Types of Insurers

Question 1

What is social insurance and list 3 such programs

Answer 1

Social Insurance: minimal level of protection provided by govt. Participation is mandatory

1. Social Security
2. Workers Compensation
3. Unemployment Compensation

Question 2

What are voluntary insurers and list the 4 types

Answer 2

Insurance companies that provide voluntary insurance coverage.

1. Governmental (eg Flood)
2. Cooperative
3. Self
4. Profit-making

Question 3

Explain how a self insurer operates

Answer 3

Retention is preferred term

Company sets up a fund, making periodic deposits and the. Pays its own losses from that fund.

Pros:

• company may incur lower costs
• retains more control over finances/operations

Cons:
-premiums paid to commercial insurer are usually deductible from income for Federal Taxes…not true for self-insurance funds

Question 4

FAIR Plan?

Answer 4

Fair Access to Insurance Requirements

Question 5

What is an insurance mutual company?

Answer 5

An insurance company owned by its policyholders

Question 6

What are reciprocal insurer’s?

Answer 6

Group of individuals or firms who combine to pay each other’s losses

Question 7

What is an insurance stock company?

Answer 7

An insurance company publicly traded and owned by shareholders