BasicPrinciple Flashcards
(29 cards)
Producers
Refers to a full range of individuals who solicit insurance products to the public such as: Agents, Brokers, solicitors and Service Representatives.
Insurance
is the transfer of risk from one party to another through a legal contract or the transfer of risk through the pooling (accumulation) of funds.
Multi-Line Insurers
Company that sell more than one line of Insurance
Stock
typically issues nonparticipating insurance policies
Nonparticipating
policies do not allow policyholders to participate in board elections or dividends and instead aim to increase profit for the shareholders.
Mutual Companies
are referred to as participating companies because the policyowners participate in dividends.
Participating
policies allow policyholders to participate in the company by electing the board of directors and receiving dividends from the divisible surplus
Divisible Surplus
is the amount of earnings paid to policyowners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes.
Pure Assessment Mutual Company
operates on the basis of loss-sharing by group members
Risk Retention Group
or risk purchasing group only has to be licensed in one state but may insure members in any state
Reciprocal Insurers
are organized on the basis of ownership by their policyholders
Fraternal Benefit Society
the organization must be nonprofit, have a lodge system that includes ritualistic work, and maintain a representative form of government with elected officers.
Lloyd’s of London
is not an insurer but rather a syndicate of individuals and companies that individually underwrite insurance.
Ceding Company
a company that transfers risk
Reinsurer
a company that assumes risk
In a reinsurance agreement, the insurance company that transfers its loss exposure to another insurer is called
Primary Insurer
The most common reinsurance contract between two insurance companies is called ____ which involves an automatic sharing of the risks assumed
Treaty Reinsurance
An insurer established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure is known as a
Captive Insurer
Surplus Lines
Nontraditional Insurance Market
Industrial Insurance
is characterized by relatively small face amounts with premiums paid weekly.
Self-Insurer
establishes a self-funded plan to cover potential losses
Marketing or Sales
divisions are responsible for increasing the number of prospective applicants.
Sales Department
is typically the department completing the application.
Underwriter Department
is responsible for reviewing applications, conducting investigations to gain additional information about applicants, assigning risk classifications, and approving or declining an application.
