Unit 1 Flashcards
Insurance
Transfer risk from insured to insurer
Adverse selection
High risk Individuals to get and keep insurance
CANHAM
Elements of an insurable risk
Calculable. (Premium) Affordable Non catastrophic ( For Insurer) Homogeneous ( risk must be in similar nature) Accidental Measurable
STARR
Methods of Handling Risk
Sharing Transfer Avoidance Retention Reduction
Types of Risk
Speculative: not insurable (Gambling)
Pure: Chance of only loss
Stock Insurer
Owned by stockholders Dividend not guaranteed Dividend paid to stockholder Dividend taxable to stockholders Issues non participating policies
Mutual Insurer
Owned by Policyholders Dividend not guaranteed Dividend paid to policyholders Dividend not taxable; considered refund of premium Issues participating policies
Fraternal Insurer
Provides insurance and other benefits
Must be a member to get benefits
Reciprocal Insurer
Unincorporated groups that agree to insure each other’s losses
Each member required to pay assessed amount for subscribers loss
Managed by attorney in fact
Lloyds Association
Ins. Provided by individual underwriters not companies
Insure unusual risks
Ie: hole in one contest, legs, athletes arm
Risk Retention Group
Liability insurance company CREATED for policy holders from the same industry
Risk Purchasing Group
Formed to BUY liability
Self Insurance
Business that pays its own claims
Reserves funds for covered losses
Retains risk rather than transfer
Government Insurers
War Risk Ins Nuclear energy liability Flood Federal Corp I’m Unemployment (at state level) Workers comp ( at state level)
Insurance company location
Domestic - state of home office
Foreign- in another state
Alien - home office in other country
