general insurance Flashcards
Owned by policyholders who may be referred to as members.
A board of Trustees or directors directs the company operations and is elected by policyholders.
Dividends are not guaranteed.
Mutual insurers typically issue Participating policies.
Mutual Insurance Company
Is a group-owned insurer whose main activity is risk-sharing.
Unincorporated and formed by individuals, firms, and business corporations that exchange insurance on one another.
Each member is known as a subscriber. Each subscribers assumes a part of the risk of all other subscribers.
If premiums collected are insufficient to pay losses, an assessment of additional premium can be made.
The exchange of insurance is affected through an Attorney-In-Fact
Reciprocal Insurance Company
Not an insurance company but consists of groups of underwriters called Syndicates, each of which specializes in a particular type of risk.
Members are individually liable for each risk they assume.
Lloyds of London
Usually organized on a nonprofit basis, fraternal benefit societies are primarily social organizations that engage in charitable and benevolent activities that provide life and health insurance to their members.
Memebership typically consists of members of a given faith, lodge, or society/
Fraternal Benefits Socieity
Are group-owned insurers that primarily assume and spread the liability-related risks of their members/
Are owned by their policyholders and licensed in at least one state. However, they may insure members of the group in other states.
Must be made up of a large number of homogeneous or similar units and membership is limited to risks with exposure to similar liability needs, such as theme parks, go-cart tracks, or waterslides.
Risk Retention Groups (RRGs)
A private commercial for-profit insurer that is owned by stockholders or shareholders.
Are in the business to make a profit and it shares that profit with its stockholders in the form of a corporate dividend. These dividends are not guaranteed but they are taxable to the stockholders.
Are known for issuing non-participating policies to policyholders.
Stock Insurer
Are owned by their policyholders. If there is an excess surplus at the end of the year, policy dividends are paid to the policyholders.
Since policy dividends are considered a return of excess premium, they cannot be guaranteed and they are not taxable.
Typically, this term issues what is known as participating policies.
Mutual Insurance
Are owned by a group of people who share the risk of the losses.
Each member of the group is known as a subscriber and the exchange is managed by an Attorney-In-Fact.
Each subscriber pays premiums, however, if the premiums are insufficient to pay the claims, an assessment of an additional premium can be made.
Reciprocal Insurers
Group of employers who share in the same or similar liabilities. They pool their premiums to spread the risk among the group.
This group provides liability insurance only to the members of the group and each member assumes a portion of the risk.
Examples include owners of Theme Parks, Water Parks, Go-Cart tracks, Inflatable Bounce Houses, and Skating Rinks.
Risk Retention Group (RRG)
To assume the financial risk one’s self.
This is generally an option only for large companies who may even reinsurance for risks above certain maximum limits.
Self-Insurer
A private coverage source of last resort for business and individuals who have been rejected by voluntary market insurers.
Coverage is typically written as workers’ compensation, personal auto liability, or property insurance on real property.
Residual Markets
Type of reinsurance agreement that covers all risks contained in the subject line(s) of business automatically.
Treaty Agreement
Type of reinsurance agreement that allows ceding and reinsurance companies the opportunity to negotiate coverage for individual risks.
Facultative Agreements
