Questions - Chapter 1.3 - Distribution of Insurance Flashcards
Name the two major types of insurers operating in Canada.
1) Incorporated
2) Unincorporated
Explain the difference between “proprietary” insurers and “non-proprietary” insurers.
Incorporated insurers write the majority of all insurance. They’re generally stock companies which are owned by shareholders seeking a profit or return on investment. Unincorporated insurers, all underwriters become personally responsible for the losses on insurance business they chose to underwrite (eg. Lloyd’s of London).
List the two most common distribution systems used by insurers to sell their products.
Independent Agency/Brokerage System and Direct Writing System.
Outline three features of each of these two systems.
Independent Agency/Brokerage System features:
I) Owners are not employees of Insurers.
II) Owners responsible for payment of all expenses associated with the business.
III) Own the business the produce.
Direct Writing System features:
I) Producers are employees of the insurer.
II) Remuneration of producers may be on either of a salary or commission basis or combination of salary and bonus.
III) Insurer owns all business written.
What’s the purpose of the Insurance Bureau of Canada (IBC)?
IBC collects insurance statistics, provides actuarial analysis to member companies, drafts policy forms, manages inter-company agreements on claims settlements, monitors legislation and works with governments in the development of insurance legislation.
What’s the purpose of the Insurer’s Advisory Organization (IAO)?
The organization provides insurers with risk inspection and advisory rating services. It’s one of Canada’s leading loss control firms.
What’s the purpose of the Insurance Crime Prevention Bureau (ICPB)?
Is a not-for-profit organization which provides assistance to police authorities in the detection, investigation, and prosecution of insurance crimes. They’re involved in investigating suspected insurance crimes.
