Keywords/Basic Principles of Insurance

Question 1

calculates policy rates, reserves, and dividends

Answer 1

Actuarial Department

Question 2

this insurer in the US is an insurer whose principal office and domiciled location is outside of the country

Answer 2

Alien Insurer

Question 3

AKA Authorized insurer is an insurer who has received a certificate of authority from a state’s department of insurance authorizing them to conduct insurance business in that state

Answer 3

Admitted Insurer

Question 4

represents themselves and the insured

Answer 4

Broker

Question 5

an issuer established and owned by a parent firm for the purpose of insuring the parent firm’s loss exposure

Answer 5

Captive Insurer

Question 6

a license issued to an insurer by a department of insurance (or equivalent state agency), which authorizes that company to conduct insurance business in that particular state

Answer 6

Certificate of Authority

Question 7

Responsible for processing, investigating, and paying claims

Answer 7

Claims Department

Question 8

the amount of earnings paid to policy owners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes

Answer 8

Divisible Surplus

Question 9

an insurer with its principal or home office in a state where it is authorized

Answer 9

Domestic Insurer

Question 10

an insurer with its principal office or domicile location in a state different from the state it is transacting insurance business

Answer 10

Foreign Insurer

Question 11

nonprofit benevolent organizations that provide insurance to its members

Answer 11

Fraternal Benefit Society

Question 12

Make up a specialized branch of the industry, primarily providing policies with small face amounts with weekly premiums. Other names for this include home service or debt insurers

Answer 12

Industrial Insurer

Question 13

the transfer of risk through the pooling or accumulation of funds

Answer 13

Insurance

Question 14

the customer receiving insurance protection under an insurance policy

Answer 14

Insured

Question 15

the insurance company

Answer 15

Insurer

Question 16

NOT an insurer, but a group of individuals and companies that underwrite unusual insurance

Answer 16

Lloyd’s of London

Question 17

an insurance company or independent agent that provides a one-stop-shop for businesses or individuals seeking coverage for al their insurance needs. For example, many large insurers offer individual policies for automobile, home owner, long-term care, life, and health insurance needs

Answer 17

Multi-Line Insurer

Question 18

insurance companies characterized by having no capital stock, being owned by its policy owners, and usually issue participating insurance

Answer 18

Mutual insurance company

Question 19

AKA an unauthorized insurer is an insurer who has not received a certificate of authority from a state’s department of insurance authorizing them to conduct insurance business in that state

Answer 19

non-admitted insurer

Question 20

typically issued by stock companies, do not allow policy owners to participate in dividends or electing the board of directors

Answer 20

non-participating policy

Question 21

an insurance policy under which the policy owners share in the company’s earnings through receipt of dividends and also elect the company’s board of directors

Answer 21

participating plan

Question 22

these companies are companies owned by private citizens or groups that offer one or more insurance lines. commercial insurers are NOT government-owned

Answer 22

private (commercial) insurer

Question 23

an unincorporated organization in which all members insure one another

Answer 23

reciprocal insurer

Question 24

the acceptance by one or more insurers of a portion of the risk underwritten by another insurer who has contracted for the entire coverage

Answer 24

reinsurance

Question 25

a company that provides financial protection to insurance companies. these handle risks that are too large for insurance companies to handle on their own and make it possible for insurers to obtain more business than they would otherwise be able to

Answer 25

Reinsurer

Question 26

a group-owned liability insurer which assumes and spread product liability and other forms of commercial liability risks among its members

Answer 26

risk retention group

Question 27

establishes a self-funded plan to cover potential losses instead of transferring the risk to an insurance company

Answer 27

self insurers

Question 28

an insurance company 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, non participating policies

Answer 28

stock insurance company

Question 29

nontraditional insurance only available from a surplus lines insurer. They offer coverage for substandard or unusual risks not available through private or commercial carriers

Answer 29

Surplus Lines Insurance

Question 30

the department within an insurance company responsible for reviewing applications, approving or declining applications, and assigning risk classifications

Answer 30

Underwriting department