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65 Cards in this Set
- Front
- Back
A ___________ insurance company is owned by its policyholders. |
Mutual |
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A__________________ insurance company is owned by its stockholders or shareholders |
Stock Insurance Company |
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A _____________ is a group owned insurer whose main activity is risk sharing. |
Reciprocal |
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______________ is not an insurance company but consists of groups of underwriters called syndicates, each of which specializes in insuring a particular type of risk. |
Lloyds of London |
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____________________ are primarily social organizations that engage in charitable activities that provide life and health insurance to their members. |
Fraternal Benefit Societies |
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_______________ is a group owned insurer that primarily assumes and spreads the liability related risks of its members. |
Risk Retention Groups |
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___________________ is a private coverage source of last resort for those who have been rejected by voluntary market insurers. |
Residual Markets |
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If an insurance company wants to transfer all or part of the risk it has already taken on, it would buy ____________ insurance. |
Reinsurance |
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____________ refers to the jurisdiction (state or country) where the insurer is formed or incorporated. |
Domicile |
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A ____________ insurer is incorporated under the laws of this state whether or not it is admitted to do business in this state. |
Domestic |
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A _________________ insurer is incorporated in another state within the US but NOT this state whether or not it is admitted to do business in this state |
Foreign |
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A ____________ insurer is incorporated outside of the U.S. whether or not it is admitted to do business in this state |
Alien |
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An _____________ insurer is authorized by this state's commissioner of insurance to do business in this state. |
Admitted |
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A ___________________ insurer has either applied for authorization to do business in this state and was declined or they have not applied. |
Non-Admitted |
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_________________ oversee the operations of a business. |
Executives |
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________________ departments gather and interpret statistical information used to make rates. |
Actuarial |
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_________________ departments are responsible for the selection of risks (the people & policy to insure) and rating that determines policy premiums. |
Underwriting |
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__________ department assists the policyholder in the event of a loss. |
Claims |
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Insureds that are less desirable than average risks and tend to seek insurance coverage to a greater extent than better risks is called __________? |
Adverse selection |
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___________ involves applying techniques for prevention or reduction of potential loss, such as installing sprinkler systems, burglar alarms, safety guards on machinery, etc. |
Risk Reduction |
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A potential cause of loss, such as fire, explosion, flood, or theft is considered to be a _______. |
Peril |
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___________ insurance is used to provide coverage when insurance is not available from an admitted carrier. |
Surplus |
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In insurance, when an applicant intentionally fails to make a material fact known, it is known as __________ |
Concealment |
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An _____________is a policy form that alters or adds to the provisions of the property and casualty insurance contract. |
Endorsement |
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Does insurance (a) transfer or (b) eliminate risk? |
It transfers risk but does not eliminate it. |
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The concept of ______________ says that both parties will bargain in good faith to form the contract. |
utmost good faith |
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____________prevents the denial of a fact , if the fact was admitted to be true previously. |
Estoppel |
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The purpose of the ____________ is to restore the insured to the same financial or economic condition that existed prior to the loss. They should not profit from an insurance transaction. |
Contract of Indemnity |
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_____________ is a method of managing risk. It will minimize the chance of loss, but not entirely prevent it. For example if you install a sprinkler which will minimize fire damage but will not prevent the fire completely. |
Reduction |
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Statements in the insurance application or in the policy that are guaranteed true are WARRANTIES. If it is later discovered to be untrue or breached, the contract will be ______________ |
Voided |
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Independent financial rating services, such as __________________, evaluate and rate the stability of insurance companies by assigning rating codes to show financial strength or weakness of each company rated. |
AM Best Company |
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___________is the value that each party gives the other - for example, the premium the insurer pays and the promise by the insurance company to pay for losses
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Consideration |
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A contract of ____________ is a contract between two parties that does not allow for negotiation (i..e take it or leave) it, so if anything is unclear in the document, the court will rule AGAINST the party who wrote it (the insurance company) |
Adhesion |
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The _______________ is a private coverage source of last resort for businesses and individuals who have been REJECTED by voluntary market insurers. |
Residual market |
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Self-insurance is considered which type of risk management? |
Retention |
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Who do PRODUCERS represent?
(B) The insured |
The INSURER |
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Which Federal entity administers the Terrorism Risk Insurance Program Reauthorization Act? |
US Treasury Dept. |
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A _____________ is a person or agency that represents an insurance company |
Producer |
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An insurer is also know as the _____________ and is the source of authority for a producer |
Principal |
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Your insurance agent is Tom. ___________ is the producer in this agency relationship and _____________is the principal in this agency relationship? |
The insurance company is the principal
Tom is the producer |
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The ______________________ states that if a consumer says that certain information in their credit report is incorrect, the reporting agency must investigate and make the necessary changes. |
Fair Credit Reporting Act |
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An ___________insurer is not approved by the state Department of Insurance to transact insurance. |
Unadmitted |
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The __________________ Act allowed:
Establishment of privacy protection for consumers |
Gramm-Leach Bliley |
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The Law of _________________ states that the larger the number of participants in a given arrangement, the more accurate the rate is to the exposure. |
The Law of large numbers |
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The ____________ is determined by dividing paid losses plus loss reserves by total earned premiums. |
loss ratio |
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A ______________ contract is one where only one party makes a promise of performance. |
Unilateral contract |
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Name the different ways of managing risk
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Sharing Transfer
***STARR*** |
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_________________ doctrine is what a reasonable and prudent policy owner would expect. |
Reasonable Expectations |
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A _______________risk is one where there is the possibility of gain or loss. |
Speculative |
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A _____________ risk is one where there is no chance for gain. The only outcome is for nothing to occur or for a loss to occur. |
Pure |
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Gambling is an example of a _____________ risk. |
speculative |
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The possibility of damage to your property caused by a fire is an example of _____________ risk. |
Pure |
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Are members of the "National Association of Insurance Commissioners" required to accept its recommendations? |
No. NAIC is only an advisory group. |
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____________ is a condition where the chance, likelihood, probability or potential for loss exists. |
Risk |
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A _______________ is a physical condition that increases the probability of loss.
Examples:
- Flammable material stored near a furnace - Wet leaves on your sidewalk
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Physical Hazard |
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A ____________ is dishonest tendencies that increase the probability of loss.
**Example: You burn down your house to get insurance payments.** |
Moral hazards |
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A____________ is an attitude that increases the probability of loss.
**Example: Carelessness of leaving your house unlocked.**
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Morale hazard |
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An agreement to pay on behalf of another party when a loss occurs is called an ___________ contract. |
Indemnity |
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A waiver is when you ______________ |
voluntarily give up your legal rights. |
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How do you determine the loss ratio? |
Paid Losses & Loss Reserves divided by Total Earned premium. |
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_____________ is when you transfer your rights of recovery from the person responsible for the loss to the insurance company.
**This prevents you from collecting twice for the same loss and helps hold responsible the third party responsible for the loss.** |
Subrogation |
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Rates are referred to as ___________ rates when the insurance company files the rates for approval and then implements the rates. |
File & Use |
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_____________ is an insurance contract that requires the potential for you to suffer financial or economic hardship in the event of a loss. |
Insurable Interest |
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Define ACTUAL CASH VALUE |
Replacement cost at the time of loss, minus depreciation |
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Name the types of insurers |
Stock Insurance Mutual Insurance Reciprocal Insurance Lloyds of London Fraternal Benefits Societies Risk Retention Groups Self Insurer |