Unit 4 Surplus Lines Ins Flashcards
Capacity
4-4
the largest amount that an insurer is willing and able to underwrite, either on an individual acct or in the aggregate
State Guaranty Funds - Surplus Lines
Surplus lines insurers do not participate in state guaranty funds, which pay claims of insurers that become insolvent. Therefore, it may be difficult for policyholders to recover their losses in those circumstances.
Lloyd’s of London
4-6
An international market that specializes in the placemnt of unique, high-capacity, or non-standard risks
why would an applicant seek insurance in a surplus lines market?
(4-7)
An applicant might seek insurance for a risk that is hard-to-place b/c of poor claims experience or a need for unusual or high limits of coverage
What are some of the disadvantages associated w/ obtaining insurance in the surplus lines market?
(4-7)
Surplus Lines insurers do not participate in and the insured is not protected by state guaranty funds. Therefore, if the insurer goes bankrupt, claims may not be paid.
What are 3 types of risks typically covered in a surplus lines market?
(4-7)
Risks covered in a surplus market are unique, non-standard, or may require high limits of liability
What is the function of the surplus lines market?
4-7
the surplus lines market functions as a supplement to the admitted market and serves as a safety valve to meet insurance needs the standard market cannot meet
Service-of-Suit
4-9
an insurance policy provision that designates the party who will receive a legal notice or be served in the event of a lawsuit
National Assoc of Ins Commissioners (NAIC)
4-9
an organization of insurance regulators from all 50 states, the District of Columbia, and four U.S. territories that wrks to provide uniform regulation among states and geographic areas
Model Act (4-9)
a model law that is written by the NAIC to promote uniformity among state and that is often adopted or used by states to develop laws
Can an applicant choose to obtain insurance on the surplus lines market if coverage is available in the standard market?
(4-12)
an applicant must first try to obtain insurance in the admitted market. An applicant may seek insurance in the surplus lines market only after insurance has been declined in the admitted market in compliance w/ the state’s requirements
Is a surplus lines insurer subject to a state’s rate and filing requirement?
(4-12)
a surplus lines insurer subject to a state’s rate and filing requirements
How does the industry attempt to regulate the surplus lines market?
(4-12)
the NAIC provides leadership in the industry to gain uniformity among states, in part, by producing model acts, which are often used by states for creating laws
What are the most common state requirement for surplus lines insurers?
(4-12)
States require that surplus lines insurers be licensed in their state of domicile and meet capital and surplus financial requirements to help ensure solvency
Non-Admitted Insurers Insurance Office (NAIIO)
4-13
An organization that evaluates alien, non-admitted insurers and that publishes reports of those meeting certain criteria
