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Casualty And Property > Types Of Insurers > Flashcards

Types Of Insurers Flashcards

1
Q

Stock Insurance company

A

Owned by stock/sharholders. Issue nonparticipating policies

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2
Q

Mutual insurance company

A

Owned by policyholders. Issue participating policies

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3
Q

Reciprocal insurance company

A

Owned by insurer whose main activity is risk sharing.
Aggregation of individuals, firms, business corporations.
Unincorporated

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4
Q

Fraternal benefit societies

A

Engage in charitable /benevolent activites that provide insurance.
Primarily life insurance

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5
Q

Domestic insurer

A

Insurer organized under laws of CA wether or not its admitted to doing business in this state

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6
Q

Foreign insurer

A

Insurer not organized under laws of CA but in one of other states/jurisdictions within the US, wether or not admitted to do business in the state

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7
Q

Alien insurer

A

Insurer organized under laws of any jurisdiction outside of US , wether or not admitted to do business in this state

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8
Q

Admitted insurer

A

Insurance company wether domestic/foreign/alien authorized to carry out business in CA

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9
Q

Non admitted insurer

A

Not authorized to carry out business in CA

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10
Q

Excess/surplus insurance

A

This insurance covers types of insurance that cant be obatined from admitted insurance bc risk is too high/difficult to underwrite.
Must be transacted through surplus lines producer/broker

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11
Q

Independent agency

A

Person who enters into an agency agreement with more than one insurer.
Has ownership of the business written/pays cost of office space

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12
Q

Exclusive agency

A

Captive Agent

Person under agreement to represent a single insurer or a group of insurers having common ownership.

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13
Q

Brokerage

A

Broker is a person acting as an intermediary between an insurer and a purchaser on a purchasers behalf to help the client obtain the best price terms and conditions on insurance coverage other than life disability and health insurance

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14
Q

Producers Authority

EXPRESS

A

Power expressed(written) in the producers contract

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15
Q

Producers Authority

Implied

A

Authority that the public assumes the producer has

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16
Q

Producers Authority

Apparent

A

Created when a producer exceeds authority expressed in their contract. (Accepting premiums on lapsed policies)

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17
Q

Three types of binding authorities

A

Express
Implied
Apparent

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18
Q

Agents responsibilities to insured

A

Complete the application and submit to insurer for further underwriting

Issuing any binders to applicant that provide temporary insurance coverage until policies is issued

Provide certificate of liability insurance/evidence of property insurance once policy is issued

Gather information/updating policy renewal

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19
Q

Insurance brokers responsibilities

A

Brokers must understand/assess the clients risks/have knowledge of the insurance market/must place coverage that meets the clients needs.

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20
Q

What is the difference between a broker and agent?

A

A broker works on behalf of the consumer.
An agent works on behalf of the insurer.

Both agents and brokers have fiduciary duty and must discover info that may affect underwriting and insurability.

License surplus lines brokers are the only producers able to place insurance with nonadmitted insurer’s.

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21
Q

Under the insurance information privacy protection act anyone who obtains info about an individual from an insurance company under false pretenses is subject to a penalty?

A

A fine up to 10,000 imprisonment up to one year or both

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22
Q

HIPAA Disclosures

A

This act applies to the business of insurance before and ensure may obtain an applicants health records from a physician or hospital the applicant must be informed
what kind of info may be obtained ,how it will be used ,and home to me it be disclosed

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23
Q

CCPA ( california consumer privacy act 2018)

A

CCPA gives consumers

  • the right to know about personal info businesses collect about them/know how the info is used and shared
  • The right to delete personal info
  • The right to opt out of sale and personal info
  • The right to non-discrimination for exercising these right
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24
Q

Californias Shine the light act establishes disclosure requirements for

A

Categories of personal information shared with third parties and used for direct marketing purposes

Gives the consumer the right to opt out

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25
Q

Fair credit report act

A

Protects the consumers right to privacy regarding the collection practices/use of consumer credit reports

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26
Q

Violent crime controk / law enforcement act 1994

A

Federal regulation that includes a prohibition against anyone who has committed felonies involving dishonesty/breach of trust from being employed in the insurance/financial services industry

27
Q

Insurance info & privacy protection act

A

Establish standards for collection,use ,preservation ,and disclosure of info relevant insurance transactions.
Notice of info practices must be delivered prior to or at time of policy delivery when personal info is collected from a source other than the applicant not later than the policy renewal.

Satisfactory notice been delivered in previous 24 months repeat notice not required

28
Q

Cali financial info privacy act

A

Adds cali specific regulations to fed Gram Leach Billy act to predict protect consumers and sharing of non-public personal financial info

29
Q

Privacy nonpublic personal info

A

Priv protection policy specific to insurers agents and insurance support organizations regarding the collection and disclosure of non-public personal financial info.

Priv policies must be provided one customer relationship is established (annual)

30
Q

Speculative risk

A

Possibility of loss, no loss, or gain

31
Q

Pure risk

A

A possibility of loss or no loss : no possibility for gain

Insurance is designed to protect against only pure risk

32
Q

Peril is

A

The specific cause of a loss
a policy insurance against

Property loss/damage destruction or theft personal prop
 liability loss/losses arising out of negligence
Human or personal loss/death illness or unemployment
 Personnel loss/ loss of key employee due to death or disability

33
Q

Types of risk management

A 
Avoidance 
reduction 
retention 
sharing
Transfer
34
Q

Insurable risks

A 
Law of large numbers
Calculable
Measurable
Affordable
Accidental in nature

Catastrophic perils excluded(war,buclear hazard,illegal operations)

35
Q

Insurable events

A

Any event which may cause loss or damage to a person having an insurable interest in the event

36
Q

Underwriting

A

The process of selecting, classifying ,and rating a risk for the purpose of issuing insurance coverage.

The insurance application is the primary source of info about the purchaser needed for the insurer to underwrite a risk and it will become part of the insurance contract

37
Q

Insurability

A

The ability of an applicant to me and insurance underwriting requirements

38
Q

Elements of a legal contract

A
  1. competent parties: legal age/beware of actions
    2.legal purpose: insurable interest must exist/no illegal purposed
  2. Agreement: offer & acceptance
    4.consideration: what 2 parties Exchange inv value to abide by the conditions of the contract for ex:
    Payment of the premium
    Ensures promise to idemnify an event of a loss
39
Q

All insurance contracts must include:

A
  1. Parties between whom the contract is made
  2. Property/or life insured
  3. The interest of the insured in the property insured if they are not the absolute owner
  4. The period during which insurance is to continue
  5. The risks insured against
  6. A statement of the premium or statement of the bases and rates upon which final premium is to be determined
40
Q

Contract of adhesion

A

A contract prepared by one party on a take it or leave it basis

41
Q

Aleatory contract

A

contract with an unequal exchange value between parties

42
Q

Personal contract

A

A contract specific to the person insured at the time the contract is formed

43
Q

Unilateral contract

A

A one sided contract were only one part is legally bound to the contractual obligations

44
Q

Conditional contract

A

Both parties are obligated to perform certain duties/follow rules of conduct that make the contract enforceable

45
Q

rescission

A

The termination of a contract from the beginning as it had never existed
Can be done if:
 1.material concealment
2. An intentional/fraudulent omission of matters proving the falsity of a warrant
3. Material misrepersentation
4. Violation or warranty

46
Q

Estoppel

A

The legal doctrine that prevents the denial of a fact if the fact was admitted to be true by previous action

47
Q

When evaluating a risk an underwriter examines:

A

1.The nature of the risk
2.What hazards are present
3.What outside factors might affect the risk
4.What past losses have occurred


48
Q

 judgment rating

A

Rates are based on underwriters judgment/experience on an individual basis

49
Q

Manual rating(class rating)

A

Rates are based on classes of insureds who have similar exposures. base rates contained in the manual published by insurer are multiplied by the number of units to calculate premium

50
Q

Merit rating

A

Combines manual ratings with an analysis of other factors that would not be found in the rate manual.
An insured who takes measures to decrease probability of loss may be rewarded with discounted rate

51
Q

Loss cost rating

A

rating organization provides insurers with the portion of rate that does not include provisions for expenses or profit.
Loss cost rating is used for risks for which the insurer may not have enough data to develop the rate

52
Q

The rating approval method used for the most property and casualty insurance issued in California is

A

Prior approval method

Meaning rates must be filed with department of insurance and cannot be used until approved

53
Q

Risk may be

A

Avoided ,transferred ,or retained in addition to being shared or reduced

54
Q

Which of the following constitutes an acceptance of an offer?

A

What the insurer issues a binder

55
Q

An Insurance policy is a legal contract between how many parties?

A

2

56
Q

What happens if an insurer exercises it’s right to rescind(cancel) a policy

A

It results in a refund of premiums because the contract is not valid

57
Q

The function of insurance is to protect the insurance assets against…

A

Loss by insurable perils

58
Q

A statement is material when

A

It discloses or lacks disclosure that would change the insurers decision to issue a policy for the same premium

59
Q

The termination of a contract from the beginning as it never existed as far

A

 rescission

60
Q

Insurance policies that contain at least two types of insurance coverage is

A

Package policy

61
Q

A fiduciary is

A

A person holding the funds/property of another in a position of trust.
When a producer or agent collects premiums for the insurer

62
Q

Monoline policy is

A

Contains a single type of insurance.

for example monoline policy might only provide coverage for property losses or only cover casualty losses

63
Q

Consideration is

A

The term used to describe rights, money ,promises ,and or property exchange between the parties as part of a contract transaction

64
Q

Agent and broker

A

An agent represents an insurer

A broker represents the insured

Casualty And Property (15 decks)

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