Study 3 Flashcards
Paid-up capital
represents that part of subscribed capital that has been paid in full by shareholders
Outstanding loss reserves
Funds set aside to pay for losses that have been incurred but not yet paid
Mutual insurance company
Owned and operated by its policyholders, who assume the risks of profit and loss and establish a corporation for the purposes of insuring one another against the possibility of fortuitous loss. Each policyholder pays a premium for his or her own insurance policy. If at the end of the fiscal year the mutual insurance company declares a profit, it is shared amongst all the policyholders. If the company declares a loss, there is also provision for the policyholders to be assessed a levy to make up for this shortfall
Factory manual
Insurance companies of the mutual type (as distinct from stock companies) that specialize in industrial risks and in loss prevention
Captive insurance company
An insurance company that provides insurance to, and is controlled by, its owners
Lloyd’s
A London-based insurance and reinsurance market, structured as a corporation, that provides the facilities, including physical location, policy issuance, and accounting, for multiple financial backers grouped in syndicates to pool and spread risk
Capacity
The measure of an insurer’s ability to issue contracts 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 ceremony is prepared to accept
Syndicate
A group of companies or underwriters organized to insure risk in the Lylod’s insurance market
Coverholder
An individual or company that has the authority to bind coverage for a specific line of business as outlined in a contract with an insurer
Reserves
Funds that are set aside by an insurance company for the purpose of meeting obligations as they fall due. Such obligations would include liabilities for unearned premiums and the estimated costs of unpaid claims
Commisson
Compensation based upon the amount of production; for example, independent insurance agents are compensated on the basis of a percentage of the premium. The percentage varies with different lines of insurance
Actuary
One who specializes in the mathematics of insurance, mortality rates, and the like
Ratemaking
The process of compiling and analyzing data to establish rates that accurately reflect the level of risk. Usually performed by actuaries.
Producer
A broker or an agent who sells insurance
Underwrite
To insure. More commonly, to scrutinize a risk and then decide on its eligibility for insurance.
