Module 4 Flashcards
provide financial products and services to the public.
financial institutions
means that the
number of firms in the financial services industry has declined over time because of mergers and acquisitions.
consolidation
means that financial
institutions can now sell a wide variety of financial products that earlier were outside their core business area.
convergence
TYPES OF PRIVATE INSURERS
▪ Stock insurers
▪ Mutual insurers
▪ Lloyd’s of London
▪ Reciprocal exchanges
▪ Blue Cross and Blue Shield
plans
▪ Health maintenance
organizations (HMOs)
▪ Other types of private insurers
is a corporation
owned by stockholders. The objective is to earn profits for the stockholders. The
stockholders elect a board of directors, who in turn appoint executive officers to
manage the corporation.
stock insurer
is a corporation
owned by the policyholders. There are no stockholders. The policyholders elect a
board of directors, who appoint
executives to manage the corporation. Because relatively few policyholders bother to vote, the board of directors has
effective management control of the company.
mutual insurer
There are several types of mutual insurers, including the following:
▪ Advance premium mutual
▪ Assessment mutual
▪ Fraternal insurer
is owned by the policyholders; there are no stockholders, and the insurer does not issue assessable policies. Once the
insurer’s surplus (the difference between assets and liabilities) exceeds a certain amount, the states will not permit a
mutual insurer to issue an assessable policy.
advance premium mutual
has the right to assess
policyholders an additional amount if the insurer’s financial operations are unfavorable.
assessment mutual
is a mutual insurer that provides life and health insurance to members of a social or religious organization.
fraternal insurer
means that a mutual insurer is converted into a stock insurer.
demutualization
a company that directly or
indirectly controls an authorized insurer.
holding company
is not an insurer, but is
the world’s leading insurance market that provides services and physical facilities
for its members to write specialized lines of insurance. It is a market where members join together to form syndicates
to insure and pool risks. Members include some of the world’s major insurance groups and companies listed
on the London Stock Exchange, as well as individuals (called Names), and limited partnerships.
Lloyd’s of London
can be defines as an unincorporated organization in which insurance is exchange among the members
reciprocal exchange
generally are organized as nonprofit, community-oriented prepayment plans that provide coverage primarily for hospital services
Blue Cross Plans
