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
generally are nonprofit, prepayment plans that provide payment for physicians’ and surgeons’ fees and other medical services
Blue Shield Plans
are organized plans of health care that provide comprehensive health-care services to their members
HMOs
is an insurer owned by a parent firm for the purposes of insuring the parent firm’s loss exposures
Captive Insurers
refers to life insurance that was sold originally by mutual savings banks in three states: Massachusetts, New York, and Connecticut
Savings Bank Life Insurance (SBLI)
someone who legally represents the principal and has the authority to act on the principal’s behalf
agent
someone who legally represents the insured even though he or she receives a commission from the insurer
brokers
is an insurer not licensed to do business in the state
nonadmitted insurer
is a special type of broker who is licensed to place business with a nonadmitted insurer
surplus lines broker
is a plan for selling individually underwritten property and casualty coverages to group members: auto and homeowners insurance are popular lines that are frequently used in such plans
Mass Merchandising
is an insurer in which the salesperson is an employee of the insurer, not an independent contrator
direct writer
sells directly to the public by television, telephone, mail, newspaper, and other media
direct response system
the agent only represents only one insurer or a group of insurers under common ownership
exclusive agency system
under this system, individual producers go into business firm, and, with the approval of management, conduct sales interviews on site with employees interested in purchasing life insurance products or annuities
worksite marketing
many stock brokers are also licensed to sell life insurance products and fixed and variable annuities
stock brokers
usually represents several unrelated insurers. the agency owns the expirations or renewal rights to the business
independent agency system
is a marketing system by which life and health insurance products are sold directly to consumers without a face-to-face meeting with an agent`
direct response system
are independent contractors who represent several insurers and sell primarily property and casualty insurance
independent property and casualty agents
is an independent agent who receives special financial consideration for meeting minimum sales requirements.
Personal Producing General Agent (PPGA)
independent agents who do not have an exclusive contracts with any single insurer or an obligation to sell the insurance products of a single insurer
Brokers
full-time agents who usually represent one insurer and a re paid on a commission basis
Career Agents
agents who sell primarily property and casualty insurance also sell individual life and health insurance products.
Multiple Line Exclusive Agency System
