Chapter 1- Basic Principles Flashcards
Actuarial department
calculates policy rates, reserves, and dividends.
an insurer whose principal office and domiciled location is outside the country.
Alien Insurer
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.
Admitted Insurer (or authorized insurer)
broker
A __ represents themselves and the insured (i.e., the client or customer).
an issuer established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure.
Captive Insurer
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.
Certificate of Authority
Claims Department
The ___ ___ is responsible for processing, investigating, and paying claims.
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.
Divisible Surplus
is an insurer with its principal or home office in a state where it is authorized.
Domestic Insurer
is an insurer with its principal office or domicile location in a state different from the state it is transacting insurance business.
Foreign Insurer
Fraternal Benefit Societies
- mutual company
- nonprofit religious, ethnic or charitable organizatins that provide insurance solely to their members
primarily provide policies with small face amounts & premiums are paid weekly
Industrial Insurer
(home service or debit insurers)
The transfer of risk through the pooling or accumulation of funds.
Insurance
is the customer receiving insurance protection under an insurance policy.
Insured
The ___ is the insurance company.
Insurer
Lloyds of London
is NOT an insurer, but a group of individuals and companies that underwrite unusual insurance.
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.
Multi-line Insurer
are insurance companies characterized by having no capital stock, being owned by its policy owners, and usually issue participating insurance.
Mutual Insurance Company
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.
Non-admitted Insurer (or unauthorized insurer)
typically issued by stock companies, do not allow policyowners to participate in dividends or electing the board of directors.
Nonparticipating policy
Participating Plan
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.
are companies owned by private citizens or groups that offer one or more insurance lines.
- NOT government-owned.
Commercial (Private) Insurer
is an unincorporated organization in which all members insure one another.
Reciprocal Insurer
is the acceptance by one or more insurers of a portion of the risk underwritten by another insurer who has contracted for the entire coverage.
Reinsurance
A ___ is a company that provides financial protection to insurance companies.
- 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.
Reinsurer
a group-owned liability insurer which assumes and spread product liability and other forms of commercial liability risks among its members.
- insure people in the same business, occupation or profession (dentists, pharma
Risk Retention Group
establishes a self-funded plan to cover potential losses instead of transferring the risk to an insurance company.
Self-Insurers
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.
Stock Insurance Company
They offer coverage for substandard or unusual risks not available through private or commercial carriers (nontraditional insurance)
Surplus Lines Insurance
the department within an insurance company responsible for reviewing applications, approving or declining applications, and assigning risk classifications.
Underwriting Department
are the accounting measurement of an insurer’s future obligations to its policyholders. They are classified as liabilities on the insurance company’s accounting statements since they must be settled at a future date.
Reserves
indicates a company’s ability to make unpredictable payouts to policyowners.
Liquidity
