Types of Insurance Companies (Chapter 1)

Question 1

Commercial Insurers (Private Insurance Companies)

Answer 1

Sell insurance for profit

Divided into two main groups, Mutual and Stock insurers

Question 2

Multi-line Insurer

Answer 2

Company that sells more than one line of insurance

Question 3

Stock Companies

Answer 3

Make profits for Stockholders/Shareholders
Are subject to taxation
Are Nonparticipating

Question 4

Mutual Companies

Answer 4

Owned by policy holders
Are not subject to taxation
Are Participating

Question 5

Mixed Insurer

Answer 5

Companies that are both participating and non participating

Question 6

Difference between Mutualization and Demutualization

Answer 6

From stock to Mutual = Mutualization

From Mutual to stock = Demutualization

Question 7

Strong Assessment Mutual Companies

List 2, explain

Answer 7

1. Pure assessment Mutual Company - No premium in advance

2. Advance Premium assessment Mutual - Premiums are charged at the beginning

Question 8

Fraternal Benefit Societies

Answer 8

Non-profit, religious, ethnic, or Charitable organizations that provide insurance soley to their members.

Question 9

Risk Retention Groups

Answer 9

Companies formed by a group of people in the same profession/industry

Question 10

Service Providers

Answer 10

Offer benefits to SUBSCRIBERS. example: PPO & HMO

Question 11

Reciprocal Insurers

Answer 11

Individual members that provide insurance for other members through indemnity contracts

Question 12

Reinsurers

Answer 12

Assumes the risk from another insurer

Question 13

Ceding company

Answer 13

The company transferring risk to another company

Question 14

Captive insurer

Answer 14

Owned by a parent company to insure the parent company’s loss

Question 15

Home Service Insurer or Industrial Insurance

Answer 15

Sold by home service or debit life ins. companies, face amounts are small

Question 16

Self-insurers

Answer 16

Establish their own self funded plan to cover potential loss.
Example: Employer who pays insurance benefits from a fund derived from employer’s current revenue