Chapter 1: Overview of Insurance Operations Flashcards
1
Q
Principal Function of Every Insurer
A
The acceptance of risks that others transfer to it through the insurance mechanism
2
Q
P/C Insurers Classifications
A
- Legal form of ownership
- Place of incorporation
- Licensing status
- Insurance distribution systems and channels
3
Q
Legal Form of Ownership
A
-Proprietary Insurer
For the purpose of earning a profit for its owners
- Coopetative Insurer
Owned by policyholders
4
Q
Insurance Distribution Systems and Channels
A
- Independent agency and brokerage marketing system
- Direct writer marketing system
- Exclusive agency marketing system
5
Q
Insurer Goals
A
- Earn a profit
- Meet customer needs
- Comply with legal requirements
- Diversify risk
- Fulfill their duty
6
Q
Internal Constraints
A
- Efficiency
- Expertise
- Size
- Financial resources
- Other internal constraints
7
Q
External Constraints
A
- Regulation
- Rating agencies
- Public opinion
- Competition
- Economic conditions
- Insurance marketing and distribution
- Other external constraints
8
Q
Measuring Insurer Performance
A
- Meeting profitability goals
- Meeting customer needs
- Meeting legal requirements
- Meeting social responsibilities
9
Q
Meeting Profitability Goals
A
- Premiums and investment incomes
- Underwriting performance
- Overall operating performance (underwriting gains/losses + investment gains/losses)
- Estimation of loss reserve
10
Q
Meeting Customer Needs
A
- Complaints and praise
- Customer satisfaction data
- Insurer’s retention ratio and lapse ratio
- Insurer-producer relationships
- State insurance department statistics
- Consumer reports
11
Q
Meeting Legal Requirements
A
- Sales and advertising
- Underwriting
- Ratemaking
- Claim settlement
12
Q
Core Functions
A
- Marketing and distributions
- Underwriting
- Claims
13
Q
Supporting Functions
A
- Risk control
- Premium auditing
- Actuarial
- Reinsurance
- Information technology
14
Q
Other Common Functional Areas
A
- Investments
- Accounting and finance
- Customer service
- Legal and compliance
- Human resources
- Special investigation units (SIUs)
15
Q
Monitoring Insurer Solvency
A
- Reducing the insolvency risk
- Protecting the public against loss when insurers fail
