PERSONAL INSURANCE - AUTO Flashcards
1
Q
SECT B: PERSONAL INSURANCE - AUTO
CHARACTERISTICS OF HIGH-RISK DRIVERS
A
a. Violate traffic laws
b. Excessive number of traffic accidents
c. Convicted of driving offenses
2
Q
SECT B: PERSONAL INSURANCE - AUTO
VOLUNTARY MARKET PROGRAMS/NON-STANDARD INSURANCE PROGRAMS FOR HIGH-RISK DRIVERS
COMMON CHARACTERISTICS OF PROGRAMS
A
- Coverage is limited to state’s min financial responsibility/compulsory insurance levels
- Limited medical payments coverage
- High deductible collision insurance
- Safe Driver Insurance Plans (SDIPs)
3
Q
SECT B: PERSONAL INSURANCE - AUTO
RESIDUAL MARKET PLANS
A
- Auto insurance plans/assigned risk (negative connotation)
• Proportionate share of high-risk drivers
• Common characteristics
i. Proof of denied auto insurance within a number of days of application
ii. Limit = state min financial responsibility/compulsory insurance
iii. Ineligible applicants
a. No driver’s license
b. Felon within 36 months
c. Habitual violators of state/local laws
iv. ARP premiums > voluntary market premiums
v. Profit based on performance of assigned risk - Joint underwriting associations (JUAs)
• JUA designates servicing insurers to handle high-risk auto insurance business
• JUA sets rates & approves policy forms
• Agents & brokers submit applications of high-risk drivers to servicing insurer (or JUA)
• All auto insurers in state proportionately losses & expenses based on % WP of voluntary auto ins - Reinsurance facility for high-risk drivers
• Original insurers set rates & service policies
• Statewide reinsurance pool to which insurers can assign premiums & losses for high-risk drivers
• Insurers in the pool share losses & expenses in proportion to the total auto insurance they write in that state - State fund mechanism (Maryland only)
• State owns the fund but requires all private insurers to subsidize any losses
• Private insurers can recover those losses by surcharging their own insureds
