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Net Income - The total after-tax earnings generated from operations and realized capital gains as reported in the company's NAIC annual statement on page 4, line 16.

 

Net Investment Income - This item represents investment income earned during the year less investment expenses and depreciation on real estate. Investment expenses are the expenses related to generating investment income and capital gains but exclude income taxes.

 

Net Leverage - The sum of a company's net premium written to policyholder surplus and net liabilities to policyholder surplus. This ratio measures the combination of a company's net exposure to pricing errors in its current book of business and errors of estimation in its net liabilities after reinsurance, in relation to policyholder surplus.

 

Net Liabilities to Policyholder Surplus - Net liabilities expressed as a ratio to policyholder surplus. Net liabilities equal total liabilities less conditional reserves, plus encumbrances on real estate, less the smaller of receivables from or payable to affiliates. This ratio measures company's exposures to errors of estimation in its loss reserves and all other liabilities. Loss-reserve leverage is generally the key component of net liability leverage. The higher the loss-reserve leverage the more critical a company's solvency depends upon maintaining reserve adequacy.

 

Net Premium - The amount of premium minus the agent's commission. Also, the premium necessary to cover only anticipated losses, before loading to cover other expenses.

 

Net Premiums Earned - The adjustment of net premiums written for the increase or decrease of the company's liability for unearned premiums during the year. When an insurance company's business increases from year to year, the earned premiums will usually be less than the written premiums. With the increased volume, the premiums are considered fully paid at the inception of the policy so that, at the end of a calendar period, the company must set up premiums representing the unexpired terms of the policies. On a decreasing volume, the reverse is true.

 

Net Premiums Written - Represents gross premium written, direct and reinsurance assumed, less reinsurance ceded.

 

Net Underwriting Income - Net premiums earned less incurred losses, loss-adjustment expenses, underwriting expenses incurred, and dividends to policyholders.

 

Net Premiums Written to Policyholder Surplus (IRIS) - This ratio measures a company's net retained premiums written after reinsurance assumed and ceded, in relation to its surplus. This ratio measures the company's exposure to pricing errors in its current book of business.

 

Negligence - Failure to use a degree of care which an ordinary reasonable person would use under the given or similar circumstances. A person may be negligent by acts of omission or commission or both.

 

Net Line - The amount, of the original line, which is retained by the reinsured (Net retained line).

 

No Claim Bonuses - see rating

 

No Cure - No Pay Salvage provision whereby no award is paid to a salvor if he is unsuccessful.

 

Noncancellable - Contract terms, including costs that can never be changed.

 

Non-Contribution Clause - A clause providing that the policy does not pay any part of a loss that is covered by another policy in force on the same risk.

 

Non-Disclosure - Failure of the assured or his broker to disclose a material circumstance to the underwriter before acceptance of the risk.  A breach of good faith.

 

Not to Inure Clause - A clause, in a policy, which prohibits the passing of benefit of the insurance to a bailee, or other party who has care of the insured goods (see “Benefit of Insurance Clause”).

 

Notice of Abandonment - A condition precedent to a constructive total loss.  If the assured fails to give notice to the underwriter the loss can be treated only as a partial loss unless an actual total loss is proved.  An underwriter who accepts notice admits liability for the loss.  Notice is not necessary where it would not benefit the underwriter, where the underwriter waives the obligation or in the case of a re-insurance.  Provided the policy incorporates the “waiver” clause, action taken by an underwriter to prevent or reduce the loss is not deemed to be an acceptance of abandonment.