Unit 1 Review- Risk Retention, Fraternal, Reciprocal, Lloyd's Flashcards
What are Risk Retention Groups (RRGs) and Risk Purchasing Groups (RPGs)?
Group-owned liability insurers that assume and spread product liability and other forms of insurance risks among its members.
Risk Retention and Risk Purchasing Groups
* RRGs and RPGs are group-owned liability insurers that assume and spread product liability and other forms of insurance risks among its members.
* This type of group is formed for the primary purpose of retaining or pooling risks.
* Risk retention groups are licensed in their state of domicile and are owned by their policyholders, who are business owners (who are also the shareholders).
* A risk retention group or risk purchasing group only has to be licensed in one state but may insure members in any State.
Why are RRGs and RPGs formed?
For the primary purpose of retaining or pooling risks.
How are RRGs licenses and who owns them?
licensed in their state of domicile and are owned by their policyholders, who are business owners (who are also the shareholders).
Where does a RRG or RPG have to be licensed and who can they insure?
- A risk retention group or risk purchasing group only has to be licensed in one state but may insure members in any State.
What do Service Providers offer and what are some examples?
Benefits to subscribers in return for the payment of a premium. Examples of service providers are Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO).
How are services packages and what are people called who purchase the plans?
Services are packaged into various plans, and those who purchase the plans are known as subscribers.
What is membership in a Fraternal Benefit society based on?
Religious, national, or ethnic lines.
What does an organization have to do to be characterized as a fraternal benefit society?
Organization must be nonprofit, have a lodge system that includes ritualistic work, and maintain a representative form of government with elected officers. Fraternal must be formed for reasons other than obtaining insurance.
What are fraternal benefit societies concerned with when if comes to insurance? Is their insurance similar or different from insurance policies issued by commercial insurers?
Fraternal benefit societies are more concerned about maintaining minimum reserves and surpluses for coverage than providing dividends or profit and they issue insurance with similar provisions found in insurance policies issued by commercial insurers.
How are Reciprocal Insurers organized and who is it similar to?
Similar to mutual, reciprocal insurers are organized on the basis of ownership by their policyholders.
In a Reciprocal, who insures the risk or the other policy holders?
- The policyholders themselves insure the risks of the other policyholders. Each policyholder assumes a share of the risk brought to the company by others.
Who manages reciprocals?
An attorney-in-fact
What is Lloyds of London and are they an insurer?
No- they are a syndicate of individuals and companies that individually underwrite insurance.
What can Lloyd’s of London be compared to and why?
The New York Stock Exchange, which provides the arena and facilities for buying and selling public stock.
