Study 1: The Commercial Insurance Context Flashcards
Describe factors that are leading to the evolution of business. Describe they key players in Canadian commercial insurance. Describe key components that impact the insurance Industry's market dynamics. Describe the bodies that regulate the Canadian commercial insurance industry and the main objectives of the regulations. Describe themes that are becoming increasingly relevant as the commercial insurance industry evolves.
What is the meaning of Direct Writer?
Insurance company selling directly to the public and not through independent agents or brokers.
What is the meaning of Insured?
Any person, including a corporation, covered by an insurance policy.
What is the meaning of Insurer?
The insurance company that undertakes to indemnify for losses and perform other insurance-related operations.
What is the meaning of Loss Ratio?
The ratio of total losses paid out in claims plus adjustment expenses divided by the total earned premiums. Usually expressed as a percentage.
What is the meaning of Broker?
A licensed independent person or firm who acts on behalf of an insured in placing business with insurance companies.
What is the meaning of Producer?
A broker or an agent who sells insurance.
What is the meaning of Reinsurance?
Insurance purchased by an insurance company from another insurance company (reinsurer) to provide it protection against large losses on cases it has already insured. Essentially, insurance for insurance companies.
What is the meaning of Cede?
An insurer’s transferral or signing over part of an insurance risk to a reinsurer.
What is the meaning of Premium?
The price of insurance protection for a specific risk for a specified period of time.
What is the meaning of Capacity?
The measure of an insurer’s ability to issue a contract of insurance. Measured usually by the largest amount it will accept on a given risk or, in certain situations, by the maximum volume of business that the company is prepared to accept.
What is the meaning of Soft Market?
A phase of the insurance market cycle in which insurers increase the amount of coverage they are willing to write, causing supply to increase and premiums to fall.
What is the meaning of Hard Market?
A phase of the insurance market cycle in which insurers reduce the amount of coverage they are willing to write, causing supply to shrink and premiums to rise.
What are two ways that a Hard Market can arise?
1) A hard market can occur as a result of very large unexpected losses that can cause a depletion of capital within the insurance and reinsurance sectors.
2) A hard market may also arise from a gradual lowering of underwriting standards that occur during a soft market cycle, leading to a greater loss experience over time.
What is the meaning of Class Action?
A civil procedure used to secure a judicial remedy for a group of persons who have common interests in an actionable cause. The group’s common interests arise from the issues of fact surrounding the case and from issues of law.
What is the meaning of Punitive Damages?
Damages in excess of those required to compensate the plaintiff for the wrong done, which are imposed in order to punish the defendant because of the particularly wanton or wilful nature of his or her wrongdoing. Also called “exemplary damages”.
What is the meaning of Insurance Claims Catastrophe?
A sudden and unexpected event causing many insured claims, often on a large scale. The event often creates an urgent situation of need for policyholders that is a challenge to service due to the scarcity of resources in the aftermath.
What is the Insurance Bureau of Canada (IBC)?
The trade association of the property/casualty insurance industry in Canada. It concerns itself with such matters as public relations, the collection of statistics, the promulgation of forms, etc. It has a substantial permanent staff but also many committees made up of volunteers from the senior ranks of insurance companies.
What is the Insurance Broker’s Association of Canada (IBAC)?
As the national voice of 25,000 home, car, and business insurance brokers in Canada, IBAC represent their interests to the federal government. The IBAC develops national licensing courses and professional development programs for brokers for delivery through its 11 provincial/regional associations.
What is the meaning of Solvency?
A business entity’s ability to meet its long-term financial commitments.
What is the meaning of Reinsurer?
An insurance company but reinsurance primary insurance company.
What is the Minimum Capital Test (MCT)?
A measure of solvency applied to insurance companies by the Office of the Superintendent of Financial Institutions (OFSI). It shows whether insurers have assets worth at least a certain multiple of the amount of their liabilities, as well as a margin of additional assets.
What is the meaning of Underwriter?
The insurance company or group that underwrites or insurers a particular risk. The individual within an insurance company whose responsibility it is to accept or reject business in the particular line in which she specialises and, in this way, choose the risks her principles are prepared to underwrite.
