Chapter 4: Insurance Company Operations Flashcards
Underwriting
The selection and pricing of insurance applications that are offered to an insurer.
Field Underwriting
Done by the agent
Reinsurance
An insurance company (primary insurer) transfers to another insurance company (reinsurer) some or all of the risks it has taken on by writing primary insurance.
Treaty (automatic) Reinsurance
Primary insurer agrees in advance to transfer some types of loss exposures and reinsurer agrees to accept them.
Facultative Reinsurance
Optional for both insurer an reinsurer. Each contract is negotiated.
Claims Settlement Procedures
- Notice of loss is filed
- Insurer investigates the claim
- Policyowner files a proof of loss with insurer
- Insurer pay or denies the claims
Insurance Adjusters (Claims adjusters (4F Rules): Be fair, frank, friendly and firm.) - Agents
Agents can settle small claims and work directly with their clients
Insurance Adjusters
- Company Employees
Company employees who specifically work to settle claims by inspecting, interviewing and consulting.
Insurance Adjusters
- Independent Adjusters
Companies outsource aspects of claims settlement process to independent adjusters who represent insurer.
Insurance Adjusters
- Public Adjuster
Represent members of the public in settling claims.
Rate Making
Establishing the price to be charged for insurance
Rate
Price charged for each unit of coverage
Example: Price per $100 of coverage.
Premium
Price charged for the amount of the coverage the policy provides
Pure (net) Rate
Portion of the rate designed to cover future loss costs.
Gross Rate
Pure rate plus loading (operating costs) added
