chapter three- insurance company organization and regulation Flashcards
what is a reciprocal insurer?
share the insurance responsiblities with all other members of the unicorporated group
Who manages a reciprocal?
an attorney in fact who is empowered to handle all of the business of the reciprocal
What is a fraternal benefit society?
it has an open contract without capital or stock that is solely for the benefits of it’s members
it is non for profit
what are the three levels of an insurance agents authority?
- express -allows the agent to countersign, issue and deliver policies
- implied authority (not formally expressed or communicated)
- apparent authority (business cards, stationary)
what is an exclusive or captive agency system?
the insurance company contracs with agencies, which are independent businesses, to represent and sell insurance contracts on a commission basis only for the insurance company
what is a direct writer system?
the insurance companys agents are emloyees of the insurance company. they can receive a salary or be paid by commission or combination of both
what is a direct response system?
there are no agents, these companies sell through direct mail, over the phone, or through the internet
what is an independent agency system?
agencies who work independently with several different companies?
what is a solicitor?
sells insurance and can collect premiums, but CANNOT countersign policies
what is a broker?
represents the insured and does not have the authority to bind an insurer to an insurance contract
what is a nonadmitted company?
not authorized to conduct business in the state under ordinary circumstances
what are the three financial ratios that underwriters use to determine the risk?
- loss ratio (compare operations from year to year)
- expense ratio (cost of doing business)
- combined ratio (sum of the loss ratio and expense ratio)
What is FEMA for?
federal emergency management agency, and National Flood Insurance program all regulated by the government
what is the ISO?
insurance service office which files loss costs and standardized forms on behalf of it’s members
