Keywords Flashcards
actuarial department
this is the department that calculates policy rates, reserves, and dividends.
adjuster
this is the person who investigates claims and arranges for them to be settled or denied.
alien insurer
in the US, this is an insurer whose principal office and domicile location is outside this country
admitted insurer
this is an insurer who has recieved a certificate of authority from a state’s department of insurance which authorizes them to conduct insurance business in that state.
agent
this is an individual or organization that,s authorized to solicit, sell, and transact (bind) coverage for specific insurance providers under the terms of one or more agent contracts.
authorized insurer
this is an admitted insurer.
broker
this is a person who represents himself and the insured (i.e., the client or customer). A broker cannot bind coverage on behalf of an insurance carrier because a broker is not appointed as an agent.
captive insurer
this is an insurer that’s established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure.
certificate of authority
this is a license that’s issued to an insurer by an insurance department (or equivalent state agency) that authorizes that company to conduct insurance business in that particular state.
claims department
this is the department that’s responsible for processing, investigating, and paying claims.
divisible surplus
this is the amount of earnings that are paid to policy owners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes.
domestic insurer
this is an insurer with its principal or home office in the state in which it’s authorized
foreign insurer
this is an insurer whose principal office or domicilelocation is in a state that’s different from the state in which it’s transacting insurance business
fraternal benefit society
this is a non-profit benevolent organization that provides insurance to its members
independent insurance agency
this is an agency that can represent any number of insurance companies through contractual agreements. Unlike a captive agency, they are not limited to one insurance company.
insurance
this is the transfer of risk through the pooling or accumulation of funds.
insured
this is the customer who recieves insurance protection under an insurance policy.
insurer
this is an insurance company
lloyds of london
this is NOT an insurer but a group of individuals and companies that underwrite unusual insurance policies.
marketing division
this is the division that’s responsible for acquiring prospective applicants through various advertising media.
monoline insurer
this is an insurance carrier that only sells one line of insurance.
multi-line insurer
this is an insurance company or independent agent that provides a “one-stop-shop” for businesses or individuals who are seeking coverage for all of their insurance needs. for example, many large insurers offer individual policies for automobile, homeowner, long-term care, life, and health insurance needs.
mutual insurance company
this is an insurance company that’s characterized by having no capital stock, being owned by their policy owners, and typically issuing participating insurance.
non-admitted (unauthorized) insurer
tis is an insurer that has not recieved a certificate of authority from a state’s department of insurance which authorizes it to conduct insurance business in that state.
nonparticipating policy
this is a policy that’s typically issued by stock companies. this type of policy doesn’t allow policy owners to participate in dividends or to elect the board of directors.
participating policy
this is an insurance policy that pays policy dividends to policy owners. by recieving dividends, policy owners share in the company’s divisible surplus and also elect the company’s board of directors.
personal producing general agency (PPGA)
this is an agency that represents one or more specific insurers. A PPGA is a similar agency system, but PPGAs don’t recruit, train, or supervise career agents.
policy owner
this is the person who’s responsibl for the payment of premiums and who possesses all ownership rights of the contract. Typically, the policy owner is also the insured.
private (commercial) insurer
this is an insurer that’s owned by private citizens or groups that offer one or more insurance lines. Commercial insurers are NOT government-owned.
producer
this is an individual who’s licensed by one or more states to sell, solicit, or transact insurance in a given state.
proposed insured
this is the person whose life will be covered by an insurance policy
public adjuster
this person acts on behalf of a consumer who’s settling an insurance claim.
reciprocal insurer
this is an unincorporated organization in which all members insure one another. An attorney-in-fact manages it.
reinsurance
this is the acceptance by one or more insurers (reffered to as reinsurers) of a portion of the risk being underwritten by another insurer that has contracted with a consumer to cover the entire risk
reinsurer
this is a company that provides financial protection to insurance companies. reinsurers handle risks that are too large for insurance companies to cover on their own and make it possible for insurers to obtain more business than they would otherwise be able to obtain.
risk retention group
this is a group-owned liability insurer that assmes and spreads product liability and other forms of commercial liability risks among its members.
sales department
this department acquires clients through one-on-one meetings in which consumers complete applications.
self-insurer
this is a company that establishes a self-funded plan to cover potential losses rather than transferring the risk to an insurance company.
service representatives
these are customer service employees. service representitives are not required to obtain a license because they neither sell nor solicit coverage, and they don’t bind coverage.
solicitors
these are the individuals who solicit and schedule sales meetings between consumers and the producers for whom they work. some states seperately license these individuals.
stock insurance company
this is an insurance company that’s owned and controlled by a group of stockholders (or shareholders) whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fixed premium, nonparticipating policies.
surplus lines insurance
this is non-traditional insurance that’s only available from a surplus lines insurer. This type of insurance provides coverage for substandard or unusual risks and is not available through private or commercial carriers
unauthorized insurer
this is a non-admitted insurer
National Association of Insurance Commisioners (NAIC)
All state insurance regulators (commissioners, superintendents, or directors) are members of the NAIC. The NAIC brings together regulators and industry personnel on committees that regularly examine various aspects of the insurance industry and recommend applicable insurance laws and regulations. Formed shortly after Paul V. Virginia with 4 main objectives.
1. to encourage uniformity among the state insurance laws and regulations
2. to assist in the administration of those laws and regulations by promoting effeciency
3. to protect the interests of policy owners and consumers
4. to preserve state regulation of the insurance business
The NAIC is NOT a regulatory organization. they create “model acts” and “model regulations.”
NAIC Unfair Trade Practices Act
most jursisdictions have adopted their own version of this act, althought individual states adjust the model to reflect their laws and regulations. All states use this model as a base to set their laws on common standards.
This act gives the head of each state insurance department power to investigate insurance companies and producers, bit it also authorizes them to issue cease and desist orders and to impose penalties. This act gives offocers the authority to seek a court injunction to restrain insurers from using methods believed to be unfair. methods include misrepresentation, false advertising, coercion, intimidation, unfair disrimination, and inequitable administration of claims settlement.
NAIC Advertising Code
when it comes to marketing, a previous issue was misleading insurance advertisement. many states now use this code which specifies certain words and phrases that are considered misleading, and they cannot be used in the advertising of any kind of insurance. this code also requires the complete disclosure of policy renewal, cancellation, and termination provisions.
The National Confrence of Insurance Legislators (NCOIL)
formed in 1969, NCOIL is a legislative organization focused on the insurance industry with members including primarily state legislators from around the nation that serve on state insurance and financial institution committees. As with the NAIC, NCOIL works to preserve state regulation of the industry and to educate public policymakers on related issues. They also write model laws for consideration, helps legislators make informed decisions on insurance issues that affect their constituents and declares its opposition to any federal encroachment on state authority to oversee insurance business, authroized under the McCarran-Ferguson Act of 1945.
National Association of Insurance and Financial Advisors (NAIFA) and National Association of Health Underwriters (NAHU)
members are life and health agents dedicated to supporting the industry and quality of service being provided by insurance proffesionals. these organizations created a code of ethics which details the expectations of agents in their duties toward clients.
Agent Marketing and Sales Practices
(made by NAIFA and NAHU)
selling to needs, suitability of reccomended products, full and accurate disclosure, documentation, and client service.
Producer Responsibilities
(made by NAIFA and NAHU)
providing customers with best service possible, soliciting new business for their company by helping clients acquire products from application to policy delivery, guiding customers to the right products that meet their needs and maintaining a relationship with them, and building a business by keeping current customers satisfied and also actively seeking referrals.
Rating services
primary purpose is to determine the rated insurance company’s financial strength, an insurer’s financial strength can be evaluated by examinng the company’s reserves and liquidity.
Reserves
the accounting measurment of an insurer’s future obligations to its policyholders. they are classified as liabilities on the insurance company’s accounting statements since they must be settled at a future date.
Liquidity
indicates a company’s ability to make unpredictable payouts to policyowners.
