Chapter 1 General Insurance Flashcards
What is a Reciprocal Insurance Company
A reciprocal insurance company is a group-owned insurer whose main activity is risk sharing.
is lloyds of london an insurance company.
Lloyds of London is not an insurance company, but consists of groups of underwriters called Syndicates,
what members are typically involved with the Fraternal Benefits Society
Usually organized on a non-profit basis, fraternal benefit societies are primarily social organizations that engage in charitable and benevolent activities that provide life and health insurance to their members. Membership typically consists of members of a given faith, lodge, order, or society.
What does RRG stand for
Risk Retention Group
What are the three types of domiciles
Domestic Insurer –
Foreign Insurer –
Alien Insurer –
Are you able to define and explain each of these domiciles?
– A licensed individual who negotiates insurance contracts with insurers, on behalf of the applicant. represents the applicant or insured’s interests, not the insurer, and thus does not have. who is this
Broker
what is risk
– A condition where the chance, likelihood, probability or potential for a loss exists; Uncertainty concerning a loss.
the company selling during reinsurance is called the what.
the ceding company
the company who purchases from the ceding company during a reinsurance is called the what.
The reinsurer
what are the two types of risk when considering risk managment.
Types of Risk
Speculative Risk
Pure Risk
Are you able to define these types of risk?
What is defined as the cause of a loss.
Peril
Reduction, decrease, or disappearance of value.
Loss - . The basis of a claim for damages under the terms of an insurance policy.
An insured burns down his/her own house to collect the insurance payout. is an example of what hazard
moral hazrd- Dishonest tendencies that increase the probability of a loss; certain characteristics and behaviors of people.
Flammable material stored near a furnace. is an example of what hazard
Physical Hazard - – A physical condition that increases the probability of loss; use, condition, or occupancy of property.
I dont need to lock the house is an example of what hazard.
Morale Hazard – Attitude that increases the probability of a loss.
what does the acronym STARR stand for when it comes to risk
Sharing Transfer Avoidance Reduction Retention
Are you able to explaine what each of these means?
There are 5 elements of fraud, what are they.
- False statement, made intentionally and that pertains to a material fact
- Disregard for the victim
- Victim believes the false statement
- Victim makes a decision and/or acts based on the belief in, or reliance upon, the false statement
- The victim’s decision and/or action results in harm
A rate charged to a group of policyholders who have similar exposures and experience.
Class Rating
A rate based on the policyholder’s actual loss history when compared to the loss history of similar risks.
Experience Rating
A rate used for a policyholder because a large enough pool of similar risks is not available to any other type of rate. It is primarily used for commercial and specialty risks because of the number of unique variables involved
Individual Rating
How is the company loss ratio calculated
Paid losses + loss reserves ÷ total earned premium
Stock Insurance Company offers insurers non participating policies. True or false
True where as Mutual Insurance Companys offer participating policies.
Dividends are not guaranteed from which type of insurance company.
Dividends are not guaranteed from stock or mutual insurance companies.
to assume the financial risk one’s self. This is generally an option only for large companies.
Self-Insurer
