Introduction To Insurance Flashcards
(29 cards)
What is a Stock Company?
An insurance company owned by shareholders, aiming to make profits for its stockholders.
What is a Mutual Company?
An insurance company owned by policyholders; profits are returned to policyholders or used to reduce premiums.
What is a Reciprocal Company?
An unincorporated group insuring each other; members are both insureds and insurers.
What is the Board of Directors?
Group responsible for governance and protecting the company owners’ interests.
What is Executive Management?
Officers responsible for day-to-day operations (e.g., CEO, CFO, VPs).
What is the State of Domicile?
The state in which an insurance company is first licensed and organized.
What are Judicial Hellholes?
Jurisdictions perceived as biased against insurers, often leading to costly verdicts.
What is Pro-Forma?
A financial projection used to forecast the future operations of an insurance company.
What does GAAP stand for?
Generally Accepted Accounting Principles; standard accounting rules for public companies.
What is STAT Accounting?
Conservative accounting system focusing on solvency and claim-paying ability.
Who is an Actuary?
A professional who analyzes financial risks using mathematics, often for setting premiums and reserves.
What is the Loss Ratio?
Incurred losses and claim expenses divided by earned premiums.
What is the Underwriting Expense Ratio?
Underwriting expenses divided by earned premiums.
What is the Combined Ratio?
Sum of the loss and underwriting expense ratios; <100% indicates profit.
What is the difference between Admitted and Non-Admitted insurers?
Admitted insurers meet state requirements and are financially backed; non-admitted do not.
What is the Product Development Process?
A five-step method: idea, feasibility, design, launch, monitor.
What is Underwriting?
The process of evaluating and deciding on the acceptance of insurance applications.
What are the Six Steps of Underwriting?
Initial review, request info, determine coverage, price, issue policy, follow-up.
What is Loss Control?
Helps reduce frequency and severity of claims through inspections and recommendations.
What is a Premium Audit?
Post-policy review to determine actual exposure and adjust premium accordingly.
What is a Hard Market?
Insurance market phase with rising rates and restricted coverage.
What is a Soft Market?
Phase with relaxed underwriting and competitive pricing.
What is Reinsurance?
Insurance purchased by insurers to spread risk; includes treaty and facultative types.
What is the Claims Adjustment Process?
RIVER: Report, Investigate, Verify, Evaluate, Resolve.
