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Insurance > Ch. 1 > Flashcards

Ch. 1 Flashcards

1
Q

Actuarial Department

A

The _____ calculates policy rates, reserves, and dividends

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2
Q

Alien Insurer

A

An ______ in the United States is an insurer whose principal office and domiciled location is outside the country

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3
Q

Admitted Insurer

A

An insurer who has received a certificate of authority from a state’s department of insurance authorizing them to conduct insurance business in that state

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4
Q

Broker

A

A ____ represents themselves and the insured (i.e., the client or the customer). Brokers help the client find the right insurance at the right price

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5
Q

Captive Insurer

A

A _____ is an issuer established and owned by a parent firm for the purpose of insuring the parent firm’s loss of exposure

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6
Q

Certificate of Authority

A

A ______ is a license issued to an insurer by a department of insurance (or equivalent state agency), which authorizes that company to conduct insurance business in that particular state

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7
Q

Claims Department

A

The _____ is responsible for processing, investigating, and paying claims

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8
Q

Divisible Surplus

A

_____ is the amount of earnings paid to policy owners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes

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9
Q

Domestic Insurer

A

A _____ is an insurer with its principal or home office in a state where it is authorized

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10
Q

Foreign Insurer

A

A _____ is an insurer with its principal office or domicile location in a state different from the state it is transacting insurance business

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11
Q

Fraternal Benefit Society

A

____ are nonprofit benevolent organizations that provide insurance to its members

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12
Q

Industrial Insurer

A

_____ makes up a specialized branch of the industry, primarily providing policies with small face amounts with weekly premiums. Other names include home service or debit insurers

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13
Q

Insurance

A

The transfer of risk through the pooling or accumulation of funds

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14
Q

Insured

A

The _____ is the customer receiving insurance protection under an insurance policy

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15
Q

Insurer

A

The _____ is the insurance company

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16
Q

Lloyds of London

A

_____ Is NOT an insurer, but a group of individuals and companies that underwrite unusual insurance

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17
Q

Multi-line Insurer

A

A _____ is an insurance company or independent agent that provides a one-stop shop for businesses or individuals seeking coverage for all their insurance needs. For example, many large insurers offer individual policies for automobile, homeowner, long-term care, life, and health insurance needs

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18
Q

Mutual Insurance Companies

A

____are insurance companies characterized by having no capital stock, being owned by its policy owners, and usually issue participating insurance.

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19
Q

Non-admitted insurer

A

A _______ or unauthorized insurer is an insurer who has not received a certificate of authority from a state’s department of insurance authorizing them to conduct insurance business in that state.

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20
Q

Nonparticipating Policy

A

A ______, typically issued by stock companies, do not allow policy owners to participate in dividends or electing the board of directors

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21
Q

Participating Plan

A

A ______ is an insurance policy under which the policy owners share in the company’s earnings through receipt of dividends and also elect the company’s board of directors

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22
Q

Private (Commercial) Insurer

A

______ companies are companies owned by private citizens or groups that offer one or more insurance lines. Commercial insurers are NOT government-owned

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23
Q

Reciprocal Insurer

A

A ______ is an unincorporated organization in which all members insure one another

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24
Q

Reinsurance

A

______ is insurance for insurance companies

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25
Q

Reinsurer

A

A ______ is a company that provides financial protection to insurance companies. They 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. The company assumes the risk.

26
Q

Risk Retention Group

A

A _______ is a group-owned liability insurer which assumes and spreads product liability and other forms of commercial liability risks among its members. only has to be licensed in one state but may insure members in any State

27
Q

Self-Insurer

A

A _____ establishes a self-funded plan to cover potential losses instead of transferring the risk to an insurance company

28
Q

Stock Insurance Company

A

A ______ is an insurance company owned and controlled by a group of stockholders (or shareholders) whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fixed premium, nonparticipating policies

29
Q

Surplus Lines Insurance

A

_______ is nontraditional insurance. They offer coverage for substandard or unusual risks not available through private or commercial carriers

30
Q

Underwriting Department

A

The ______is the department within an insurance company responsible for reviewing applications, approving or declining applications, and assigning risk classifications

31
Q

What year was the McCarran-Ferguson Act enacted?

A

1945

32
Q

At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?

A

Upon completion of the application

33
Q

A nonprofit incorporated society that does not have capital stock and operated for the sole benefit of its members is known as:

A

Fraternal benefit society

34
Q

Dividends payable to a policy owner are

A

Declared by the insurance company

35
Q

An insurance applicant MUST. be informed of an investigation regarding his/her reputation and character according to the:

A

Fair Credit Reporting Act

36
Q

When a policy pays dividends to its policyholders, it is said to be

A

Participating

37
Q

What type of reinsurance contract involves two companies automatically sharing their risk exposure?

A

Treaty

38
Q

A company that only sells one line of insurance

A

Monoline Insurer

39
Q

A stock company may be converted into a mutual company through a process called

A

Mutualization

40
Q

Mutual companies can convert to stock companies through a process called

A

Demutualization

41
Q

In the rare case of a stock insurance company issuing both participating and nonparticipating policies, the company is referred to as using a

A

Mixed plan

42
Q

The company transferring the risk is called the

A

Ceding Company

43
Q

Benefit of Insurance

A

most contracts offered to individuals and organizations in society, including health, property, and casualty policies, are contracts of indemnity whose primary purpose is to pay off financial losses and reimburse the insured

44
Q

Life Insurance

A

creates an instant estate, regardless of when death occurs

45
Q

Private vs Government Insurance

A

Two types of insurance companies

46
Q

Pure assessment mutual company

A

Operates on the basis of loss-sharing by group members. Essentailly divides any risk on a large group of people.

47
Q

In a reinsurance agreement, the insurance company that transfers its loss exposure to another insurer is called the

A

Primary Insurer

48
Q

The Marketing or Sales divisions

A

Are responsible for increasing the number of prospective applicants

49
Q

Sales Department

A

Typically the department completing the application

50
Q

Agents are also classified as:

A

Captive or Career agents and Independent agents

51
Q

Career Agencies

A

Are branches of major stock and mutual insurance companies that are contracted to represent an insurer in a specific area

52
Q

1868-Paul v. Virginia

A

This case, which the U.S. Supreme Court decided, involved one state’s attempt to regulate an insurance company domiciled in another state

53
Q

1944- United States v. Southeastern Underwriters Association (SEUA)

A

Ruled that the insurance industry should be subject to federal regulation.

54
Q

1945- The McCarran- Ferguson Act

A

Entrusts states with the authority and responsibility for the regulation of the business of insurance

55
Q

1958- Intervention by the FTC

A

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

56
Q

1959- Intervention by the SEC

A

The 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 regulations. The SEC regulates variable life insurance

57
Q

1970- Fair Credit Reporting Act

A

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

58
Q

1994- United States Code

A

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

59
Q

1999- Financial Services Modernization Act

A

Act passed by Congress 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

60
Q

2001- Uniting and Strengthening America Act

A

The Patriot Act, which amends the Bank Secrecy Act (BSA), was adopted in response to the September 11, 2001, terrorist attacks. The Patriot Act is intended to strengthen U.S. 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

61
Q

2003- Do Not Call Implementation Act

A

The Do Not Call Registry allows consumers to include their phone numbers on the list to which telemarketers cannot make solicitation calls

62
Q

2010- Patient Protection and Affordable Care Act

A

Often shortened to the Affordable Care Act (ACA), it represents one of the most significant regulatory overhauls and expansions of health insurance coverage in U.S. history

Insurance (20 decks)

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