Ohio Life and Health Insurance Flashcards
Sells insurance for a profit. Offer many lines of insurance. Divided into two many groups; stock and mutual
Commercial Insurers
Organized and incorporated under state laws for the purpose of making a profit for its stockholders (shareholders)
Stock Companies
Policyholders do not participate in Recieving dividends or electing board of directors
Nonparticipating Insurers
Stockholders
Stock Dividends are paid to
A stock company converts into a mutual company
Mutualization
Mutual Company can convert to a stock company
Demutualization
Rare case of a stock insurance company issuing both participating and nonparticipating policies. Dividends can never be guaranteed.
Mixed Plan
Participate in recieving dividends and electing board of directors.
Participating Insurers
Dividends get paid to policyholders.
Mutual Companies
Operates based on loss-sharing by group members. No premium is payable in advance. Each member is assessed an individual portion of losses that occur.
Pure assessment mutual company
Charges a premium at the beginning of the policy period. If the original premiums exceed the operating expenses and losses, the surplus is returned to the policyholders as dividends. If total premiums are not enough to meet losses, additional assessments are levied against the members. The amount of assessment that may be levied is limited either by state law or simply as a provision of the insurers by law
Advance Premium Assessment Mutual
Special types of mutual companies, nonprofit, religious, ethnic, or charitable organizations that provide insurance solely to their members
Fraternal benefit societies
Mutual companies formed by a group of people in the same industry or profession
Risk retention group
Offers benefits to subscribers in return for the payment of a premium (HMO) (PPO)
Service providers
Unincorporated groups of individual members that provide insurance for other members through indemnity contracts
Reciprocal Insurers
Make arrangements with other insurance companies to transfer a portion of their risk to the reinsurer
Reinsurers
An insurer established and owned by the parent company to insure the parent company’s loss exposure
Captive insurer
(Also known as industrial insurance) is sold by home service or debt life insurance companies. Face amounts are small. Usually $1000-$2000 and premiums are paid weekly
Home Service Insurer
Provide social insurance programs to protect against universal risks by redistributing income to help people who cannot afford the cost of incurring such losses themselves
Government Insurance
Provides income benefits for the elderly, survivors of those who died young, and federal disability
Social Security
Health insurance to care for the elderly
Medicare
Health insurance to aid the financially needy
Medicaid
Servicemen’s or veterans group life insurance for active and retired members of the military
SGLI and VGLI
Health insurance for members of the military and their family
Tri-Care
Retain risks and must have a large number of similar risks and enough capital to pay claims. Not a method of transferring risk, rather establish their own self-funded plan to cover potential losses.
Self Insurers
A plan in which an employer pays insurance benefits from a fund derived from the employers current revenues
Self- Funded Plan
Not an insurance company. Members of the association from syndicates to underwrite and issue insurance- like coverage.
LLody’s Of London
The ways insurance products are marketed and sold to the public.
Distribution Systems
works for only one insurer
Captive Agent
Work for themselves or for several insurers non- exclusively
Independent Agent
Officers are established in certain locations. These agents are recruited to work at these locations. Training and Recruiting
Career Agency System
Agents work for and independent agency selling policies from several insurance companies. Agents are not employees of the insurance company. They work for this system. Primarily sell insurance, instead of recruiting and training new agents as in the career agency system
Personal Producing General Agency System
Agents represent a number of insurance companies under separate contractual agreements. Can also work for themselves or under other insurance agents. Have control and ownership over clients account.
Independent Agency System
With this system, branch offices are established in several locations. Instead of a general manager running the agency, a salaried branch manager is employed by the insurer.
Managerial System
Policies are marketed and sold through television and radio advertisement, newspapers, magazines etc.
Mass Marketing
The U.S Supreme Court ruled that insurance transactions crossing the state lines are NOT interstate commerce
1869 Paul V. Virginia
Gave the authority to the states to regulate insurance
1905 The Armstrong Investigation Act
Ruled that insurance transactions crossing state lines ARE interstate commerce and subject to federal regulation. DID NOT affect the power of states to regulate insurance
1944 United States V South Eastern Underwriters Association
States that while the federal government has authority to regulate the insurance industry, it WOULD NOT excercise its right if the insurance industry was regulated effectively and adequately on the state level.
1945 The McCarren Ferguson Act
provides individuals privacy protection and fair and accurate credit reporting
1970 Fair Credit Reporting Act
this law repealed the Glass- Steagall Act; this allows Banks, retail brokers, and insurance companies to enter each other’s line of business
1999 Gramm- Leach- Billley Act (Financial Services Modernization Act)
designed to detect and deter terrorists and their funding by imposing anti money laundering requirements on brokerage firms and financial institutions
2001 USA Patriot Act
Insurance calls are NOT exempt from the no not call registry
2003 National Do Not Call Registry
Offen shortened to the Affordable Care Act. Represents one of the most significant regulatory overhauls and expansions of coverage in US history
2010 Patient Protection and Affordable Care Act
Organization composed of insurance commissioners from all 50 states, District of Columbia and 4 US territories. responsible for recommending appropriate laws and regulations. Responsible for creation of the advertising code and the unfair trade practices act and the Medicare supplement insurance minimum standards model act
National Association of Insurance Comissioners
- To Encourage uniformity in state insurance laws and regulations
- Assist in the administration of those those and regulations by promoting efficiency
- Protect the interest of policyowners and consumers
- Preserve state regulation of the insurance business
The Four Objectives of The NAIC (National Association of Insurance Comissioners)
The code specifies certain words and phrases that are considered misleading and are not to be in use in advertising of any kind
Advertising Code
Gives chief financial officer the power to investigate insurance companies and producers to impose penalities. Also gives officers the authority to seek a court injunction to restrain insurers from using any methods believed to be unfair
Unfair Trade Practices Act
Life and health insurance agents dedicated to supporting the industry and advancing the quality of service provided by insurance professionals. These organizations created a code of ethics detailing the expectations of agents in their duties toward clients
National Association of Insurance and Financial Advisors (NAIFA) and National Association of Health Underwriters (NAHU)
The accounting measurement of an insurers future obligations to its policyholders. They are classified as liabilities on the insurance companies accounting statements since they must be settled at a future date.
Reserves
An insurers ability to make unpredictable payouts to policyowners
Liquidity
Established by all states to support insurers and protect consumers in case an insurer becomes insolvent.
Guaranty associations
Credit rating agencies that rate or grade the financial strength and stability of insurers based on claims, reserves, and company profits.
Independent Rating Services
nationally recognized statistical rating organizations that rate insurers
A.M Best, Moodys, Standard and Poors, and Fitch Ratings
