Chapter 1 Heath/Life Insurance Flashcards
What is a Certificate of Authority?
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.
What is Claims Department?
Responsible for Processing, Investigating and paying claims
Divisible Surplus
Divisible surplus is the amount of earnings paid to policyowners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes.
Actuarial department
The actuarial department calculates policy rates, reserves, and dividends.
Alien Insurer
An Alien Insurer in the United States is an insurer whose principal office and domiciled location is outside the country.
Admitted Insurer
An admitted or authorized insurer is 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.
Broker
A Broker represents themselves and the insured (i.e., the client or customer).
Captive Insurer
A Captive Insurer is an issuer established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure.
Domestic Insurer
A Domestic Insurer is an insurer with its principal or home office in a state where it is authorized.
Foreign Insurer:
A Foreign Insurer is an insurer with its principal office or domicile location in a state different from the state it is transacting insurance business.
Fraternal Benefit Society
Fraternal Benefit Societies are nonprofit benevolent organizations that provide insurance to its members.
Industrial Insurer
Industrial Insurers make up a specialized branch of the industry, primarily providing policies with small face amounts with weekly premiums. Other names for industrial insurers include home service or debit insurers. Worker’s Comp.
Insurance
The transfer of risk through the pooling or accumulation of funds.
Insured
The insured is the customer receiving insurance protection under an insurance policy.
Insurer
The insurer is the insurance company.
Lloyds of London
Lloyds of London is NOT an insurer, but a group of individuals and companies that underwrite unusual insurance.
Multi-line Insurer
A multi-line insurer 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.
Mutual Insurance Company
Mutual Insurance Companies are insurance companies characterized by having no capital stock, being owned by its policy owners, and usually issue participating insurance.
Non-admitted Insurer
A non-admitted or unauthorized insurer 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.
Nonparticipating policy
A nonparticipating insurance policy, typically issued by stock companies, do not allow policyowners to participate in dividends or electing the board of directors.
Participating Plan
A participating plan is an insurance policy under which the policyowners share in the company’s earnings through receipt of dividends and also elect the company’s board of directors.
Private (Commercial) Insurer
Private or commercial insurance companies are companies owned by private citizens or groups that offer one or more insurance lines. Commercial insurers are NOT government-owned.
Reciprocal Insurer
A Reciprocal Insurer is an unincorporated organization in which all members insure one another.
Reinsurance
Reinsurance is insurance that an insurance company purchases from another insurance company to insulate itself from the risk of a major claims event.
Reinsurer
A reinsurer is a company that provides financial protection to insurance companies. Reinsurers 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.
Risk Retention Group
is a type of liability insurance company that allows businesses with similar insurance needs to pool their risks and assume and spread some or all of the liability exposure of its members.
Self-Insurers
A self-insurer establishes a self-funded plan to cover potential losses instead of transferring the risk to an insurance company.
Stock Insurance Company
A stock company is 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.
Surplus Lines Insurance
Surplus Lines Insurance is nontraditional insurance only available from a surplus lines insurer. They offer coverage for substandard or unusual risks not available through private or commercial carriers.
Underwriting Department
The underwriting department is the department within an insurance company responsible for reviewing applications, approving or declining applications, and assigning risk classifications.
Mutilation
The process of a stock company being converted into a mutual company
De-Mutilation
The process of a mutual company being converted into a Stock Company
pure assessment mutual company
operates on the basis of loss-sharing by group members.
ceding company
The company transferring the risk is called the
reinsurer
The company assuming the risk is the
The marketing or sales Division
are responsible for increasing the number of prospective applicants.
The sales department
typically the department completing the application.
Agents are also classified as
captive or career agents and independent agents.
Career agencies
are branches of major stock and mutual insurance companies that are contracted to represent an insurer in a specific area.
Express authority
is the authority a principal deliberately gives to its agent.
Implied authority
is the unwritten authority that is not expressly granted, but which the agent is assumed to have in order to transact the business of the principal.
Apparent authority
is the appearance or assumption of authority based on the principal’s actions, words, or deeds.
Rating Service
is an independent agency’s opinion about the company’s financial strength and ability to pay claims. These ratings are important because they help consumers decide if an insurer can be expected to pay claims.
Reserves
The accounting measurement of the insurer’s future obligations to its policyholders.
Liquidity
how easy it would be for you to access cash from your policy
1945-The McCarran-Ferguson Act.
States that while the federal government has the authority to regulate the insurance industry, it would not exercise that right if the insurance industry was run effectively and adequately by the states.
1970 Fair Credit Reporting Act
Provides individuals privacy protection and fair and accurate credit reporting
