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General Insurance Flashcards

1
Q

Domestic Insurer

A

An insurer organized under the laws of this state, whether or not it is admitted to do business in this state.
Example: An insurer inc. in New York is considered domestic to New York

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2
Q

reinsurance agreements

A
  • Treaty reinsurance agreement that automatically excepts all risk presented by the ceding insurer.
  • facilitative - reinsurance agreements that allow the reinsurance company an opportunity to reject coverage for individual risks, or price them higher due to their substandard (higher risk) nature.
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3
Q

claims department

A

Assist the policyholder, insured, or beneficiary in the event of a loss and processes, and pays the amount of the claim in a timely manner, based upon the contractual provisions and amount insured.

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4
Q

parol evidence rule

A

A written contract may not be altered without the written consent of both parties

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5
Q

certificate of authority

A

Authorization granted by the department of insurance to an agency or insured to transact insurance in this state

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6
Q

moral hazard

A

Dishonest tendencies that increase the probability of a loss. Morale hazards most closely related to some form of lying, cheating, or stealing.

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7
Q

self- insurer

A

Self-insurers assume all of the financial risk faced without transferring that risk to an insurer.

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8
Q

Personal producing general agent

A
  • Does not recruit career agents.

- sells insurance for carriers it is contracted with and maintains its own office and staff

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9
Q

peril

A

A specific cause of a loss

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10
Q

Aleatory contract

A

Parties to a contract exchange unequal amounts of money. Insureds premium paid is less than the potential benefit to be received in the event of loss

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11
Q

Foreign insurer

A

And insurer organized under the laws of any other state, possession, territory, or the district of Columbia of the United States, whether or not it is omitted to do business in the states.
-example; an insurer Inc. in New York is considered foreign to Kansas

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12
Q

Apparently authority

A

Authority created when the producer exceeds the authority expressed in the agents contract. This occurs when the insured takes no action to counter the public impression that such authority exist.

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13
Q

residual markets

A

Residual markets are a last resort private coverage source for businesses and individuals who have been rejected by the voluntary insurance market. Coverage is typically written as workers compensation, personal auto liability, or property insurance and real estate.

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14
Q

insurable events

A

Any event, whether past or present, which may cause loss or damage or create legal liability on the part of the insured

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15
Q

Elements of a legal contract

A

A legal contract must include 4 necessary elements:

  • Competent parties
  • legal purpose
  • agreement offer and acceptance
  • consideration
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16
Q

Fraternal benefit societies

A

Fraternal benefit societies are primarily social organizations that engage in charitable and benevolent activities that can provide life and health insurance to their members. Memberships typically consist of members of a given faith, lodge, order, or society.
Fraternal insurance producers represent the fraternal insurer and sell insurance to fraternal members.

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17
Q

non-admitted insurer

A

And insurer that has not sought approval (or) has not been able to obtain approval to transact business in this state from the commissioner (Director) of insurance.

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18
Q

morale hazard

A

An attitude of indifference towards the risk of loss that increases the probability of a loss occurring

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19
Q

personal contract

A

A contract between the insurance company and the person insured at the time the contract is formed. This is a contract that cannot be assigned.

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20
Q

physical hazard

A

A physical condition that increases the likelihood or probability of loss. Physical hazards may be seen, heard, felt, tested, or smell. Example flammable material store near a furnace.

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21
Q

warranties

A

Statements made on the application that are guaranteed to be true

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22
Q

implied authority

A

Authority the public assumes the producer has. And example would be the business activities of providing quotes, completing applications, and accepting premiums on behalf of the insurer.

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23
Q

law of agency

A

A relationship between two parties where one (the producer/agent) may act on the behalf of the other (the insured/principal) and bind the actions or words of the principal.

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24
Q

loss exposure

A

The extent to which one may be affected by a peril.

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25
principle of indemnity
Concept that an insured is restored to the same financial condition as prior to the loss. no profit or loss from insurance transaction
26
Massmarketing
- Used to target a specific type of insurance to a large group of individuals. - Mass marketing uses the direct response to direct mail method to reach its targeted audience.
27
admitted versus non-admitted
Refers to whether or not an insurer is approved or authorized to write business in the state
28
USA patriot act an anti-money laundering (AML)
Usa patriot act - this act specified which financial institutes would be required to institute AML training programs, including insurance companies. Anti-money laundering AML with the increase of drug trafficking and acts of terrorism, the desire and demand for laundered money has also increased. As of May 2006 insurance companies have been required to provide anti-money laundering training to their producers.
29
adverse selection
The tendency of more bad risk than good risk to purchase and maintain insurance
30
Conditional contracts
Both parties to the contract must perform certain duties and follow rules of conduct to make the contract enforceable
31
Alien insurer
And insurer organized under the laws of any jurisdiction outside the United States, whether or not it’s admitted to do business in the states
32
insurability
The ability of an individual to meet an insurer’s underwriting requirements
33
Direct writing system
- Producer or agent is an employee of the insurer - Insurer owns the accounts - The agent may be paid a salary, salary plus bonus, or commission
34
Mccarran- Ferguson act of 1945
Established that the federal government will not regulate the business of insurance in areas which the states have historically had authority to do so (such as producer and company licensing) unless the states fail to cooperate
35
tort law
Torts are civil wrongs; they are not crimes or breaches of contract. They result in injuries or harm that constitute the basis of a claim by a third-party
36
private firms and persons
- Insurance companies: manufacture and sell insurance coverage in the form of insurance policies or contracts of insurance. - Insurance producers licensed individuals representing an appointed by an insurance company when transaction insurance business. - Insured; the person or entity that is covered by the insurer which covers losses due to loss of life help property or liability. - owner: not necessarily the insured under the policy but is responsible for paying the policies premium
37
marketing /sales department
Responsible for advertising and selling
38
Mutual insurance company
Insurance company owned by policyholders who may be referred to as members
39
fraud
Intentional deception of the truth in order to induce another to part with something of value or to surrender a legal rights
40
Admitted insurer
The insurer that is authorized and has a certificate of authority to do business in a state
41
Risk share plan
Insurers agree to apportion among themselves those risks that are unable to obtain insurance through normal channels
42
stock insurance company
It’s stock company is owned by stockholders or shareholders. Directors and officers which are elected by stockholders put in place a management team to carry out company’s mission.
43
violent crime control and law-enforcement act of 1994
The act made it a felony for a person to engage in the business of insurance after being convicted of state or federal felony crime involving dishonesty or breach of trust
44
Financial rating services
Independent financial reading services that evaluate and read the claims pain ability and financial stability of insurance companies. (A M best, standard and poor, Moody Weiss and others)
45
insurer | principal
The Insurer is the source of the authority in which the producer/agent must abide
46
Actuarial department
Gathers and interpret statistical information used in rate making. An actuary determines the probability of loss and such premium rates
47
concealment
The withholding of known (material) facts so important that the disclosure of them would change the decision of an insured with respect to underwriting settling a loss or determining premium
48
Utmost good faith
Both parties bargain and good faith informing the contract, and rely upon the statement and promises of each other
49
Reinsurance companies
Reinsurance companies are insurance companies that operate to accept all or a portion of the financial risk of loss from the primary (or ceding ) insurance company
50
hold harmless agreement
A contractual agreement that transfers the liability of one party to another party. Used by landlords, contractors, and others as a way to avoid or reduce risk
51
legal purpose
All parties to contract must enter it for a legal purpose ; public policy cannot be violated by legal contract. All parties to a contract must enter in good faith
52
domicile
And insured organized under the laws of the state whether or not it is admitted to do business in the states
53
speculative risk
Instances where there is a chance of loss or gain
54
Contract of adhesion
One party prepares a contract (insurer) and submits it to the other party on take it or leave it basis
55
risk
A condition in which a chance of loss exist
56
career agency system
Agents are recruited, trained and supervised by either a manager employee or general agent who is contracted with the insurance company
57
lloyds of London
Consist of groups of underwriters called syndicates, eachOf which specializes in ensuring a particular type of risk. Lloyd’s provides a meeting place and clerical services for syndicates members Who actually transact the business of insurance. Members are individually viable for each risk they assume and coverage provided is under written by a syndicate Managers such as an attorney in fact or individual proprietor.
58
representations
Statements made are said to be true to the best of the applicants knowledge and beliefs
59
valued contracts
A policy which pays a pre-determined amount when a claim is made
60
gramm-leach -bliley act
Repeal parts of the glass Steagall act of 1933 to allow the merger of banks, security companies , and insurance companies it also establishes the financial privacy rule and safeguards rule for protection of consumers privacy.
61
surplus lines insurance
Fines coverage when insurance cannot be obtained from admitted insurers
62
join underwriting association or joint reinsurance pool
Requires insurers writing specific coverages lines in a given state to assume their share of profit /losses of the total voluntary market premiums written in that state.
63
competent parties
All parties to a contract (i.e. insurer and insured must have legal capacity to enter into a contract)
64
risk retention groups rrg
A group owned insurance that primarily assumes and spreads the liability related risk of its members. - owned By its policy holders. - Membership is limited to risk with similar liability exposure such as theme parks, go kart tracks, or water slides.
65
law of large numbers
The larger the number of exposures is considered, the more closely the losses reported will equal the probability of loss.
66
loss
Reduction, decrease, or disappearance of value. A loss is the basis of a claim under the terms of an insurance policy.
67
pure risk
Situations were only the chance of lost and no gain exist.
68
producer (agent)
License individuals representing an insurance company when transacting insurance business.
69
contract law
Pertains to the formation and enforcement of contracts.
70
trade and regulatory associations
National Association of insurance commissioner’s NAIC consist of all see in territorial insurance commissioner’s or regulators. It provides research resources legislative and regulatory recommendations and enter to rotations for state insurance regulators. Also, federal insurance office monitors the insurance industry and identifies inssues and gaps in state regulation of insurers.
71
Insurance contract
- A legal contract purchase to indemnify the insured against a loss, damage, or liability arising from an unexpected event. - The exchange of a relatively small and definitive expense for the risk of loss that, if it occurs may be large or small. - A contract designed to transfer rest from the insured to the insurer.
72
indemnity contract
A contract that pays a specific dollar amount not to exceed the amount of the loss
73
fraud and false statements
Any person who knowingly presents faults or fraudulent information on an insurance application or claim for the payment of a loss is guilty of a crime and may be subject to fines in confinement in state prison.
74
commissioner
The state commissioner, supervisor, or Director of insurance is the chief insurance regulator and has the power to issue rules and regulations to enforce state insurance status
75
misrepresentation
Default statement in the application that can render the contract void, if material to acceptance of the risk
76
Direct mail or direct response company
Insurers who sell insurance policies directly to the public with license employees or contractors. A marketing system realizing mass media such as direct mail newspapers, magazines, radios, television, Internet, websites, call centers,and vending machines
77
Distribution models
- Exclusive or captive agency system - Direct writing system - Independent agency - Career agency system - Personal producing general agent - Direct mail or direct response - Massmarketing
78
unilateral contract
Only one party is legally bound to contractual obligation’s after premium is paid. Only the insurer has made a promise of future performance
79
consideration
Insured’s payment of premium in exchange for the insurer’s promise to pay benefits.
80
exclusive or a captive agency system
Deals with the insured through an exclusive or captive agents - Agency represents Soli one company or group of companies have in common ownership. - Insurer retrain ownership rights to the business written by the agent - The agent is an employee or a commissioned independent contractor - ensure may or may not provide office and agency support services
81
Reasonable expectation doctrine
What a reasonable and prudent policy owner would expect. The reasonable expectations of the policy owners are honored by the courts although the strict terms of the policy may not support these expectations
82
independent agency
- An agent or agency that enters into selling agreements with more than one insurer. - Agency retains ownership of the business written. - An independent contractor that is paid a commission and covers the cost of the agency operations.
83
hazard
A specific situation that increases the probability of a loss arising from a peril or that may influence the extent of the loss. (Physical or moral or morale)
84
underwriter
Primary responsibilities include the selection of risk by determining insurability. also determines the classification, or type of risk, and premium rating if a risk is excepted by the insurer.
85
Federal insurance office or FIO
Established by the Dodd Frank Wall Street reform and consumer protection act. this office managers the insurance industry and identifies issues and gaps in the state regulation of insurers. Also monitors access to affordable insurance by traditionally underserved communities and consumers minorities and low and moderate income persons
86
reciprocal insurance company
A reciprocal insurance company as a group owned insure who is mean activity is reassuring
87
Waiver
Voluntary surrender of a no rights claim or privilege
88
Express authority
Authority that is written into the producers contract. An example would be a producers binding authority if written in the contract.
89
fair credit reporting act
Protects consumer privacy and from overly intrusive information collection practices
90
insurable risk requirements
``` Large numbers of homogeneous units. Calculate bowl Loss must be measurable Premiums must be affordable Loss must be accidental Cause financial hardship Excludes war, nuclear attacks and illegal acts ```
91
estoppel
Judicial denial of a contractual right based on prior actions contrary to what the contract requires
92
insurable interest
The potential for an insured or beneficiary to suffer a financial or economic hardship in the event of a loss
93
National Association of insurance commissioners NAIC
- Consist of all stay and territorial insurance commissioner’s or regulators. - provides resources, research, legislative and regulatory recommendations and interpretations for state insurance regulators. - promotes uniformity among states. - NAIC has no legal authority to intact or enforce insurance laws

Life and Health (1 decks)

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