Life & Health Insurance & Annuities Flashcards
Actuarial Department
calculates policy rates, reserves, & dividends
Alien Insurer
in the United States in an insurer whose principal office and domiciled location is outside the country
Admitted Insurer
or authorized insurer, is an insurer who has received a certificate of authority from a states department of insurance authorizing them to conduct insurance business in that state
Broker
represents themselves & the insured (client)
Captive Insurer
insurer established & owned by a parent firm for the purpose of insuring the parent firm’s loss exposure
Certificate of Authority
license issued to an insurer by a department of insurance (or equivalent agency) which authorizes that company to conduct insurance business in that particular state.
Claims Department
responsible for processing, investigating, and paying claims
Divisible Surplus
amount of earnings paid to policy owners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses & general business purposes
Domestic Insurer
insurer with its principal or home office in a state where it is authorized
Foreign Insurer
insurer with its principal office or domicile location in a state different from the state it is transacting insurance business
Fraternal Benefit Society
nonprofit benevolent organizations that provide insurance to its members
Industrial Insurer
make up a specialized branch of the industry, primarily providing policies with small face amounts with weekly premiums. Other names for industrial insurers include home service or debt insurer.
Insurance
transfer of risk through the pooling or accumulations of funds
Insured
customer receiving insurance protection under an insurance policy
Insurer
insurance company
Lloyds of London
NOT an insurer, but a group of individuals and companies that underwrite unusual insurance
Multi-line Insurer
an insurance company or independent agent that provides a one stop-shop for business or individuals seeking coverage for all their insurance needs
Mutual Insurance Company
insurance companies characterized by having no capitol stock, being owned by policy owners & usually issue participating insurance
Non-admitted Insurer
an insurer who has not a certificate or authority from a state’s department of insurance authorizing them to conduct insurance business in that state
Nonparticipating Policy
typically issued by stock companies, do not allow policy owners to participate in dividends or electing the board of directors
Participating Plan
an insurance policy under which the policy owners share in the company’s earnings through receipt of dividends and also elect company’s board of directors
Private (Commercial) Insurer
companies owned by private citizens or groups that offer one or more insurance lines. Commercial insurers are NOT government-owned
Reciprocal Insurer
an unincorporated organization in which all members insurer one another
Reinsurance
the acceptance by one or more insurer, of a portion of the risk underwritten by another insurer who has contracted for the entire coverage
Reinsurer
company that provides financial protection to insurance companies. Reinsurers handle risks that are too large for insurance companies to handle on their own & make it possible for insurers to obtain more business that would otherwise be able to
Risk Retention Group
a group owned liability insurer which assumes and spread product liability and other forms of commercial liability risk among its members
Self-Insurers
establishes a self funded plan to cover potential losses instead of transferring the risk to an insurance company
Stock Insurance Company
is an insurance company owned and controlled by a group of stock holders (or share holders) whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fixed premium, nonparticipating policies
Surplus Lines Insurance
is nontraditional insurance only available from a surplus lines insurer. They offer coverage for substandard or unusual risks not available through private or commercial carriers
Underwriting Department
the department within an insurance company responsible for reviewing applications, approving or declining applications, & assigning risk classifications
Types of Insurance Companies
insurance companies are typically classified as private/commercial & government. Within these two classes are many categories of insurance providers, as well as insurance plans and insurance producers.
Private (Commercial) Insurance Companies
Private companies offers many lines of insurance. Companies that sell more than one line of insurance are known as multi-line insurers. Stock and mutual companies can be both considered commercial insurers, and as such both can write life, health, property and casualty insurance.
Stock Companies- Nonparticipating
Private organization, organized and incorporated under state laws for the purpose of making a profit for its stockholders (shareholders). Stock insurance companies issue nonparticipating insurance policies. Nonparticipating insurance policies do not allow policyholders to participate in the companies profits (receive dividends). Nonparticipating insurance policies also do not allow policyholders to participate in electing the companies board of directors. Opposed to passing savings on to policyholders, stock companies look to grow their earned surplus.
Mutual Companies- Participating
Organized and incorporated under state laws but they do not have any stockholders. Instead, the owners are policyholders. Customers have the right to vote for members of the board of directors and participate in dividends. Mutual insurers allow their policyowners to share in any company earnings (divisible surplus).
Reciprocal Insurers
Organized on the basis of ownership by their policyholders. It is the policyholders themselves who insure the other policyholders’ risks. An attorney-in-fact manages reciprocal insurers.
Reinsurers and Retention Limits
Specialized branch of the insurance industry because they insure insurers. Reinsurance is an arrangement by which an insurance company transfers a portion of an assumed risk to another insurer. It occurs to limit the loss any one insurer would face should a very large claim become payable. Another reason for reinsurance is to enable a company to meet specific objectives, such as favorable underwriting or mortality results. The company transferring the risk is called the ceding company. In a reinsurance agreement, the insurance company that transfers its loss exposure to another insurer is called the primary insurer.
Service Provider
Sells medical and hospital care services to their subscribers, not insurance, in return for premium payment. Another type of service provider is a health maintenance organization. HMOs offer a wide range of health care services to member subscribers for a fixed periodic premium paid in advance of any treatment. HMOs are known for stressing preventative health care and early treatment programs. The third type of service providers is the preferred provider organization. Under the usual PPO arrangement, a group of desiring healthcare services will obtain price discounts or special services from certain select healthcare providers in exchange for referring its employees or members to them.
