Chapter 5 Vocab (Text) Flashcards
Stock Insurer
corporation owned by stockholders
Mutual Insurer
corporation owned by the policyholders
Advance Premium Mutual
owned by the policyholders; there are no stockholders, and the insurer does not issue acceptable policies.
Assessment Mutual
the right to assess policyholders an additional amount if the insurer’s financial operations are unfavorable
Fraternal Insurer
a mutual insurer that provides life and health insurance to members of a social or religious organization
Demutualization
means that a mutual insurer is converted into a stock insurer
Holding Company
company that directly or indirectly controls an authorized insurer
Lloyd’s of London
not an insurer, but the world’s leading insurance market that provides services and physical facilities for its members to write specialized lines of insurance
Reciprocal Change
Also called an interinsurance exchange, can be defined as an unincorporated organization in which insurance is exchanged among the members (called subscribers)
Captive Insurer
an insurer owned by a parent firm for the purposes of insuring the parent firm’s loss exposures
Savings Bank life Insurance (SBLI)
life insurance that was sold originally by mutual savings banks in three states: Massachusetts, New York, and Connecticut
Express Authority
refers to the specific powers that an agent receives from the insurer
Implied Authority
the agent has the authority to perform all incidental acts necessary to exercise the powers that are expressly given
Apparent Authority
the authority the public reasonably believes the agent possesses based on the actions of the principal
Binder
temporary insurance until the policy is actually written
Broker
Someone who legally represents the insured
Nonadmitted insurer
insurer not licensed to do business in the state
Surplus Lines Broker
a special type of broker who is licensed to place business with a nonadmitted insurer
Personal Selling Distribution Systems
systems in which commissioned agents solicit and sell life insurance products to prospective insureds
A Personal-Producing General Agent (PPGA)
independent agent who receives special financial consideration for meeting minimum sales requirements
Direct Response System
marketing system by which life and health insurance products are sold directly to consumers without a face to face meeting with an agent
Exclusive Agency System
the agent represents only one insurer or a group of insurers under common ownership
Direct Writer
an insurer in which the salesperson is an employee of the insurer, not an independent contractor
Multiple Distribution Systems
To increase profits, many property and casualty insurers use more than one distribution system to sell insurance
Mass Merchandising
plan for selling individually under written property and casualty coverages to group members
