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CPCU 520 Problems > CPCU 520 ch 1 - review notes > Flashcards

CPCU 520 ch 1 - review notes Flashcards

1
Q

Property Casualty Insurance Classifications

A

Legal form of ownership
Place of incorporation
Licensing status
Insurance distribution systems and channels

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2
Q

Proprietary insurers

A

Stock insurers, Lloyds, insurance exchanges
Most prevalent type of proprietary insurer in US=stock insurers
Formed for purpose of earning profit for its owners

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3
Q

Cooperative insurers

A

Owned by policyholders, formed to provide ins protection to policyholders at minimum cost

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4
Q

Cooperative insurer types

A

Mutal Insurers (largest), reciprocal insurance exchanges, fraternal organizations, other cooperatives

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5
Q

Attorney in fact

A

manager of reciprocal exchange

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6
Q

Captive insurer/formalized self insurance purpose

A

Fund the losses of their owners

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7
Q

Cooperative insurers

A

Captive insurers, risk retention groups, purchasing groups

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8
Q

Only unincorporated insurers permitted in most states

A

Reciprocal insurance exchanges

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9
Q

Distribution systems used by most insureres

A

Independent agency/brokerage marketing
Direct writer
Exclusive agency

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10
Q

Common distribution channels

A 
Internet
 call centers
direct response
group marketing
financial institutions
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11
Q

Five major goals of insurers

A 
Earn a profit
Meet customer needs
Comply w/ legal requirements
Diversify risk
Fulfill duty to society
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12
Q

Internal constraints in achieving insurer’s major goals

A 
Efficiency
Expertise
Size
Financial resources
Other--lack of name recognition/poor reputation
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13
Q

External constraints in achieving insurer’s major goals

A 
Regulation
Rating agencies
Public opinion
Competition
Economic conditions
Insurance marketing/distribution
Other - catastrophes/disregard for law & order/legal changes affecting liability claims
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14
Q

Rating agencies

A

AM Best, Standard & Poor’s, Moody’s

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15
Q

measures of insurer profitability based on premium consider:

A

Premium growth issues and the rate of growth sustained over time

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16
Q

Ratios used to measure insurer’s underwriting performance

A

Loss ratio, expense ratio, combined ratio (trade basis)

17
Q

Specific measures of insurer’s operational performance

A

Investment income ratio, overall operating ratio, return on equity

18
Q

Measures of customer satisfaction

A 
retention ratio (policy count, premium volume, both)
lapse ratio (number of policies lapsed/number of policies written @ beginning of period
19
Q

Core functions of typical insurer

A

Marketing/distribution
Underwriting
Claims

20
Q

Supporting functions of typical insurer

A 
Risk control
Premium auditing
Actualrial
reinsurance
Information technology
21
Q

Other common functional areas of typical insurer

A 
Investments
Accounting/finance
Customer service
Legal/compliance
HR
Special investigation unit
22
Q

Reciprocal exchange (interinsurance exchange)

A

Owned by policyholders, unincorporated assoc, purpose of providing insurance to members/subscribers and managed by attorney in fact. Members share profits in same amounts of insurance purchased

23
Q

FAIR plans

A

Pool through which private insurers address need for prop insurance on urban proprties, esp those susceptible to loss by riot/civil commotion

24
Q

Residual market

A

Make insurance available thru shared risk to thsoe who cannot obtain covg in admitted mkt

25
Q

Surplus lines broker

A

Places business w/ insurers not lic in state in which transaction occurs, but permitted to write ins b/c covg not available thru std mkts

26
Q

Independent agy/brokerage system

A

Producers are indpendent contractors, sell ins as reps of several unrelated insurers

27
Q

Direct writer system

A

agents are direct employees of insurer

28
Q

Exclusive agy mkt system

A

Agents sell ins exclusively for 1 insurer or assoc group of insurers

29
Q

UW guidelines/UW guide

A

communicates underwriting policy/specifies attributes of acct insurer is willing to insure

CPCU 520 Problems (5 decks)

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