Cook Flashcards
List 3 factors that may classify someone as being a high risk driver:
- constantly violates traffic laws and/or
- has been in a high number of traffic accidents and/or
- has been convicted of serious offences
List some common characteristics of high risk programs in the voluntary market:
- Insurers will often limit the coverage so it is just enough to comply with the states compulsory insurance requirement
- Coverage for medical payments (for the insured) may be limited
- Collision insurance may have a high deductible
- Premium would be significantly higher than it is for average drivers
List 4 groups of programs for insureds in the auto residual market:
- Automobile insurance plans
- Joint underwriting associations (JUAs)
- Reinsurance Facilities
- Maryland State Fund
Briefly describe the structure of Automobile Insurance Plan:
All auto insurers in the state are assigned a portion of the high risk drivers based on their market share of the auto insurance written in the state.
Common characteristics of Automobile Insurance Plan:
- Applicants need to demonstrate that they have been unable to obtain auto insurance within a certain number of days (usually 60)
- The minimum limits of insurance offered are at least equal to the compulsory insurance requirement
- Certain people may be ineligible for coverage
- Premiums are usually higher than in the voluntary market.
Services provided by servicing insurers for the JUA:
- Receive applications
- Issue policies
- Collect premiums
- Settle claims
- Other necessary services
How does JUA acquire business:
Agents/ Brokers submit the applications of the high risk drivers to the JUA or to the servicing insurer.
How are profits/ losses shared in JUA structure:
The auto insurers in the state will pay a share of the underwriting losses and expenses based on their share of the voluntary auto premium in the state.
Briefly describe the structure of a reinsurance facility:
Insurers accept all applicants who have a valid drivers license, issue policies, collect premiums, and settle claims. If the insurer does not wish to retain the policy, it can assign the policy to the reinsurance facility. All of the auto insurers in the state share the underwriting losses and expenses in proportion to the auto insurance premium in the state.
List 2 ways in which a FAIR plan can be structured:
- The plan may be a policy issuing syndicate which issues policies; and its staff handle the underwriting, processing, and possibly claims handling.
- One or more voluntary insurers may act as servicing organizations, and perform the services in return for a portion of the premium.
Conditions to qualify for FAIR plan coverage:
The property must be ineligible in the voluntary market and must have been inspected by a FAIR plan administrator.
5 types of properties are considered to be uninsurable for FAIR:
- Vacant or open to trespass
- Poorly maintained or has unrepaired fire damage
- Subject to unacceptable physical hazards
- Violates law of public building
- Not built in accordance with the building and safety codes
Criteria to be eligible for Beachfront and Windstorm Plans:
Properties must be ineligible for voluntary coverage, and must be located in designated coastal areas. Some states require that the property be located within a certain distance of the shoreline. Properties constructed or rebuilt after a certain date must conform to the applicable building codes.
Types of properties that are uninsurable under the Beachfront and Windstorm Plans:
- Those that are poorly maintained or that have unrepaired damage
- Those that are subject to poor housekeeping
- Those that violate a law or public policy
