Introduction Flashcards
What is insurance?
Insurance is a contract that transfers the risk of financial loss from an individual or business to an insurer; in return, the insurer agrees to cover the individual or business for certain losses if they occur
What is risk?
Risk is uncertainty about whether a loss will occur
Is insurance designed to only cover losses that involve risk? (ie uncertainty)
Yes - life being a notable corollary - which really covers risk of when the person will die (because death is a certainty)I
Insurance =
Transfer of risk
Risk =
Uncertainty
What is speculative risk (vs. pure risk)
Speculative risk has a possibility of a loss and also hold the possibility of a gain. Insurance companies will not ensure gambling losses or investments because someone could win or lose money - these are speculative risks
What are pure risks?
Pure risks only involve the possibility of loss and they can be covered by insurance. The chance of being in a car accident is an example of a pure risk
Are speculative risks insurable?
No
Are pure risks insurable?
Yes
What is “loss”
The reduction in the value of an asset - to determine loss, the value of the asset needs to be measured before and after the loss
What is “exposure”
The risk assumed by the insurer and the amount that the insurer is responsible to pay out at any given time
How is exposure defined?
In units
What is the “unit of exposure” for life insurance?
$1,000 of death benefit and premium rates apply per unit of exposure
What is the calculation for insurance premiums based on?
THe calculation of insurance premiums is the rate multiplied by the number of exposure units
What is a “peril”
A cause of loss - insurer agrees to cover losses caused by a specified peril - for life insurance, the peril is death, for health insurance, the peril is illness or accidents
What is the peril for life insurance?
Death
If electronic that were insured in a home are destroyed because of lightning - what was the peril?
Lighting (the cause of loss) was the peril
What is the peril for property and casualty insurance?
Fire, Lightning, etc.
What is a “Hazard”
Anything that increases the chance that a loss will occur
Do hazards “cause losses”
No - when you think of a hazard, think of something that becomes more dangerous and can make a loss more likely to happen
Hazards do not “cause losses” but they “make losses more likely”
Note
What are the 3 subcategories of “Hazards”
- Physical
- Moral
- Morale
What is a “physical hazard”
Physically identifiable factors that increase the chance of loss
What would be an example of a “physical hazard” in life and health?
A heart condition because it is physically identifiable and produces tangible evidence of its existence
What is a moral hazard?
Moral hazards arise from an individual’s character - dishonesty is a moral hazard because it increases the chance that an individual might lie on an insurance application or fake a loss
What is morale hazard?
State of mind or careless attitude. In common usage, morale hazard is an unconscious change in a person’s actions or behaviors vs. a deliberate change with the intent to cheat or benefit from such circumstances
What is an example of a “morale hazard” from property and cacsualty?
the insured carelessly leaving the doors and windows unlocked when not at home
Physical hazard - can be seen or determined
Moral hazard - intentionally causing a loss
Morale Hazard - Carelessness
Note
The methods of handling risk can be easily remembered by using what acronym?
STARR
What is the S in STARR? (STARR - acronym to remember the methods for handling risk)
S: Sharing - In risk sharing, two or more individuals agree to pay a portion of any loss incurred by any member in the group. Stockholders in a corporation share the risk of profit or loss
What is the T in “STARR” (STARR - acronym to remember the methods for handling risk)?
T: Transfer - This is what happens with insurance - insurer agrees to pay if an individual or business has a loss. Individual or business has a cost in the form of of premium payment which is small and certain (vs the risk of loss, which is large and uncertain)
What is the A in “STARR” (STARR - acronym to remember the methods for handling risk)?
Avoidance: Risk Avoidance means eliminating a particular risk by not engaging in a certain activity. For example, not driving avoids the risk of injuring someone in an accident and being held responsible
What is the first R in “STARR” (STARR - acronym to remember the methods for handling risk)?
Retention: Risk retention means that an individual will pay for a loss if it occurs
What is the second R in “STARR”? (STARR - acronym to remember the methods for handling risk)?
Reduction: Risk reduction refers to lessening the chance that a loss will occur or lessening the extent to which a loss does occur
The distinction between Moral and morale hazard is not as fine as you would think - moral hazard appears to be attempting to cause the occurrence of a risk to receive an insurance payment, whereas morale is unconscious decisions and even decisions where an individual decides that they don’t need to reduce the risk of occurance because they are insured
Note - I make this distinction because I missed a practice question:
“Tiffany leaves her car unlocked when she goes shopping. She figured her car and contents are insured so there is no reason to worry. Which type of hazard is this an example of”
The answer is “Morale” - even though the decision was a conscious one, she wasn’t hoping to trigger the insurance to receive a payment
What is the law of large numbers?
The law of large numbers is the principal that makes insurance possible - The larger the group, the more accurately losses can be predicted. - can’t predict the specific individual, but generally can predict the how many dollars they will have to pay out, this allows them to charge each insured a premium that, pooled together, will cover all claims and operating costs
Not all risks are insurable, risks that can be insured have a set of necessary characteristics - what acronym represents this set of risks?
CANHAM
What are the components of “CANHAM” (the acronym that can be used to define the set of necessary characteristics for a risk to be insurable)
C: Calculable A: Affordable N: Non-Catastrophic H: Homogenous A: Accidental M: Measurable
What does the “C” stand for in CANHAM? (the acronym that can be used to define the set of necessary characteristics for a risk to be insurable)
Calculable: Premiums must be calculable based on prior loss statistics for that particular risk in order to predict future losses
What does the first “A” Stand for in CANHAM? (the acronym that can be used to define the set of necessary characteristics for a risk to be insurable)
Affordable: The premium for transferring risk should be affordable for the average consumer
What does the “N” stand for in “CANHAM” (the acronym that can be used to define the set of necessary characteristics for a risk to be insurable)
Non-Catastrophic: Insurance cannot insure events that cause widespread losses to large numbers of insured at the same time. This is why the peril of war is excluded from most policies because the risk is too large for the insurance company to pay
What does the “H” stand for in “CANHAM” (the acronym that can be used to define the set of necessary characteristics for a risk to be insurable)
Homogenous: The individual risks that the insurer covers must all be similar, or homogenous, in regard to factors that affect the chance of loss
What does the second “A” stand for in “CANHAM” (the acronym that can be used to define the set of necessary characteristics for a risk to be insurable)
Accidental: Insurance is a method of handling risk - if risk of loss is certain to occur, there is no risk
What does the “M” stand for in CANHAM? (the acronym that can be used to define the set of necessary characteristics for a risk to be insurable)
Measurable: it must be possible to estimate the loss as a dollar amount. Insurance covers the financial loss of unexpected death or medical bills from sickness
What is “Adverse selection”?
The tendency for high-risk individuals to get and keep insurance more than individuals who represent an average level of risk. Given the fact that statistics insurers use to predict their losses are based on average risks, adverse selection could cause the insurance company to experience more losses than predicted
To avoid adverse selection, what do insurers do?
They make an extensive evaluation of information related to a particular task - a process called underwriting
Underwriting is used to avoid adverse selection - what is underwriting?
An extensive evaluation of information related to a particular task - a process called underwriting
If an underwriter determines risks to be higher, what might the insurer do?
- Charge higher rates
- Limit the amount of coverage it will insure
- Refuse the application
What is reinsurance?
Like insurance for insurers - transfers risk from one insurer to another insurer - to reduce the total amount of loss that it is liable for, one insurer may pay the other insurer a premium to assume a portion of its risk.
In a reinsurance relationship, the company transferring the risk is known as what?
The “ceding insurer”
In a reinsurance relationship, the company assuming the risk is known as what?
The “Reinsurer”
Does a reinsurance relationship generally involve a ceding insurer transferring risk to a reinsurer and paying a premium in the process?
Yes
There are two types of reinsurance - “facultative” and “treaty” - what is facultative reinsurance?
In facultative reinsurance, the reinsurer considers EACH RISK before allowing the transfer to be made from the ceding company
There are two types of reinsurance - “facultative” and “treaty” - what is treaty reinsurance?
The reinsurer accepts all risks of a certain type from the ceding company. This is called treaty reinsurance
Reinsurance protects insurance companies from catastrophic losses in certain geographical areas
Note
What is a “stock insurer”
- A stock insurer is a business formed as a public or private corporation and owned by its stockholders, also known as shareholders.
- The board of directors that oversees the operation of the company is chosen by the stockholders/shareholders.
- Profits from the insurance operation are distributed to the stockholders as dividends (taxable)
The policies issued by stock insurers are called “non-participating”, or “non-par”, policies to distinguish them from the participating policies issued by mutual insurers
Note
What is a mutual insurer?
A mutual insurer does not have stock or stockholders, it is owned by policyholders, also known as “policy owners”
Who owns a “mutual insurer”
Policyholders (also known as “policy owners”)
Who elects the board of directors in a “mutual insurer”
The policyholders, aka policyowners who also own the company
With a mutual insurer, who appoints the officers?
The board appoints the officers who run the company
With a mutual insurer, funds that remain after paying claims may be distributed to the policyholders dividends?
True
With mutual insurers, are the funds that are paid to policyholders as dividends taxable (like with a stock insurer)
No - they are not taxable
Mutual policies are referred to as what?
participating or “par” policies because the policyowners participate in the operating results of the company
What are fraternal benefit societies?
They exist for the benefit of their members and offer life insurance as one of the benefits of membership
Do fraternals, in addition to offering life insurance to members, also provide social activities and engage in charitable and benevolent causes?
Yes
Fraternals are organized under what system? Do they receive tax advantages?
The Lodge system - yes, they receive tax advantages
What are fraternal policies called?
Certificates
In fraternal benefit societies, members who own life insurance are known as what?
Certificate holders
A distinctive feature of fraternal life insurance is that certificate holders may be assessed additional charges if premiums are not sufficient to pay claims during a given period
Note
If premiums are not sufficient to pay claims during a given period in a fraternal benefit society, what may happen (unique to fraternal life insurance)
Holders may be assessed additional charges
Policies with the feature where, if premiums are not sufficient to pay claims during a given period, holders may be assessed additional charges are referred to sa what?
Open Contracts
In contrast to fraternal life insurance, where contracts may be “open” (if premiums are not sufficient to pay claims during a given period, holders may be assess additional charges), mutual and stock insurers are not assessable and are sometimes referred to as what type of companies?
Legal Reserve companies
What are reciprocal insurers?
Unincorporated groups of people that agree to insure each others losses under a contract
What are the members of a reciprocal group called?
subscribers
In reciprocal insurance, each subscriber has an account through which premiums are paid and earned interest is tracked, if any subscriber suffers a loss covered by the reciprocal insurance agreement, each subscriber account is assessed what?
an equal amount to pay the claim
In a reciprocal group, who handles administration, underwriting, sales promotion, and claims handling?
In reciprocal insurance, they are handled by an “attorney-in-fact”
In a reciprocal group, who oversees and controls the attorney-in-fact?
An advisory committee of subscribers
Are reciprocal insurers incorporated?
No
What are members of a fraternal organization called?
Benefit of members
what is a risk retention group (RRG)?
An insurer formed for the sole purpose of providing liability insurance to its policyholders
Who owns an RRG?
An RRG is owned by the insured or members
THe members of an RRG must all be members of what?
THe same type of business
Where are RRG members regulated?
By the state where they are headquartered - however, they can operate in other states as well
A risk retention group only focuses on what type of insurance?
Liability insurance
What are Lloyd’s associations? Are they insurance companies?
They are not insurance companies - rather they provide a hub for the exchange of information among member underwriters who actually transact the business of insurance. Members are individually liable and responsible for the contract of insurance into which they enter
With Lloyd associations, are members individually liable for het contract of insurance into which they enter?
Yes
Over the past few years, have Lloyd Associations insured unusual risks, such as athlete/celebrity hair and bodyparts?
Yes
Most Lloyd Associations are often licensed in only a few states; thus, how are they typically sold?
They are sold by surplus line intermediaries
In Lloyd associations, insurance is provided by what as opposed to insurance companies?
Individual underwriters
What is self-insurance?
A means of retaining, rather than transferring risk.
May businesses develop a formal program for self-insuring all or a portion of certain risks?
Yes
Companies that self-insure at least part of their risk exposure may set aside savings to cover losses in advance and may even have a claim system like an insurance company
Note
The types of insurance plans described so far are all insurers that operate in the private sector. In addition to private sector insurers, what are some government entities that provide insurance to the public or certain govt. employees?
- Social security
- Military life insurance benefits
- Federal employee compensation (pensions)
- Retirement benefit programs
Does the government also provide support or subsidize a number of insurance programs designed to cover catastrophic risks, including insurance for war risks, flood, and crop losses
Yes
At the state level, how are governments involved in insurance?
- Unemployment insurance
- Workers’ Compensation
- Disability insurance
- Medical insurance for the needy
- Local governments also participate in providing medical, disability, and retirement benefits
depending on where an insurance company is incorporated, it is defined as being domestic, foreign, or alien - what do each of these mean?
- Domestic: In its home state - that is, the state in which the insurer was formed (chartered or incorporated) and is headquartered-an insurer is referred to as domestic insurer. An insurer’s home state is also called its state of domicile
- Foreign: An insurer that writes business in states other than where it is domiciled is referred to as a foreign issuer. For example, an insurer that is located in Texas, but is selling insurance in Wisconsin is considered foreign
- Alien: An insurer that is formed under the laws of any country other than the US and its territories is considered an Alien insurer. To citizens of the US or any US territory such as Puerto Rico, an insurer is based in any other country in an Alien Territory
What is an insurer’s home state called?
Its state of domicile
Which insurer refers to an insurer formed under the laws of any country other than the US and its territories? Alien or Foreign?
Alien (“foreign” insurers refer to insurers from a foreign state)
Do states typically require companies to have license to sell insurance in the state?
Yes
What is a “certificate of authority”
States typically require companies to have licenses to sell insurance in het state - the license is called a “certificate of authority”
When a company is licensed (certificate of authority) what is it called?
Admitted or authorized
Do some states allow companies to sell insurance to certain types of risks (called surplus) without having a license?
Yes
What are companies that are allowed to sell insurance to certain types of risks (called surplus) without having a license (certificate of authority) called?
Nonadmitted, unauthorized, or nonapproved
When is “surplus line” insurance generally provided?
When an individual or business has an exceptionally large or specialized risk that no authorized insurer can or will cover, in such cases, insurance may be obtained from an unauthorized/non-admitted insurer on a surplus line basis.
Who places surplus line insurance? (specialized)
Surplus line insurance is placed with an insurance surplus line broker
Is it true that surplus line insurance can only be transacted according to certain rules governing that type of business? Please provide an example?
Yes - for example, states keep lists of surplus lines insurers and the insurer through which surplus lines coverage is obtained. There are also rules that do not allow surplus lines insurance to be purchased only to get a cheaper rate when the insurance is available from an authorized issuer
Generally, is surplus line insurance available if there is an authorized insurer in order to obtain better rates?
No
What is surplus line insurance also often called?
Excess and surplus lines because in some cases a limited amount of coverage is available from an authorized insurer, and only the excess is obtained through the surplus lines insurer
What are some examples of exposures that might require surplus lines insurance?
Gaming, Casinos, and entertainment, mining, and skyscrapers are all examples of exposures that might require surplus lines insurance
May insurers also be classified according to their financial strength?
Yes
Several independent rating agencies evaluate various factors such as an insurer’s loss experience, reserves, investment performance, management, and operating expenses - they then assign a rating based on that analysis
Note - loss experience, reserves, investment performance, management, and operating expenses
What are some of the organizations that rate insurers?
- AM Best, Inc
- Standard and Poor’s Insurance Rating Services
- Duff and Phelps Credit Rating Company
- Weiss Ratings
- These firms do not all rate every company, and each firm has different criteria on which companies are evaluated. Each firm also uses a different rating scale
What is the highest rating from AM Best?
A++
What is the highest rating from Fitch?
AAA
What is the highest rating from Moody’s
Aaa
What is the highest rating from Standard & Poor’s?
AAA
Is it true that most insurance companies sell their products through insurance producers, or agents?
Yes
What are the 4 different types of agents?
- Independent insurance Agent
- Exclusive or Captive Agents
- General Agents (GAs) or managing general agents (MGAs)
- Direct-Writing Companies
What is an independent Insurance agent?
Sell the insurance products of several companies and work for themselves or other agents.
With an independent insurance agent, who owns the expiration of the policies?
The agent does - meaning that agent may place that business with another insurer upon renewal if it is in the best interest of the client to do so
Who does an independent insurance agent represent?
The client
What is an exclusive or captive agent?
Exclusive or captive agents only represent one company - these agents are sometimes referred to as career agents working from career agencies. Most often, these captive or career agents are compensated by commissions.
Who do exclusive or captive agents represent?
The insurer
what is a general agent (GA) or managing general agent (MGA)?
These agents hire, train, and supervise other agents within a specific geographical area. GAs and MGAs receive overriding commissions (overrides) on the business produced by the agents they manage
What is a direct-writing company?
Direct-writing companies pay salaries to employees whose job function is to sell the company’s insurance products from a company office. This type of producer is not usually paid a commission and the insurer owns all of the business produced
What is direct response marketing?
In direct response marketing, there is no producer/agent - policies are sold directly to the public by the insurer. Direct response marketing is conducted through the mail, by advertisements in newspapers and magazines, on television and radio or through the internet
In direct response marketing, is any agent/producer involved
no
What is agency?
Agency is a relationship in which one person is authorized to represent and act for another person or for a corporation
The person authorized to act on behalf of another in an agency relationship is known as what?
An agent
The person on who’s behalf the agent is acting in an agency relationship is known as what?
THe principal
The knowledge of the agent is assumed to be the knowledge of the principal; thus, the principal is liable for the statements and actions of their agent
Note
What are the 3 types of authority under the laws of agency?
- Express
- Implied
- Apparent
What is express authority?
Express authority is the authority made explicit in a producer’s written agency agreement with the insurer
What is implied authority?
Authority not written into the agency contract - but it is assumed to be granted to the agent in accordance with general business practices - implied authority is power that the agent believes that he has because it is necessary for the agent to conduct business of the insurer
What is apparent authority?
Authority that others believe that the agent has
Might an insurer still be bound by the actions of an agent if the agent’s apparent authority creates a “presumption of agency” in the mind of the insured? What would be an example of this?
For example, if an agent sends an insured an email stating their policy covers flooding but in reality the policy excludes flooding from coverage, the company could be made to pay the claim because of the actions of its agent
Do agents have a fiduciary responsibility to applicants and insureds?
Yes
What is a fiduciary?
A fiduciary is a person in a position of financial trust
As a fiduciary, the agent has the responsibility to act in the best interest of the insured - t/f?
True
What is commingling?
Mixing of personal and insured or insurer’s funds - this can occur when premiums are not managed properly
Any agent who takes funds held in trust for personal use is guilty of theft and will be punished as provided by law
Note
An agent must be knowledgeable about features and provisions of given policies and must be able to explain important features to the insured
Note
What are suitability considerations?
An agent has the responsibility to make recommendations that are appropriate, suitable, in light of a client’s particular needs, objectives, and circumstances
Insurance policies are legal contracts and are subject to the general law of contracts - what 4 elements must be present?
- Consideration
- Legal Purpose
- Offer
- Acceptance
- Competent parties
An example of an invalid contract due to a nonlegal purpose would be on contract for stealing goods - such a contract would not have a legal purpose
Note
Who are the parties to an insurance contract?
The insurance company and the applicant
An agreement is reached when an offer is accepted with no conditions
Note
What is an offer?
An offer is a proposal made by one of the potential parties of the contract
An applicant who submits a completed application to an insurer along with a payment for the first premium is making an offer to become insured by the insurer
Note - if the policy is issued as applied for, the insurer has accepted the offer
Is there an offer if the applicant sends the application to the insurance company without payment of the premium?
No
THe insurance company makes an offer by issuing the policy
Note - the applicant accepts it by paying the first premium
Acceptance of an offer must be unconditional and unqualified
Note - if the acceptance is qualified or conditional, no agreement has been reached (in fact, a qualified acceptance is actually a rejection of the offer and is called a counter offer
What is the “consideration of a contract”
The exchange of value - this means money
THe consideration from the applicant is the premium payment - the consideration from the insurer is a promise to pay if certain losses occur
Note
For a contract to be binding, parties must be competent - meaning what?
- They must be of legal age (18)
2. They must be legally competent
What is the acronym to remember for a legal contract to be binding?
CLOAC C: Consideration L: Legal Contract O: Offer A: Acceptance C: Competent parties
Insurance policies are contracts of “adhesion” what does that mean?
Their provisions are written by only one party to the contract, and the other party is required to adhere, or stick, to them - the insured must “adhere” to the insurer’s terms
If there is any ambiguity (doubt) in the wording of a contract of adhesion, courts will interpret the wording in favor of who?
The adhering party - that is, parties that have no input into the wording of a contract and no power to change the contract cannot be held responsible for any unclear contract language
Who is given advantage in the case of an insurance policy legally?
The insured - because they are complying to a contract of adhesion
What are aleatory contracts?
Contracts where the value received from the contract by each party may be unequal
Are insurance policies aleatory contracts?
Yes (small premium for a large amount of coverage)
An insurance policy is a contract of utmost good faith - what does that mean?
This means that each party is entitled to a reasonable expectation that the other party will not try to conceal pertinent information or otherwise act deceptively - violation can void the claims of the offending party under a contract of utmost good faith
Insurance contracts are “unilateral”, or one-sided - what does that mean?
insurance policies are one-sided contracts because only one party is legally bound to perform under the contract - the insured has the right to stop paying the premiums at any time
As long as the insured keeps the contract in force by paying the premiums, the insurer is required by law to pay for any covered losses that occur
Note
Unilateral - only one PROMISE is made - how does this relate to insurance contracts?
THe insurance company PROMISES to pay for a covered loss, the insured does NOT PROMISE to pay the claim
Property and casualty are “Personal” contracts - are life and health?
Life and health policies are not
What is a “personal’ contract (like property and casualty)
A personal contract is one made with a particular person and no one else. The contract cannot be transferred to a different person (with a homeowners’ policy for instance, the insurer evaluates not only the condition of the property, but also whether the insured will take reasonably good care of the property, a different person would represent a different risk - so the contract does not allow a change of parties
With life insurance - the policy is not with the insured, but with the policyowner. The insured and the policyowner are often the same person, but they do not have to be. For example, a wife can apply for a policy on her spouse, in which case the wife applying for the insurance is the policyowner and the spouse is insured
Note
Is a life insurance policy a personal contract?
No - the insurer has a contract not with a particular person, but with whatever party is the policyholder
Personal contracts cannot be reassigned to someone else - auto and homeowner insurance policies are personal contracts. However, assignment can take place with life insurance policies pledged as a security for a bank loan
Note
Insurance contracts are “conditional” contracts - meaning that certain conditions must be fulfilled in order for performance under the contract to be enforced. For example, the contract may require what?
Certain documents to be filed to prove that a loss has occurred - in the case of life insurance, a death certificate must be filed
What does it mean to say that insurance policies are contracts of “indemnity”
it means that the contract is intended to restore the insured to the financial status he or she enjoyed prior to the occurrence of a loss - no more and no less
What is the principle of restoring an insured to his or her pre-loss financial state called?
Indemnification
Does indemnification apply for life insurance?
No - it is impossible to restore the value that occurs upon death
What is a “representation” in the context of insurance?
A statement that is believed to be true, to the best of ones knowledge at the time it is given
What is a “misrepresentation” in the context of insurance?
A representation that is actually false
Do misrepresentations necessarily void insurance contracts?
No - they must be material misrepresentations to do so
When is a misrepresentation deemed “material”
If the false information would have been a determining or material factor in the insurer’s acceptance of the risk - if the insurer would have rejected the application or written the coverage on a different basis
What is a warranty?
A statement that is guaranteed to be true
If a warranty is not kept, what is said to have occurred?
A breach of warranty
An example of a warranty for property and casualty insurance would be a business guaranteeing that it will hire a security guard - t/f?
True - if it does not, its property insurance policy will be void
For life and health insurance, do most state laws say that statements or responses to questions on an application are representations not warranties?
Yes - that is, an untrue statement on an application is not a breach of warrant/void the contract. To be grounds for voiding the contract, it must be material to the insurer’s acceptance of the risk
What is concealment?
The intentional failure to disclose facts
An insurer may be able to void the insurance contract if it can prove that an applicant or insured intentionally concealed a material fact
Note
What is fraud?
Fraud is an intentional act designed to deceive and induce another party to part with something of value
Are all acts of misrepresentation or concealment fraud?
No
What are the repercussions to Fraud and False Statements?
- A person who transacts with insurance in interstate commerce and who intentionally makes false statements in connection with financial reports or documents presented to insurance regulators appointed to investigate the person and to influence the actions of such officials is subject to:
a. A fine
b. Imprisonment for up to 10 years
c. both - Imprisonment may be ordered for up to 15 years if the false statements jeopardized the safety and soundness of the insurer and were a significant cause of the insurer being placed in conservation, rehabilitation, or liquidation by the courts
- Officers, directors, agents, and employees of an insurance company who willfully embezzle or misappropriate funds are subject to the same consequences described above
What is a waiver?
A waiver is defined as the intentional and voluntary giving up of a known right
What is an Estoppel?
A legal doctrine that prevents a party from denying action if it had been accepted previously
