chapter 1: general insurance

Question 1

insurance company (known as insurers or carriers)

Answer 1

manufacture and sell insurance coverage in the form of insurance policies or contracts of insurance

Question 2

insurance agencies

Answer 2

captive or independent organizations that recruit, contract with, train and support insurance producers

Question 3

insurance producers

Answer 3

licensed individuals representing and appointed by insurance company when transacting insurance business.

Question 4

an insured

Answer 4

the person or entity that is covered by the insurer, which covers losses due to the loss of life, health, property, or liability

Question 5

an owner

Answer 5

the person responsible for paying the policy’s premium; this person is not necessarily the insured under the policy, but has various rights that are specified in the contract.

Question 6

The National Association of Insurance Commissioners (NAIC)

Answer 6

consists of all state and territorial insurance commissioners or regulators. it provides resources, research, legislative and regulatory recommendations and interpretations for state insurance regulators. Has no legal authority to enact or enforce insurance laws.

Question 7

Federal Insurance Office (FIO)

Answer 7

this office monitors the insurance industry and identifies issues and gaps in the state regulation of insurers. Monitors access to affordable insurance by traditionally underserved communities and, consumers, minorities, and low and moderate income persons.

Question 8

stock insurance company

Answer 8

company is owned by stockholders or shareholders. They may receive taxable corporate dividends as a share of the company’s profit when and if declared by the directors.

Question 9

mutual insurance company

Answer 9

company is owned by policyholders. policyholders may receive a non-taxable dividends as a return of any divisible surplus when and if declared by the directors.

Question 10

treaty

Answer 10

reinsurance agreement that automatically accepts all new risks presented by the ceding insurer (the company seeking or requesting the reinsurance from the reinsurer)

Question 11

facultative

Answer 11

reinsurance agreement that allows the reinsurance company an opportunity to reject coverage for individual risks, or price them higher due to their substandard (higher risk) nature.