. Also known as revolving credit.

open-end investment company. An investment company that remains ready at all times to repurchase its own shares at or near the share’s net asset value. Also known as a mutual fund company.

operating efficiency ratios. See activity ratios.

operating expenses. The costs that a company incurs in conducting its normal business operations. For insurers, costs other than expenses for contractual benefits. Types of operating expenses include development expenses, acquisition expenses, maintenance expenses, and overhead expenses.

operational planning. The process of determining how to accomplish the specific tasks that need to be performed to carry out the organization’s strategic plans. Also known as tactical planning.

operational risk. A broad category of risks originating from a company's (1) inadequate or failed internal processes and controls, people, or systems, or (2) external events.

opportunity cost. A benefit that is forfeited or given up in choosing one decision alternative over another.

opt in. For purposes of information collection and disclosure, a mechanism in the United States that limits the disclosure of information collected in connection with insurance transactions by requiring insurers to obtain written authorization from customers before disclosing the customer's information to third parties. Under opt in, the customer must say, "Yes, it is OK to disclose my information."

opt out. For purposes of information collection and disclosure, a mechanism in the United States that limits the disclosure of information collected in connection with insurance transactions by allowing an insurance customer to direct the insurer not to disclose certain information. Under opt out, the customer must say, "No, please do not disclose my information."

optional insured rider. See second insured rider.

optional modes of settlement. See settlement options.

optionally renewable policy. An individual health insurance policy that grants the insurer the right to refuse to renew the policy for any reason on certain dates specified in the contract and to add coverage limitations and increase the premium rate if it does so for a class of optionally renewable policies. See also cancellable policy, conditionally renewable policy, guaranteed renewable policy, noncancellable policy.

oral specimen (saliva) test. In insurance underwriting, a means of screening a proposed insured for the habitual use of nicotine or cocaine and the presence of HIV antibodies by testing a specimen of the proposed insured’s saliva.

ordinary annuity. A series of equal payments made at the end of each payment period over a fixed amount of time. Contrast with annuity due.

ordinary life insurance policy. See continuous-premium whole life policy.

organizational customer. A business or organization (such as a government, an educational institution, or a charity) that buys a product or service for its benefit or the benefit of its employees or members. Also known as an institutional customer.

organizational market. A market that consists of people, groups, or formal organizations that purchase products and services for business purposes. Also known as the business market.

original age conversion. A conversion of a term life insurance policy to a cash value life insurance policy in which the premium rate for the cash value policy is based on the insured’s age when the original term policy was issued. Contrast with attained age conversion.

orphan policyowner. An insurance policyowner who does not currently have a relationship with a producer.

OSFI. See Office of the Superintendent of Financial Institutions.

OSHA. See Occupational Safety and Health Administration.

OTC market. See over-the-counter market.

other insured rider. See second insured rider.

out-of-pocket maximums. In a medical expense insurance plan, a specified maximum amount that limits the insured person's payment obligations. Once the insured reaches the out-of-pocket maximum, the insurance pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specified amount of time, such as a benefit year.

outsourcing. The process of paying external specialists to handle specified business activities instead of using an organization’s own employees or processes to perform those activities.

overhead expenses. See indirect costs.

overinsurance. An amount of applied-for insurance that, together with in-force insurance, is excessive in relation to the need for which coverage is being purchased.

overinsurance provision. An individual health insurance provision which states that the benefits payable under the policy will be reduced if the insured is overinsured. An overinsured person would be one entitled to receive either (1) more in medical expense benefits than the actual costs incurred for treatment or (2) a greater disability income amount during disability than the amount that would have been earned from working.

override. See overriding commission.

overriding commission. In insurance sales, a sales commission that is paid to the head of an agency office, typically a general agent, on the new and renewal business generated by the agents who work in that office. Also known as an override.

over-the-counter (OTC) market. An electronic communications network over which securities that are not bought and sold on an exchange are traded.

owners' equity. The investment the owner of a company has in the company. For stock insurers, owners’ equity consists of capital and surplus; for mutual insurers, owners’ equity consists only of surplus.

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