92 Flashcards
Rating plan
Set of directions that specify criteria of the exposure base, the exposure unit, and rate per exposure unit to determine premiums for a particular line of insurance
Rate
The price of insurance per exposure unit that when multiplied by number if exposure unit, determines premium
Insurance rate consists of
An expected loss component
Underwriting expense constant
Allowance for underwriting profit and contingencies
Expense loading
Element in gross rate that covers the insurers underwriting expense, profits, and contingencies
Pure premium
The amount included in the rate per exposure unit required to pay losses
Pure premium=
Dollar amount of losses incurred in the experience period/number of earned exposure units
Gross rate=
Pure premium/expected percentage of losses and loss adjustment expenses
Manual rate
Rate found in rating manual
Manual premium
Premium developed from applying manual rate
Credibility factor
Factor applied in rate making to adjust for the predictive value of loss data and used to minimize the variations in the rates that result from purely chance variations in losses
Trend factor
Adjustment to loss data for a change in general economic conditions such as inflation
Merit rating plan
Insurance rating plan that increases or decreases manual rates for a particular insured based in that insurers actual or expected loss experience
Retrospective rating plan
Rating plan that increases or reduces the premium for future policy period based on insureds own loss experience during the same policy period
Schedule rating plan
A rating plan that awards debuts or credits based on specific categories such as the care and condition I the premises or the selection and training of employees
Schedule rating plan
Rating plan that awards debuts or credits based in specific categories such as the care and condition of premises or the selection and training of employees. This amount does not generally exceed 25%
What is amount for loading and contingencies?
Usually 5%
Three major goals of rate regulation are to ensure
Rates are adequate, not excessive, and not unfairly discrimitory
Adequate
Rate should be high enough to pay all claims and expenses related to rates
Not excessive rates
Insurers rates should not he excessive
Rates should not be unfairly discriminatory.
Rates can be discriminate but not unfairly
Mandatory rate law
State law under which insurance rates are set by a state agency or rating bureau and all licensed insurers are required to use those rates
Prior approval law
State law under which insurance rates must be approved by the state insurance department before they can be used
File and use law
State Law under which insurance rates must be filed with the state insurance department but can then be used immediately
Use and file law
Insurance rates can be put into effect with filing information subsequently submitted and subject to regulatory review
Flex rating law
State law under which prior approval is required only if the new rates exceed a certain percentage above (and sometimes below) the rates previously filed
Open competition system
A system under which rates do not have to be files with the state insurance department
Admiralty law is
The traditional body of rules and practices relating to commerce transacted at sea, navigation, and general maritime affairs.
An in rem endorsement is a
Maritime endorsement that extends coverage to defendants in a vessel belonging to the insured, rather than just the named insured
A right of sailor is maintenance which is
A remedy for injured sailors and crew members to receive food and lodgining
A right of sailors is cure which is
A remedy for insured sailors and crew members to receive medical care, encompassing hospital and rehabilitation
Comparative negligence
Is a defense to negligence that apportions damages to respective degree of fault within plaintiff and defendant.
FELA - federal employees liability act
Provides comp regards to fault. Comparative negilgence. Interstate railroad workers are covered
DOHSA - death on high seas act
Allows for recovery of a person caused by wrongful act, neglect or default occurring in high seas beyond maritime league from the shore of any state. DOHSA applies only to death occurring more than three nautical miles (1 nautical mile = 6080 feet) from shore of any state. The Jones act covers the 3 miles of land before that.
Jones Act
Injured sailors have additional recourse and can sue the shipowner for damages caused by negligence in operating the ship
LHWCA - United States Longshore and Harbor Workers’ Compensation Act
Federal statute that eliminates right of maritime workers to sue employers. It requires such employers to provide injured or ill workers with benefits like WC for injury and illness. LHWCA does not include “a master or member of a crew of any vessel.” They can seek remedies from Jones Act
Seaman status test has four elements
- Vessel must be in navigation
- The worker must have been employed as a master or member of the crew and must call for service on a vessel.
- The employee must have a more or less permanent connection with the vessel.
- Worker’s duties must contribute to function of vessel or accomplishment of it’s mission.
A seaman is not considered one if they spend less than ___% of his or her time in service of a vessel in navigation
30%
What is navigable waters?
A body of water is navigable if it, by itself or by uniting with other waterways, forms a continuous highway capable of sustaining interstate or foreign commerce.
The term “vessel” encompasses
most types of man-made floating objects as well as ships transporting passengers or cargo and fishing boats. This could include barges, dredges and the like.
An injured worker can recover for damages such as
medical, pain and suffering, lost earnings, mental anguish, past and future economic loss, and impaired enjoyment of life.
An injured workers can not recover for loss of
consortium (love, companionship, and affection).
What is stevedoring?
The loading and unloading of vessels
LHWCA covers all maritime employees. What is considered a maritime employee?
Maritime employment covers employees engaged in longshoring, harbor work, ship repair, shipbuilding, and ship-breaking in navigable waters except master or members or the crew of a vessel.
Maritime employees do not include
- individuals employed exclusively to perform office clerical, secretarial, security, or data processing.
- individuals employed by a club, camp, recreational operation, restaurant, muesuem, or retail outlet
- individuals employed by a marina and who are not engaged in construction, replacement, or expansion of such marina (except routine maintanenance)
- individuals who are employed by suppliers, transporters, or vendors, temporarily doing business, not engaged in work normally performed by employees
- aquaculture workers
- individuals employed to build, rapir, or dismantle any recreational vessel under 65 feet in length.
- a master or member of a crew of any vessel
- any person engaged by a master to load or unload or repair any small vessel under eighteen tons net.
terminal operations
cargo handling activities associated with stevedoring
What is considered a small vessel?
a commercial barge under 900 lightship displacement tons and tugboats, towboats, crew boats, supply boats, fishing vessels under 1600 tons gross
What is ships displacement?
Empty vessels weight measured in long tons (2240 pounds)
What is a vessel’s gross tons (long tons)?
measurement of volume of vessel’s enclosed spaces, counting each 100 cubic feet as one gross ton.
What is shipbreaking?
All facets of scrapping a vessel from striping non ferrous fittings, reducing hull to convenient size, moving and pulling scrap
What are the two tests that are used to determine LHWCA coverage?
A status and situs test
What is a status test?
The test to determine maritime employment. The worker’s shoreside presence is merely incidental to work on the water. If it is, the worker retains employee status while ashore.
What is a situs test?
Claimants locatin at time of injury must be on navigable waters or certain adjoining areas.
What is a dry dock?
A dock from which water can be pumped out and that is used for building ships or for repairing ships below their waterline. This includes floating dock and graving dock and cranes, scaffolds, etc with them
What is a building way or marine rail way?
This is the land adjacent to incline or track system devoted to construcing or reparing vessels
In stevedoring, there are penalty rates for handling
raw hides, soda ash, old bones, acids, ammunition, and explosives
Is OT excluded in Stevedoring
Exclusion of overtime pay does not apply to payroll assigned to any classification under the caption “stevedoring” with a code number followed by the letter F.
Robbery is?
The unlawful taking of property from care and custody of a person by one who has caused or threatened that person bodily harm
Burglary is
The unlawful taking of property from inside a building by unlawful entry or exit, signs of force-able entry or exit must be visible
What is embezzlement
The unlawful taking of money or property by a person to whom it has been entrusted
Fideility agreement
covers loss caused by dishonest or fraudulent acts committed by employees
Suretyship is?
obligation of one entity to answer for debt, default, or miscarriage of performance of duties by another entity
segregation of duties
processes that ensure no one individual has physical and system access to control all phases of business process or transaction
Book value (net depreciated value)
assets historic cost minus accumulated depreciation
depreciation is
a noncash expense used to allocate cost of long term assets over multiple accounting periods
Actual cash value is
replacement cost of a property minus its physical depreciation
Replacement cost
is the amount required to replace lost, damage, or destroyed property with comparable property
coinsurance clause
requires the insured to carry insurance equal to at least a specified percentage of insured propertys value
Loss payable =
[limit of insurance/(value of covered property x coinsurance %)]* amount of covered loss} - deductible
Value reporting form (CP 13 10)
a commercial property form that bases insured’s premium on business property values that insured reports to insurer periodically during the policy period
Insurers payment =
(value reported/actual value) x loss) - deductible
Business income coverage is
coverage for the loss of net income and continuing normal operating expenses during the period of inturruption
Extra expense coverage is
insurance coverage for extra expenses incurred by the named insured to avoid or minimize suspension of operations resulting from direct damage caused by a covered cause of loss.
Extended business income coverage
insurance coverage for business income losses that continue after period of restoration ends, coverage beings when the damaged property has been restored
