Unit 1 Vocab Pt. 2 Flashcards
Service Providers
Another type: health maintenance organization (HMO). Offer a wide range of health care services to member subscribers. Fixed periodic premium paid in advance of any treatment… subscribers are entitled to the services of specific physicians and hospitals contracted to work with the HMO. Provide financing for health care plus the health care itself. Known for stressing preventive health care and early treatment programs.
Strong Assessment Mutual Insurers
Classified by the way in which they charge premiums. Operates on the basis of loss-sharing by group members. No premium is payable in advance. Member is assessed a portion of the losses that occur. Advance premium assessment mutual charges a premium at the beginning of the policy period. If original premiums exceed the operating expenses, the surplus is returned to the policyholders as dividends. If total premiums are not enough, additional assessments are levied against the members. May be levied is limited either by state law or simply as a provision in the insurer’s by-laws.
Stock Insurance Company
Insurance company owned and controlled by a group of stockholders whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fixed premium, nonparticipating policies.
Surplus Lines Insurance
Nontraditional insurance only available from a surplus lines insurer. They offer coverage for substandard or unusual risks not available through private or commercial carriers.
Underwriting Department
Department within an insurance company responsible for reviewing applications, approving or declining applications, and assigning risk classifications
Underwriter
Refers to the person who identifies, assesses, examines, and classifies the amount of risk represented by an applicant (proposed insured) to determine if coverage should be provided and, if so, at what cost (premium). Approves or declines insurance applications and determines the cost to provide insurance.
Actuary
refers to the person who calculates policy rates, reserves, and dividends and makes other applicable statistical studies and reports. Concerned about the cost of insurance as a whole or for a specific class of risk.
Adjuster
a person who engages in investigative work to obtain information for adjusting, settling, or denying insurance claims. Primarily use claim forms, but depending on the claim, may also be involved with investigations into an insured’s identity, habits, conduct, business, occupation, honesty, integrity, or credibility, etc. Public adjuster refers to a person who, for compensation, acts on behalf of or aids an insured with settling an insurance claim.
Career Agency System
Branches of major stock and mutual insurance companies that are contracted to represent an insurer in a specific area. Insurance agents are recruited, trained, and supervised by either a manager-employee of the company or a general agent (GA) who has a vested right in any business written by the GA’s agents. May operate strictly as managers, or they may devote a portion of their time to sales. The career agency system focuses on building sales staff.
Managerial System
Branch offices are established in several locations. Instead of a general agent running the agency, a salaried branch manager is employed by the insurer. Supervises agents working out of that branch office. Pays the branch manager’s salary and pays him a bonus based on the amount and type of insurance sold and the number of new agents hired.
Personal Producing General Agency System
Similar to the career agency system. However, PPGAs do not recruit, train, or supervise career agents. They sell insurance, although they may build a small sales force to assist them. Generally responsible for maintaining their own offices and administrative staff. Agents hired by a PPGA are considered employees of the PPGA, not the insurance company, and are supervised by regional directors.
Independent Agency System
Creation of the property and casualty industry does not tie a sales staff or agency to any one particular insurance company. Represent any number of insurance companies through contractual agreements. Compensated on a commission or fee basis for the business they produce. AKA: American agency system.
1999-Financial Services Modernization Act (Gramm-Leach-Bliley Act, or GLBA)
Act allowed commercial banks, investment banks, retail brokerages, and insurance companies to engage in each other’s lines of business
