Chapter 1 Flashcards
Actuarial department
calculates policy rates, reserves, and dividends
Alien Insurer
in the United States is an insurer whose principal office and domiciled location is outside the country
Admitted Insurer
insurer who has received a certificate of authority from a state’s department of insurance authorizing them to conduct insurance business in that state
Broker
represents themselves and the insured (i.e., the client or customer)
Captive Insurer
an issuer established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure
Certificate of Authority
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
Claims Department
is responsible for processing, investigating, and paying claims
Divisible Surplus
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 with its principal or home office in a state where it is authorized
Foreign Insurer
an insurer with its principal office or domicile location in a state different from the state it is transacting insurance business
Fraternal Benefit Society
are 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
transfer of risk through the pooling or accumulation of funds
Insured
is the customer receiving insurance protection under an insurance policy
Insurer
Insurance company
Lloyds of London
NOT an insurer, but a group of individuals and companies that underwrite unusual insurance
Multi-line Insurer
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
Mutual Insurance Company
are insurance companies characterized by having no capital stock, being owned by its policy owners, and usually issue participating insurance
Non-admitted Insurer
non-admitted 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
Nonparticipating 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
Private or commercial insurance companies 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 one 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
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
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
Surplus Lines Insurance
nontraditional insurance only available from a surplus lines insurer. They offer coverage for substandard or unusual risks not available through private or commercial carriers
Underwriting Department
department within an insurance company responsible for reviewing applications, approving or declining applications, and assigning risk classifications.
