Chapter 1 Insurancy Industry Flashcards
Four types of insurers
Joint stock company
Mutual company
Lloyd’s of London
Fraternal societies
Define reinsurance
Insurance bought by insurers to transfer risk
What are the two types of reinsurance?
Proportional - reinsurer shares percentage of Premium
Non-proportional - coverage starts after loss dollar amount
Define Retrocession
When reinsurers purchase reinsurance
Five elements of a legally binding contract
Competent parties Offer and acceptance Legality of object Informed parties Consideration
The three additional elements of insurance contracts
Insurable interest
At most good-faith
Indemnity
What is the difference between void contract and voidable contract
Void equals never existed
Voidable equals contract is in place until the victim chooses otherwise
What losses can be insured?
Future and accidental
Caused by an insurable peril
Direct loss
Indirect loss resulting from a direct loss
Define exclusive agents
Intermediaries who represent one insurer
Define direct Writer
Employed agent of the insured. Only works with one insurer
Define managing Agent/ General agent aka MGA
Represent ensures in one area or program. Can have underwriting, claims handling or accounting powers. Can offer special coverage. Can appoint agents
Define wholesale broker
Specializes in hard-to-place specialty. Can underwrite, issue policy and paying claims
Who is the OSFI? What do they do?
Office of the superintendent of financial institutions. Monitors national insurers for solvency and stability
Who is the PACICC? What do they do?
Property and Casualty Insurance compensation Corporation. Protects consumers if insurer bankrupt.
What are the limits paid out from the PACICC?
Auto and Commercial claims Max 250000
Home claims Max 300,000
70% refund for unearned premiums Max $700 per policy
