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Property and Casualty > General Insurance > Flashcards

General Insurance Flashcards

1
Q

Who owns a stock insurance company

A

stockholders or shareholders- receive taxable corporate dividends as return of profit

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2
Q

what type of polices do stock insurers typically issue?

A

Non-participating policies

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3
Q

Who owns a mutual insurance company

A

Policy holders- receive non-taxable dividends as a return of unused premium when declared by directors

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4
Q

What type of policy does a mutual insurance company issue?

A

Participating policy

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5
Q

Who owns a reciprocal insurance company?

A

Group owned, main activity is risk sharing. Unincorporated. exchange of insurance is affected through Attorney in Fact

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6
Q

What is Lloyds of London?

A

NOT INSURANCE COMPANY! groups of underwriters called Syndicates, each of which specializes in particular type of risk

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7
Q

What are syndicates?

A

Groups of underwriter that specialize in particular type of risk

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8
Q

what do lloyds provide for syndicates

A

provide meeting place and clerical services

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9
Q

Who underwrites coverage provided by lloyds of london?

A

syndicate manager (attorney in fact or individual proprietor)

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10
Q

What are Fraternal Benefit Societies?

A

Social organizations that engage in charitable activities that provide life and health insurance to members.

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11
Q

What is a RIsk REtention Group?

A

Group-owned insurer that primarily assumes and spreads liability related risks of its members. Made up with large number of homogenous or similar units.
each member assumes portion of risks, must have sufficient liquid assets

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12
Q

Who can be a member in RIsk Retention Group

A

risks of similar liability exposures

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13
Q

what does it mean to self insure

A

assume financial risk of one’s self. ONLY an option for large companies who may even reinsure for risks above certain limits

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14
Q

What is residual market

A

private coverage source of last resort for those who have been rejected by voluntary market insurers.

Risk sharing plan! insurers agree to appoprtion themselves those that are unable to obtain insurance through normal channels. coverage written as workers compensation, personal autoliability, property insurance

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15
Q

What type of insurance company is owned by policyholders?

A

Mutual

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16
Q

What is a reinsurance compan?

A

company that assumes all or a portion of risk from primary insurance company

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17
Q

What are the two types of reinsurance

A

treaty and facultative

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18
Q

What type of reinsurance agreement is TREATY?

A

AUTOMATICALLY all risk

19
Q

What type of reinsurance agreement is FACULTATIVE?

A

Allows for NEGOTIATION of coverage for individual risks

20
Q

what does a financial rating service do?

A

evaluate and rate financial stability of insurance company, ratings are avaiable and show financial strength

21
Q

What does insurer domicile refer to?

A

jurisdiction where an insurer is formed or incorporated (domestic, foreign, alien)

22
Q

What does the admitted vs non-admitted distinction refer to?

A

Whether or not insurer is approved or authorized to write business in this state

23
Q

what type of insurance company is organized under laws of another state within the United States?

A

Foreign

24
Q

what is the point of surplus lines insrance?

A

finds coverage when insrance cannot be obtained by admitted insurers

25
Q

what role does an actuary plane?

A

Determines the probability of loss and sets premium rates

26
Q

What is the role of the underwriting department?

A

responsible for selection of risks and rating that determines actual policy premium

27
Q

Exclusive or captive agency model distribution

A

deals with insured through exclusive or captive agreement- agent represents one company or group that has common ownership. Insurer retains ownership rights. Insurer may or may not provide office and agency support

28
Q

What is the Direct Writing System model of distrubtion?

A

Producer or Agent is employee of insurer, insurer owns the accounts, agent may be paid salary, plus bonus, or commission

29
Q

What is the distribution model of an indepednet agency

A

agency that enters into agency agreements with more than one insurer. retains ownership of the business written. indepdent contractor that is paid a commission and covers cost of agency operations

30
Q

what is a personal producing general agent?

A

does not recruit career agents . sells insurance for carriers it is contracted with and maintains its own office

31
Q

What is the Law of Agency

A

three-party relationship where Principal authorizes agent to act on its behalf to create legal relationship. Agent represents Principal and is held to highest standards

32
Q

What is the role of the Principal?

A

Insurer is source of authority from which producer must abide. Responsible for all acts of producer, when acting within scope of its authority. May be liable when acts exceed authority of the agency’s contract

33
Q

What is the role of producer?

A

person appointment by insurance agency to represent it and present policies on its behalf

34
Q

what are the three types of authority that producer has?

A

express, implied, apparent

35
Q

What is expressed authority

A

authority written in the producer agency contract

36
Q

What is implied authority

A

authority the public assumes the producer has

37
Q

what is apparent authority?

A

authority created when producer exceeds the authority expressed in agency contract. (when insurer does nothing to counter the public impression that such authority exists)

38
Q

What are the producer’s responsibilities to the insurer?

A

fiduciary duty in all respects! must keep premium funds in trust account separate fro other funds, report any material facts that affect udnerwriting, only recommend purchase of only suitable policies

39
Q

What are the producer’s responsibilities to insurance applicant or insured?

A

forward premiums on a timely basis, seek and gain knowledge of needs, serve best interest of applicant,

40
Q

What is the role of the broker

A

negotiates insurance contracts with insurers on behalf of the applicant. Does not have legal authority to bind the insurer

41
Q

What is the Fair Credit Reporting Act?

A

products consumer privacy! ensures data is confidential, relevant. protects from overly intrusive collections.

42
Q

Can the applicant review the credit report?

A

YES! Can challenge - credit agency must reinvestigate within 6 months, agency must forward applicant inaccurate information given out, report must not include lawsuits over 7 years old or bankruptcies over 14.

43
Q

What are the obligations of the insurer under the Fair Credit Reporting Act?

A

Insurer is NOT responsible for correcting inaccuracies on reports. If an applicant is denied coverage because of inaccurate information they are entitled to certain rights

44
Q

What does the Financial Anti-Terrorism Act do? USA Patriot Act

A

Imposes record keeping and gov’t reporting requirements on banks, financial institutions and nonfinancial businesses for specific transactions and customer financial recrods

Property and Casualty (5 decks)

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