Basic Principles Flashcards
Actuarial Department
The Actuarial Department calculates policy rates, reserves, and dividends
Alien Insurer
An Alien insurer in the United States is an insurer whose principal office and domiciled location is outside the country.
Admitted Insurer
An insurer licensed to do business in the state or country in which the insured exposure is located.
Broker
Represents themselves and the Insured (i.e. client or customer
Captive insurer
Is an issuer established and owned by a parent firm for the purpose of insuring the parents firm’s loss exposure.
certificate of authority
a license issued by the state to an insurance company that allows the company to conduct its business.
claims department
The claims department at an insurance company is the section that manages the settling and adjusting of claims. … Determining the amount of money or other compensation to be paid to the insured for insured losses. Investigating claims to determine whether fraud has occurred
divisible surplus
is the amount of earnings paid to policyowners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes
Domestic insurer
an insurer admitted by and formed under the laws under the state in which insurance is written.
home office in a state where it is authorized
Foreign insurer
an insurer domiciled in the United States but outside the state in which the insurance is to be written
Fraternal benefit society
Nonprofit benevolent organizations that provide insurance to its members.
industrial insurer
make up a specialized branch of the industry, primarily providing policies with small face amounts with weekly premiums. Other names for industrial insurers include home service or debit insurers
Insurance
The transfer of risk through the pooling or accumulation of funds.
insured
The insured is the customer receiving insurance protection under an insurance policy
insurer
the insurance company
Lloyds of London
a group of individuals and companies that underwrite unusual insurance
multiple-line insurer
an insurance company that provides coverage against multiple perils
auto, home, long-term, life, and health all from one company
mutual insurance company
insurance companies characterized by having no capital stock, being owned by its policy owners, and usually issue participating insurance.
non-admitted insurer
“unauthorized insurer” is an insurer who has not received a certificate of authority from a stat’s department of insurance authorizing them to conduct insurance business in that state.
nonparticipating policy
insurance policy, typically issued by stock companies, do not allow policyowners to participate in dividends or electing the board of directors
participating plan
is an insurance policy under which the policyowners share in the company’s earnings through receipt of dividends and also elect the company’s board of directors
Private (commercial) insurer
are companies owned by private citizens or groups that offer one or more insurance lines. Commercial insurers are NOT government-owned
Reciprocal Insurer
an unincorporated organization in which all members insure on another
Reinsurance
the acceptance by one or more insurers, called reinsurers, of a portion of the risk underwritten by another insurer who has contracted for the entire coverage
Reinsurer
a company that provides financial protection to insurance companies. Reinsurers handle risks that are too large for insurance companies to handle on their own and make it possible for insurers to obtain more business than they would otherwise be able to
Risk Retention Group
a group-owned liability insurer which assumes and spread product liability and other forms of commercial liability risks among its members
self-insurers
establishes a self-funded plan to cover potential losses instead of transferring the risk to an insurance company
Stock insurance company
a company owned and controlled by a group of stock holders (or shareholders) whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fixed premium, nonparticipating policies
Surplus Lines insurance
nontraditional insurance only available form a surplus lines insurer. They offer coverage for substandard or unusual risks not available through private or commercial carriers.
Underwriting department
the department within an insurance company responsible for reviewing applications, approving or declining applications, and assigning risk classifications
1868 Paul V. Virginia
Case, which the US supreme court decided, involved one state’s attempt to regulate an insurance company domiciled in another state
1944 United States V. Southeastern Underwriters Association (SEUA)
The supreme court ruled that the insurance industry is subject to a series of federal laws, many of which conflicted with existing state laws. As such, insurance is a form of interstate commerce to be regulated by the federal government.
1945 the McCarran-Ferguson Act
Law mad it clear that the states’ continued regulation of insurance was in the publics best interest. however, it also made possible the application of federal antitrust laws to the extent that (the insurance business) is not regulated by state law
1958 intervention by the FTC
the supreme court held that the McCarran -Ferguson Act disallowed such supervision by the FTC, a federal agency. Additional attempts have been made by the FTC to force further federal control, but none have been successful.
1959 intervention by the SEC
Supreme court ruled that federal securities laws applied to insurers that issued variable annuities and, thus, required these insurers to conform to both SEC and state regulation. The SEC regulates variable life insurance.
1970 Fair Credit Reporting Act
requires fair and accurate reporting of information about consumers, including applications for insurance. Insurers must inform applicants about any investigations that are being made upon completion of the application
1994 United States Code (USC) Sections 1033 and 1034. According to 18 U.S.C. 1033 AND 1034
it is a criminal offense for an individual who has been convicted of a felony involving dishonesty or breach of trust to willfully engage or participate (in any capacity) in the business of insurance without first obtaining a “Letter of Written Consent to Engage in the Business of Insurance” from the regulating insurance department of the individual’s state of residence.
1999 Financial Services Modernization Act
Congress passed the financial services modernization act, which repealed the Glass Steagall Act.Under this new legislation, commercial banks investment banks, retail brokerages, and insurance companies can now enter each other’s lines of business.
2001 Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act.
The Patriot Act, which amends the Bank Secrecy Act (BSA), was adopted in response to the 9/11/2001 terrorist attacks. The Patriot Act is intended to strengthen US measures to prevent, detect, and deter terrorists and their funding. The act also aims to prosecute international money laundering and the financing of terrorism. These efforts include anti-money laundering (AML) tools that impact the banking, financial, and investment communities.
2003 Do Not Call Implementation Act
Do Not Call Registry allows consumers to include their phone numbers on the list to which telemarketers cannot make solicitation calls
2010 Patient Protection and Affordable Care Act (PPACA)
Shortened to the Affordable Care Act (ACA, it represents one of the most significant regulatory overhauls and expansions of health insurance coverage in US history
Express Authority
Implied Authority
Apparent Authority
EX…is the authority a principal deliberately gives to its agent
IM…is the unwritten authority that is not expressly granted, but which the agent is assumed to have in order to transact the business of the principal
AP…is the appearance of assumption of authority based on the principal’s actions, words, or deeds.
