CO-INSURANCE, DUAL INSURANCE, SELF- INSURANCE Flashcards
What is co-insurance?
A way of sharing a risk with the insurers + the insured.
What 2 choices does an insurer have when a risk is offered, but the amounts at risk are greater than the insurer’s retention limits for that category?
- Decline to offer insurance for the risk
- Co-insurance
What is reinsurance?
Insurers coming together to form a common pool and agree to jointly underwrite particular risks.
What can co-insurance also refer to?
To the case where the insured agrees to retain part of the risk themselves.
What is dual insurance?
The existence of two or more policies covering the same risk.
What is self insurance?
Where the policyholder decides to carry the risk themselves by setting aside funding.
When does dual insurance usually occur?
Where an aspect of cover provided as part of a package overlaps with a primary cover that has intentionally been purchased to deal with a particular eventuality.
What is reinsurance usually designed to cover?
Catastrophic risks e.g. terrorism
For property insurance, an insurer may agree the rating and terms to be applied with other insurers and issue a….?
…collective policy
What is an excess?
A small fixed sum retained by the insurer
What is the small fixed sum retained by the insurer called?
Excess
What is the large fixed sum retained by the insurer called?
Deductible
What is a deductible?
The large fixed sum retained by the insurer
What is a benefit of risk sharing for insurers?
The policy holder is deterred from making small claims
What can self-insurance ALSO refer to?
The part of a loss that the insured retains.
