Chapter one intro insurance Flashcards
Five functions of insurance
Spread of risk
Basis of credit system
Eliminates worry encourages entrepreneurship
Loss prevention Reduce worry
Source of employment
Definition of insurance
A means of shifting financial responsibility for a loss
Payment will be made only in the event of the happening of a certain risk or peril
The amount of the payment is restricted to the amount required to idemnify the insured
Insurance covers losses to which the object of insurance may be exposed
The indemnity provided can be in the form of money or other thing of value
Types of general insurance
Automobile
Liability
Property
Organizations of insurance
Stock companies
Mutual
Government
Private Insurers
stock Commpanies
Mutual Companies
Government Insurers
Explain Stock Companies
money comes from private funds or public sale of stock.
ownership in the hands of the companies shareholders
Explain Mutual Company
owned by its policyholders
money refunded to policyholder through dividends or rate adjustments
Government Insurers
Federal and provincial government provided various plans
ie medical insurance
employment insurance
workers coimpensation
How is insurance distributed
Direct Writing system
Independent brokerage system
Agency sysyem
Direct Writing System
limited to selling only those products by the insurer
insure owns the business
performs all administrative duties
ie belair, rbc insurance desjardin insurance company
Independent Brokage System
brokage owners not employees
represents more than one insurance company
commissions are used to salaries etc
agency System
distinct from brokers and direct writers
represent one insurer and Facility association
small business owners
Lloyds of London
