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General Insurance Flashcards

(80 cards)

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1
Q

Fair Credit Reporting Act

A

Protects Consumer privacy and from overly intrusive information collection practices.

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2
Q

Actuarial Department

A

Gathers and interprets statistical information used in rate making. An actuary determines the probability of loss and sets premium rates.

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3
Q

Mutual Insurance Company

A

Insurance company owned by policyholders (who may be referred to as members )

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4
Q

Estoppel

A

Judicial denial of a contractual right based on prior actions contrary to what the contract requires

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5
Q

Distribution Models

A 
Exclusive or captive Agency System 
Direct writing System 
Independent agency 
Career agency system 
Personal producing General Agent 
Direct Mail or Direct Response Company 
Mass Marketing
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6
Q

National Association of Insurance Commissioners. (NAIC)

A

Consists of all state and territorial insurance commissioners or regulators.
Provides resources,research,legislative and regulatory recommendations and interpretations for state insurance regulators.
Promotes uniformity among states
NAIC has no legal authority to enact or enforce insurance laws

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7
Q

Risk Sharing Plan

A

Insurers agree to apportion among themselves those risks that are unable to obtain insurance through normal channels

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8
Q

Law of Large Numbers

A

The larger the number of exposures considered , the more closely the losses reported will equal the probability of loss

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9
Q

McCarran-Ferguson Act of 1945

A

Established that the federal government will not regulate the business of insurance in areas which states have historically had the authority to do so unless the states fail to cooperate

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10
Q

Legal Purpose

A

All parties to a contract must enter in for a legal purpose ;public policy cannot be violated by a legal contract.

All parties to a contract must enter it in good faith

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11
Q

Financial Ratings Services

A

Independent financial rating services that evaluate and rate the claims paying ability and financial stability of insurance companies

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12
Q

Violent Crime Control and Law Enforcement Act of 1994

A

The act made it a felony for a person to engage in the business of insurance after being convicted of a state or federal felony crime involving dishonesty or breach of trust

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13
Q

Hazard

A

A specific situation that increases the probability of a loss arising from a peril or that may influence the extent of the loss

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14
Q

Joint Underwriting Association or Joint Reinsurance pool

A

Requires insurers writing specific coverage lines in a given state to assume their share of profits /losses of the total voluntary market premiums written in that state

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15
Q

Self-Insurer

A

Self-Insurer assume all of the financial risk faced without transferring that risk to an insurer

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16
Q

Reasonable Expectations Doctrine

A

What a reasonable and prudent. Policy owner would expect. The reasonable expectations of policy owners are honored by the courts although the strict terms of the policy may not support these expectations

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17
Q

Direct Writing System

A

Producer or agent is an employee of the insurer
Insurer owns the accounts
The agent may be paid a salary , salary bonus or commission

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18
Q

Competent Parties

A

All parties to a contract

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19
Q

Valued contract

A

A policy which pays a pre-determined amount when a claim is made

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20
Q

Independent Agency

A

An agent or agency that enters into selling agreements with more than one insurer
Agency retains ownership of the business written
An independent contractor that is paid a commission and covers the cost of agency operations

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21
Q

Loss

A

Reduction , decrease, or disappearance of value.

A loss is the basis of a claim under the terms of an insurance policy

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22
Q

Implied Authority

A

Authority the public assumes the producer has. Example providing quotes , completing applications , and accepting premiums on behalf of the insurer

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23
Q

Claims Department

A

Assists the policy holder insured or beneficiary in the event of a loss and processes and pays the amount of the claim

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24
Q

Physical Hazard

A

A physical condition that increases the likelihood or probability of loss.

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25
Insurable interest
The potential for an insured or beneficiary to suffer a financial or economic hard ship in the event of a loss
26
Surplus Lines Insurance
Finds coverage when insurance cannot be obtained from admitted insurers
27
Gramm- Leach- Bliley Act
allows the merger of banks , securities companies, and insurance companies
28
Career Agency System
Agents are recruited , trained and supervised by either a managing employee or general agent who is contracted with the insurance company
29
Risk
A condition in which a chance of loss exists
30
Admitted insurer
An insurer that is authorized and has a certificate of Authority to do business in a state
31
Tort Law
Torts are civil wrongs , they are not crimes or breaches of contract They result in injuries or harm that constitute the basis of a claim by a third party
32
Certificate of Authority
Authorization granted by a department of insurance to an agency or insurer to transact insurance in this state
33
Domicile
An insurer organized under the laws of this state wether or not it is admired to do business . Incorporated
34
Conditional Contract
Both parties to a contract must perform certain duties and follow rules of conduct to make contract enforceable the
35
Express Authority
Authority that is written into the producers contract An example would be he producers binding authority if written in the contract A producers contract may also express what the producer may not do , such as creating his her own advertisements
36
Parol Evidence Rule
A written contract may not be altered without the written consent of both parties
37
Insurability
The ability of an individual to meet an insurers underwriting requirements
38
Foreign Insurer
Insurer organized under laws of another state etc . Ether it’s is admitted to do business in the state
39
Peril
A specific cause of a loss
40
Hold Harmless Agreement
A contractual agreement that transfers the liability of one party to another party .
41
Commissioner
The State Commissioner is the chief insurance regulator and has the power to issue rules and regulations to enforce state insurance statues
42
Direct Mail or Direct Response Company
Insurers who sell insurance policies directly to the public with licensed employees
43
Consideration
Insurers payment of premium in exchange for the insurers promise to pay benefits
44
Representations
Statements made are said to be true to the best of the applicants knowledge and beliefs
45
Federal Insurance Office | FIO
Monitors access to affordable insurance by low inc me communities and identifies issues or gaps in state regulations
46
Contract of Adhesion
One party prepares a contract and submits it to the other party on a take it or leave it basis
47
Apparent Authority
Authority created when the producer exceeds the authority expressed in the agency contract
48
Concealment
The withholding of known facts , that could change the decision
49
Aleatory Contract
Parties to a contract exchange unequal amounts of money
50
Marketing / Sales Department
Responsible for advertising and selling
51
Reinsurance Companies
Are insurance companies that operate to accept all or a portion of the financial risk of loss from the primary insurance company
52
Insurable Risk Requirements
``` Large number of homogenous units Calculable Loss must be measurable Premiums must be affordable Loss must be accidental Cause financial hardship Excludes war , nuclear attacks and illegal acts ```
53
Misrepresentation
A false statement in the application that render a contract void
54
Contract Law
Pertains to the formation and enforcement of contracts
55
Reciprocal Insurance Company
A reciprocal a group owned insurer whose main activity is risk sharing
56
Residual Markets
Are a last resort private coverage source for businesses and individuals who have been rejected by the voluntary insurance market.
57
Admitted vs non-Admitted
Refers to wether or not an insurer is approved to write business in this state
58
Fraud and False Statements
Any person who knowingly presents false or fraudulent information
59
Moral Hazard
Dishonest tendencies that increase the probability of a loss
60
Principle of Indemnity
Concept that an insured is restored to the same financial condition as prior to the loss
61
Pure Risk
Situations where only the chance of loss and no chance for gain exists
62
Unilateral Contract
Only one party is legally bound to contractual obligations after the premium is paid
63
Morale Hazard
An attitude of indifference toward the risk of loss that increases the probability of a loss occurring
64
Adverse Selection
The tendency of more bad risks than good risks to purchase and maintain insurance
65
Personal Contract
A contract that cannot be assigned
66
Lloyd’s of London
Consists of groups of underwriters called syndicates each specialize in insuring a type of risk.
67
Warranties
Statements made on the application that are guaranteed to be true
68
Personal producing general agent
Sells insurance for carriers it is contracted with and maintains its own office and staff
69
Alien Insurer
An insurer organized outside the country
70
Trade and Regulatory Associations
NAIC and FIO
71
Insurer (principle )
The insurer is the source of the authority in which the producer / agent must abide
72
Underwriter
Responsible for selection of risk by determining insurability . Along with class , risk , premium,
73
Speculative Risk
Instances when there is a chance of gain
74
Fraternal Benefits societies
Charitable Societies that provide its members insurance
75
Elements of a legal Contract
Competent parties Legal purpose Agreement Consideration
76
Indemnity Contract
A contract pays a specified dollar amount not to exceed the amount loss
77
Law of Agency
A relationship between two parties where one may act on behalf of the other and bind the actions or words of the principle
78
Risk retention group
A grouped owned insurer that spreads its risk amongst its members and is owned by its policy holders
79
(AML) Act and Anti -Money Laundering
This act states which financial institutions must give anti money laundering training to its employees . Such as insurance companies
80
Waiver
Voluntary surrender of a known right , claim or privilege

Insurance License (1 decks)

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