Chapter 1 Flashcards
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.
divisible surplus
operates on the basis of loss-sharing by group members.
pure assessment mutual company
only has to be licensed in one state but may insure members in any State
risk retention group
the organization must be nonprofit, have a lodge system that includes ritualistic work, and maintain a representative form of government with elected officers.
fraternal benefit society
syndicate of individuals and companies that individually underwrite insurance
lloyds of London
company transferring the risk is called the
ceding company
company assuming the risk
reinsurer
In a reinsurance agreement, the insurance company that transfers its loss exposure to another insurer is called the
primary insurer
An insurer established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure is known as a
captive insurer
is responsible for reviewing applications, conducting investigations to gain additional information about applicants, assigning risk classifications, and approving or declining an application.
underwriting department
is responsible for processing, investigating, and paying claims for losses incurred by insureds.
claims department
accounting measurement of an insurer’s future obligations to its policyholders
reserves
insurer who has received a certificate of authority from a state’s department of insurance authorizing them to conduct insurance business in that state.
admitted insurer
represents themselves and the insured (i.e., the client or customer).
broker
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.
certificate of authority
insurer with its principal or home office in a state where it is authorized.
domestic insurer
insurer with its principal office or domicile location in a state different from the state it is transacting insurance business.
foreign insurer
make up a specialized branch of the industry, primarily providing policies with small face amounts with weekly premiums
industrial insurer
unincorporated organization in which all members insure one another.
reciprocal insurer
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.
reinsurance
They offer coverage for substandard or unusual risks not available through private or commercial carriers.
surplus lines insurance
