Chapter 1, Section 3 Flashcards
Distribution of Insurance
Name the two major types of insurers operating in Canada
- Private Insurers
- Government Insurers
Explain the difference between proprietary insurers and non-proprietary insurers
Proprietary insurers are insurance companies who exist to make a profit or return on their investment. May be incorporated or unincorporated.
Non-proprietary insurers are insurance companies which are organized for reasons other than profit. They are owned and controlled by their policy holders who have banded together to secure insurance at as low a cost as possible. No stock or share capital involved.
List the two most common distribution systems used by insurers to sell their products:
- Independent Agency/Brokerage System
- Direct Writing System
Outline three features of Independent Agency/Brokerage System
- Owners are not employees of insurers
- Owners responsible for payment of all expenses associated with the business
- Own the business they produce
- Increased responsibility for client services
(May be authorized to quote and issue policies for certain classes of business and handle small property claims in order to reduce the insurers expenses)
Outline three features of Direct Writing System
- Producers are employees of the insurer
- Remuneration of producers may be on either of a salary or commission basis or combination of salary and bonus
- Insurer owns all business written
- Administration function assumed by insurer
Briefly explain the purpose of this organization:
Insurance Bureau of Canada (IBC)
- Collects insurance statistics
- Provides actuarial analysis to member companies
- Drafts policy forms
- Manages inter-company agreements on claims settlements
- Monitors legislation and works with governments in the development of insurance legislation
Briefly explain the purpose of this organization:
Insurer’s Advisory Organization (IAO)
- Provides insurers with risk inspection and advisory rating services. One of Canada’s leading loss control firms
- To ensure that fire safety and security standards are being met
Briefly explain the purpose of this organization:
Insurance Crime Prevention Bureau (ICPB)
- Provides assistance to police authorities in the detection, investigation and prosecution or insurance crimes
- As such, their main activities involve investigating suspected insurance crimes. The following branches have been established to assist them in that mandate:
- Fire Underwriters Investigation Bureau (FUIB)
Crimes relating to fire and other property losses
- Canadian Automobile Theft Bureau
Primary concern is operation of criminal rings involved in the theft of motor vehicles.
Also investigated suspicious individual thefts and automobile fires and assists in identification of stolen vehicles.
Also operates the Casualty Claims Index which records the names of people presenting claims for bodily injury under an automobile policy where the period of claim exceeds four weeks
