Chapter 1 Flashcards
What are Reserves
An accounting measurement of an insurer’s future obligations to its policy holders.
Liquidity
A companies ability to make unpredictable payouts to policy owners.
What is a “Private Insurance Company”?
A commercial company that sells annuities and primarily life insurance along with others such as health insurance or property and casualty insurance.
What is a “Stock Company”?
A non-participating, private organization with the purpose of making profit for it’s stockholders.
-Policy holders do not participate in dividends.
What is a “Mutual Company”?
- A participating company where the owners are the policyholders.
- Policyholders participate in dividends.
Define “mutualization”.
When a stock company is converted into a mutual company.
Define “demutualization”.
When a mutual company is converted into a stock company.
Who are the “Lloyd’s of London”?
- An association of people and companies that individually underwrite insurance; help settle claims, disputes, and provide coverage that may not be available in certain areas.
- Alien company
What is a “reinsurer”?
A specialized branch of the industry that takes a portion of risk from one insurance company (ceding company) and transfers it to another insurer (assuming company).
What do “service providers” do?
Offer benefits to a subscriber, such as hospital and medical services, for a fee. They do not sell insurance.
Define “HMO”.
Health maintenance organization where, for a fixed premium, subscribers are able to receive the services of those contracted to work with the HMO.
Define “PPO”.
The preferred provider organization is a group that refers employees or members to these hospitals or physicians in exchange for special services or discounts.
What is the “NAIC”
The “National Associates of Insurance Commissioners” which assists in administration of uniformed stat insurance laws and regulations by promoting efficiency to protect the interests of the policyholders.
What is the “Public Law 15”?
The McCarren-Ferguson Act which states, while the federal government has the authority to regulate the insurance industry, it will not exercise that right if the industry is being run effectively and adequately by the states.
