1.3

Question 1

With Reciprocal Insurance, each member can absorb larger loss by sharing it and through its participation in the reciprocal, it _____________.

Answer 1

pays a lesser amount of loss since it is shared by the other subscribers in the reciprocal.

Question 2

A reciprocal is another form of insurance for a business, corporation or municipality that helps spread the risk and costs of loss. This type of self-insurance is administered by an attorney, called , __________ and is often used by municipalities to ‘cross-indemnify’ each other against potential loss in addition to purchasing formal insurance.

Answer 2

an Attorney in Fact (AIF)

Question 3

The majority of private commercial insurance companies in America are considered to be ____________. While both types of organizations provide insurance to consumers, they differ in how they operate.

Answer 3

either stock or mutual insurance companies

Question 4

A _______ insurance company is a private insurance company that is established to provide insurance to policyowners and to make a profit for its stockholders.

Answer 4

Stock

Question 5

A Stock insurance company is considered to be Non-Par because the insured policyowners do not own the company, nor do they receive any dividends that the company returns. Stock insurers do not issue participating policies; therefore, two groups exist: shareholders and policyowners – although a shareholder could also be a ______.

Answer 5

policyowner