Fin 301 Ch. 2

Front 1

A non-government insurance provide

Back 1

Private Insurer

Front 2

An insurer that is owned by its stockholders and formed as a corporation for the purpose of earning a profit for the stockholders

Back 2

Stock Insurer

Front 3

An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them

Back 3

Mutual Insurer

Front 4

An insurer owned by its policyholders, formed as an unincorporated association for the purpose of providing insurance coverage to its members (called subscribers), and managed by an attorney-in-fact. Members agree to mutually insure each other, and they share profits and losses in the same proportion as the amount of insurance purchased from the exchange by that member

Back 4

Reciprocal Insurance Exchange

Front 5

A subsidiary formed to insure the loss exposures of its parent company and the parent's affiliates

Back 5

Captive Insurer, or captive

Front 6

The transfer of insurance risk from one insurer to another through a contractual agreement under which one insurer (the reinsurer) agrees, in return for a reinsurance premium, to indemnify another insurer (the primary insurer) for some or all of the financial consequences of certain loss exposures covered by the primary's insurance policies

Back 6

Reinsurance

Front 7

The process of selecting insureds, pricing coverage, determining insurance policy terms and conditions, and then monitoring the underwriting decisions are made

Back 7

Underwriting

Front 8

An insurer employee who evaluates applicants for insurance, selects those that are acceptable to the insurer, prices coverage, and determines policy terms and conditions

Back 8

Underwriting

Front 9

A demand by a person or business seeking to recover from an insurer for a loss that may be covered by an insurance policy

Back 9

Claim

Front 10

A conscious act or decision not to act that reduces the frequency and/or severity of losses or makes losses more predictable

Back 10

Risk Control

Front 11

Methodical examination of a policyholder's operations, records, and books of account to determine the actual exposure units and premium insurance coverages already provided

Back 11

Premium Audit

Front 12

The ability of an insurer to meet its financial obligations as they become due, even those resulting from insured losses that may be claimed several years in the future

Back 12

Solvency

Front 13

An insurer licensed to operate in a state but incorporated in another state

Back 13

Foreign Insurer

Front 14

An insurer doing business in the jurisdiction in which it is incorporated

Back 14

Domestic Insurer

Front 15

An insurer domiciled in a country other than the United States

Back 15

Alien Insurer

Front 16

An insurer to which a state insurance department has granted a license to do business within that state

Back 16

Admitted Insurer

Front 17

An insurer not authorized by the state insurance department to do business within that state

Back 17

Nonadmitted Insurer

Front 18

State laws that permit producers with a surplus lines license to write business for an acceptable "nonadmitted insurer when protection from admitted insurers is not available."

Back 18

Surplus Lines Laws

Front 19

State law under which insurance rates are set by a state agency or rating bureau and all licensed insurers are required to use those rates

Back 19

Mandatory Rate Law

Front 20

An insurance rating law in which the rates and supporting rules must be filed with and approved by the state insurance department before they can be used

Back 20

Prior-approval Law

Front 21

An insurance rating law in which the insurer must file rates and supporting rules with the state insurance department prior to their use, but the rates can then be used immediately without specific approval

Back 21

File-and-use Law

Front 22

An insurance rating law in which the rates must be filed with the state insurance department within a specified period after they are put into use

Back 22

Use-and-file Law

Front 23

An insurance rating law under which prior approval is required only if the new rates exceed a certain percentage above (and sometimes below) the rates previously filed

Back 23

Flex Rating Law

Front 24

An insurance rating law that allows insurers to develop and use rates without having to file with or get approval from the state insurance department

Back 24

Open Competition (no-file law)

Front 25

Regulation of the practices of insurers in regard to four areas of operation: sales practices, underwriting practices, claim practices, and bad-faith actions

Back 25

Market Conduct Regulation

Front 26

State law that specifies certain prohibited business practices

Back 26

Unfair Trade Practices Law

Front 27

The process, conducted by state insurance regulators, of verifying the solvency of insurers and determining whether their financial condition enables them to meet their financial obligations and to remain in business

Back 27

Solvency Surveillance

Front 28

An association of insurance commissioners from the fifty US states, the District of Columbia, and the five US territories and possessions, whose purpose is to coordinate insurance regulation activities among the various state insurance departments

Back 28

National Association of Insurance Commissioners (NAIC)

Front 29

The primary financial statement prepared by insurers and required by every state insurance department

Back 29

NAIC Annual Statement

Front 30

The amount the insurer estimates and sets aside to pay on an existing claim that has not been settled

Back 30

Reserve

Front 31

An information and early-warning system established and operated by the NAIC to monitor the financial soundness of insurers

Back 31

Insurance Regulatory Information System (IRIS)

Front 32

A state-established fund that provides a system for the payment of some of the unpaid claims of insolvent insurers licensed in that state, generally funded by assessments collected from all insurers licensed in the state

Back 32

Guaranty Fund

Front 33

Collectively, insurers who voluntarily offer insurance coverages at rates designed for customers with average or better-than-average loss exposures

Back 33

Standard Market

Front 34

Insurance obtained from nonadmitted insurers when protection is not available from admitted insurers

Back 34

Surplus Lines Insurance

Front 35

A nonadmitted insurer that is eligible to insure risks that have been exported by a surplus lines licensee in accordance with a surplus lines law

Back 35

Surplus Lines Insurer