Chapter 5 Vocab (Text) Flashcards Preview

Risk and Insurance > Chapter 5 Vocab (Text) > Flashcards

Flashcards in Chapter 5 Vocab (Text) Deck (25):
1

Stock Insurer

corporation owned by stockholders

2

Mutual Insurer

corporation owned by the policyholders

3

Advance Premium Mutual

owned by the policyholders; there are no stockholders, and the insurer does not issue acceptable policies.

4

Assessment Mutual

the right to assess policyholders an additional amount if the insurer's financial operations are unfavorable

5

Fraternal Insurer

a mutual insurer that provides life and health insurance to members of a social or religious organization

6

Demutualization

means that a mutual insurer is converted into a stock insurer

7

Holding Company

company that directly or indirectly controls an authorized insurer

8

Lloyd's of London

not an insurer, but the world's leading insurance market that provides services and physical facilities for its members to write specialized lines of insurance

9

Reciprocal Change

Also called an interinsurance exchange, can be defined as an unincorporated organization in which insurance is exchanged among the members (called subscribers)

10

Captive Insurer

an insurer owned by a parent firm for the purposes of insuring the parent firm's loss exposures

11

Savings Bank life Insurance (SBLI)

life insurance that was sold originally by mutual savings banks in three states: Massachusetts, New York, and Connecticut

12

Express Authority

refers to the specific powers that an agent receives from the insurer

13

Implied Authority

the agent has the authority to perform all incidental acts necessary to exercise the powers that are expressly given

14

Apparent Authority

the authority the public reasonably believes the agent possesses based on the actions of the principal

15

Binder

temporary insurance until the policy is actually written

16

Broker

Someone who legally represents the insured

17

Nonadmitted insurer

insurer not licensed to do business in the state

18

Surplus Lines Broker

a special type of broker who is licensed to place business with a nonadmitted insurer

19

Personal Selling Distribution Systems

systems in which commissioned agents solicit and sell life insurance products to prospective insureds

20

A Personal-Producing General Agent (PPGA)

independent agent who receives special financial consideration for meeting minimum sales requirements

21

Direct Response System

marketing system by which life and health insurance products are sold directly to consumers without a face to face meeting with an agent

22

Exclusive Agency System

the agent represents only one insurer or a group of insurers under common ownership

23

Direct Writer

an insurer in which the salesperson is an employee of the insurer, not an independent contractor

24

Multiple Distribution Systems

To increase profits, many property and casualty insurers use more than one distribution system to sell insurance

25

Mass Merchandising

plan for selling individually under written property and casualty coverages to group members