Insurance Providers

Question 1

Stock Insurance Companies

Answer 1

• Owned by stockholders
• May be publicly traded on stock exchanges or privately held by small groups of investors or families
• Pay stock dividends (taxable)

Question 2

Mutual Insurance Companies

Answer 2

• Owned by their policyowners
• Issue participating policies
• Pay policy dividends (non taxible)

Question 3

Managed Care Service Providers

Answer 3

Blend characteristics of commercial insurance companies and medical care providers

HMOs, and Blue Cross/Blue Shield organizations

Question 4

Fraternal Benefit Societies and Insurers

Answer 4

An organization of people who share a common ethnic, religious, or vocational affiliation
* have no capital stock
* have a representative form of government
* exist not for profit but solely for the benefit of their members and their beneficiaries
* operate on a lodge system with a ritualistic form of work
* may provide insurance to their members

Question 5

Fraternal Insurance Companies

Answer 5

• nonprofit organizations that are affiliated with a fraternal society
• operate under a special section of the insurance laws of the state in which they are domiciled
• specialize primarily in life insurance and annuity products that are usually available only to the society’s members

Question 6

Home Service / Industrial Insurance

Answer 6

• AKA: “Burial insurance,”
• Individual coverage in small face amounts, usually less than $10,000
• These policies generally require no medical exam to qualify

Question 7

Self Insurance

Answer 7

Pay for it themselves

Question 8

Risk Retention Groups

Answer 8

Self-insurers who want to share the administrative tasks of running a self-insurance program may join a risk retention group

Question 9

Surplus (Excess) Lines of Insurance

Answer 9

• more common with property and casualty insurance than with life and health insurance
• A way for non-admitted insurers outside of the state to provide coverage not available in-state via Surplus lines brokers

Question 10

Reinsurance

Answer 10

Life insurance companies spreading the risk of large policies with other insurers

Question 11

Domestic Insurer

Answer 11

Exists and operaties in the state where it is domiciled

Question 12

Foreign insurer

Answer 12

Domiciled in another state

Question 13

Alien insurer

Answer 13

Domiciled outside of the United States

Question 14

Federal Insurance Programs

Answer 14

• Social Security
• Medicare

Question 15

State Government Isnurance Programs

Answer 15

• Workers comp
• Unemployment
• Medicaid
• other unique state-run medical insurance plans

Question 16

Admitted Insurer

Answer 16

Issued a certificate of authority to transact business in a state

Question 17

Career Agency Distribution System

Answer 17

Producers (agents) represent one insurer
1. Managerial: Regional offices, brances, agencies owned by insurer
2. General agency: Independent contractor

Question 18

Insurance Company Functions

Answer 18

• Marketing and sales
• Actuarial
• Underwriting
• Claims

Question 19

Independent Agency Distribution System

Answer 19

Licensed producers (brokers) represent multiple companies

Like ALP

Question 20

Direct Response Distribution System

Answer 20

Insurers sell directly to consumers, without the use of external agents or brokers

Like USAA