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Flashcards in H4. Hamilton and Ferguson Deck (16):

What types of properties are covered by Beach and Windstorm Plans?

Properties along Atlantic and Gulf coasts vulnerabe to windstorm loss


List some perils covered under FAIR

-Fire, lightning, windstorm or hail, explosion, riot, aircraft, vehicles, smoke, and vandalism or malicious mischief
-Some states include crime, sprinkler leakage, and earthquake


What types of properties are not eligible for Beach and Windstorm plans?

-In poor physical condition or with unrepaired previous damage
-Subject to poor housekeeping
-In violation of law or public policy


What types of properties are eligible for Beach and Windstorm Plans?

-Plans offer coverage only in designated coastal areas
-Each plan requires buildings that are constructed or rebuilt after certain date to conform to applicable building code


Describe how the FAIR plan operates

-Fair plan may operate as a policy issuing syndicate
-For a percentage of premium, servicing carriers will underwrite, service, and settle claims
-Either staff of the FAIR plan or a contracted insurer will handle the above
-In almost all plans, insurers share risk in proportion to market share


List 4 types of residual auto plans

1. Assigned Risk Plans
2. Reinsurance Facilities
3. Joint Underwriting Authorities
4. Maryland Auto Fund


3 exceptions to the rule that cancellation of for beach and windstorm plans are subject to 30 day statutory notice.

1. Non payment of premium
2. Material misrepresentation
3. Evidence of arson at direction of or by the owner/occupant


3 objectives of reinsurance facility

1. Achieve more equitable pricing
2. Improve service
3. Avoid stigma associated with being in an assigned risk plan


Describe how the assigned risk plans work

-When rejected in voluntary market, driver applies for coverage through plan
-Plan assigned application to insurer
-Insurer obligated to accept specified percentage based on market share
-Insurer handes policy as if written voluntarily (receives prem, services, pays losses, retains profit/loss. voluntary insureds subsidize)
-Rates in a state are uniform


Explain how the Reinsurance Facility plan works

-Premiums and losses are ceded to facility
-Producers accept applications for auto insurance and submit to insurer
-insurer can choose to handle submission as voluntary OR cede premium to facility and just service the policy
-When claim occurs, servicing insurer handles and pays claim (reimbursed by facility)
-Operating losses and expenses of the facility are shared by all insurers based on a formula
-Insured cannot readily detect whether he in the shared market
-Rates are not uniform


Explain how the JUA works

-Limited number of servicing insurers are designated to handle all residual auto insurance business
-Servicing carriers get fee out of handling policies
-Applicants found unacceptable to voluntary insurer are forwarded to JUA servicing carrier
-Servicing insurer issues policy, collect premium, provides service, pays claims
-Results of business in pool shared by all insurers based on voluntary market share


Explain how Maryland Auto Insurance Fund works

To be insured must first provide:
-Evidence of cancellation from one insurer
-Evidence that application has been rejected by two other private insurers
-All services, including claims, are handled by personnel of MAIF


List some properties of rates in the JUA

-based on pool experience
-uniform for all servicing insurers
-like assigned risk plans, higher than voluntary market


Describe the operation of Beach and Windstorm plans

-LA and MS use single servicing carrier for UW, services and claims
-Other states, the plan issues and services policies
-In all plans, property insurers share in plan losses according to premium volume


Briefly describe the FAIR Plan

Property owner unable to get coverage through voluntary market applies to FAIR plan via an authorized agent or broker


What types of property are considered to be uninsurable under FAIR?

-Vacant or open to trespass
-In poor physical condition or has unrepaired fire damage
-Subject to poor housekeeping
-In violation of law or public policy
-Not built in accordance with building and safety codes