Chapter 1 General Insurance Flashcards
State Commissioner
chief insurance regulator who protects the insuring population by regulating all insurers and insurance professionals doing business in the State
Stock Insurance Company
issues non-participating policies and is owned by stockholders who received taxable corporate dividends as a return of profit
Mutual Insurance Company
issues participating policies and is owned by the policyholders who receive non-taxable dividends as a return of unused premium
Reinsurance
transfer of risk between insurance companies. The reinsurer assumes some or all of the risk of the ceding, or primary, insurance company
Admitted Insurer
authorized to do insurance business in the state and is issued a Certificate of Authority by the state’s Department of Insurance
Underwriting Department
insurance company is responsible for the selection of risks to insure and determines the rate to be charged
Agent/Producer
the employee of an insurance company that owns the agent’s book of business, or an independent agent that enters into agency agreements with more than one insurance company. Independent agent retains ownership of their books of business
Law of Agency
a relationship between two or more parties where one party (the agent or producer) acts on behalf of the other party, known as the principal or insurer
Express Authority
written into the producer’s agency contract
Fair Credit Reporting Act (FCRA)
protects consumer privacy by ensuring that any data collected by an insurer remains confidential, and is accurate, relevant, and used for a proper and specific purpose
Hazard
increases the probability of a loss. The 3 types of hazards are physical, moral, and morale
Principle of Indemnity
does not allow the insured to profit from a loss; instead, it restores the insured to the same financial or economic condition that existed prior to the loss
Insurable Interest
requires the potential for an insured to suffer financial or economic hardship in the event of a loss. Property and casualty insurance must exist at the time of the loss
Insurance Contract
one of adhesion; one party (the insurer) prepares the contract and presents it to the second party (the insured), who must accept it on a “take-it-or-leave-it” basis
Underwriting Factors
determine premium include the nature of the risk, hazards, claims history, and other factors that vary depending upon the risk
