Ch 1 [Associations & Types of Insurers]

Question 1

NAIC is an acronym for__?

Answer 1

National Association of Insurance Commissioners

Question 2

FIO stands for?

Answer 2

Federal Insurance Office

Question 3

What are the characteristics of NAIC

Answer 3

Consists of all state and territorial insurance commissioners or regulators.
Provides resources, research, legislative and regulatory recommendations and interpretations for state insurance regulators.
Promotes uniformity among states and members may accept or reject recommendations.

Question 4

What are the characteristics of the FIO

Answer 4

Monitors the insurance industry and identifies issues and gaps in the state regulation of insurers.
Monitors access to affordable insurance by traditionally undeserved communities and consumers, minorities, and low-and moderate income persons.
Not a regulator or supervisor
Insurance is primarily regulated by the individual state
Established by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Question 5

Owned by stockholders
Dividend is a return of profit
Receive taxable corporate dividends
Non participating policies issued
Directors and officers direct the company operations and are elected by stock holders

Answer 5

Stock Insurer

Question 6

Owned by policy holders
Policy dividends are returned to policy holders as a return of excess premium
Dividends can not be guaranteed ans are not taxable
participating policies issued

Answer 6

Mutual Insurer

Question 7

Characteristics Of a Reciprocal Insurer

Answer 7

Group owned insurer,
Main activity is risk sharing
Each member is know as a subscriber
Exchange is run through an attorney in fact
If premiums are insufficient an assessment of additional premium can be made.

Question 8

Characteristics of Lloyds of London

Answer 8

Group of syndicates who specialize in particular risk
Not an insurance company by definition
Provides meeting place for syndicate members to transact business
Member liable for each rick they assume

Question 9

Social organization engaging in charitable activities
provides life insurance to its annuities to members
Non profit organizations based on lodge or fraternal system
Offers insurance to members only

Answer 9

Fraternal Benefit Society

Question 10

Characteristics of a Risk Retention Group

Answer 10

Group owned insurer spreading liability risk of members with similar need
Each member assumes a portion of the risk
Group must have a large number of homogeneous units
Must have sufficient liquid assets to meet obligations
Self Insurer; Assuming financial risks of ones self. Generally only for large companies who may even re-insure for risks above certain maximum limits.