Basic Principles Flashcards
Commercial Insurer
(or private insurance companies) Businesses that sell insurance for profit.
Stock Companies
(One of the two forms of commercial insurance) Non-participating (because the policyholders do not own the company do not receive company dividends due to profit from stocks and stock dividends)
Mutual Companies
(Second form of commercial insurers)
Participating because the policy owners are the policy holders as well therefore receiving dividends and voting in board directors.
Participating and Non participating
Known as a mixed insurer company.
Fraternal Benefit Societies
Non profit religious, ethnic or charitable organizations that provide insurance solely for their members.
Risk Retention Groups
Mutual companies formed by people in the same group or profession.
Service Providers
Provide benefits in return for premium payments. Ex: PPO’s and HMO’s
Reciprocal Insurers
Unincorporated groups of members that provide annuity insurance to other members therefore being both policyholders and policyowners “reciprocal”
Re-insurers
Passing of insurance to another company that takes on the risk of that policy (The ceding company is the company giving he policy away)
Captive Insurer
Fall back to a parent company’s loss
Home Service Insurers
Insurance for home coverage face amounts are typically small ($1,000 to $2,000) and premiums are paid weekly.
Government Insurance
Federal and State government are also insurers.
Social Security (OASDI)
Income benefits for those that are of old (retirement), survivors of those who died young, and disability qualifiers.
Medicare
Care for the elderly
Medicaid
Health insurance for the financially needy
S.G.L.I & V.G.L.I
Serviceman’s or Veteran’s Group Life insurance for active and retired.
Tri-Care
Health insurance for military members and their fam.
Self-Insurers
Capital saved up by the employer to cover potential losses.
Distribution System
How insurance is sold to the public either through captive agents (One insurance agency) or Independent agents (Sells for themselves or others)
Career Agency Systems
Commercial insurers setting up base to recruit and train other agents.
Personal Producing General Agency System
The inverse of the career agency system where insurance is sold by independent agents
Independent Agency System (American Agency System)
The system in which independent agents operate.
Managerial System
A system of companies ran by a branch manager instead of one general agent at each company.
Industry Oversight and Regulations
The policies and regulations that determine state by state laws with minimal federal oversight.
Oversight Policy: 1869 Paul V Virginia
Insurance transactions crossing state lines are NOT interstate commerce.
Oversight Policy: 1905 The Armstrong Investigation Act
Gave insurance regulation to states instead of the federal government. (Federal government cant “Armstrong” the states lol)
Oversight Policy: 1944 U.S V. South-Eastern Underwriters Association.
Ruled insurance transactions crossing state lines are interstate commerce therefore subject to federal regulation. (Didn’t change power of insurance regulation by the state)
NAIC National of Insurance Commissioners
An organization of commissioners from all 50 states the district of Colombia and 4 us territories
