Insurable Interest

Front 1

Determining insurable interest (2 questions used to determine)

Back 1

1. Is there a bond of love and affection is found in family relationships?

2. Is there a financial relationship is found between partners in business or stockholders?

Front 2

Insurable risks (CAM-U-EL)

Back 2

Catastrophic, adverse selection, measurable, uncertain, economic hardship, law of large numbers

Front 3

Catastrophic

Back 3

Catastrophic events do not fall into a model of predictability, from this standpoint, it is logical to exclude catastrophic perils

Front 4

Adverse selection

Back 4

Occurs when a potential client can take advantage of an insurance company.

Front 5

Measurable

Back 5

The last must first be Measurable meaning the insurer must be able to place a monetary value on that loss

Front 6

Uncertain

Back 6

The definition of pure risk applies here. Insurance is meant to reduce or eliminate uncertainty, meeting that the writing of insurance for intentional acts such as suicide is not allowed.

Front 7

Economic hardship

Back 7

The idea that an economic hardship would result from the occurrence of apparel is an essential reason for insurance coverage

Front 8

Law of large numbers

Back 8

Allows a more accurate prediction of future losses and thereby insurable or uninsurable risk

Front 9

Indemnity

Back 9

The underlying concept of indemnity is that no one should profit from a loss

Front 10

Types of insurers

Back 10

Private commercial, private non-commercial, the United States government or public

Front 11

Stock insurance

Back 11

Consist of stockholders who owns shares in the company

Front 12

Mutual Company

Back 12

There are no stockholders and ownership rests with the policy owners

Front 13

Reciprocal organization

Back 13

An unincorporated group of individuals, with each party ensuring the other members

Front 14

Risk retention group

Back 14

Usually set up by its members to only provide certain types of liability insurance protection, specifically for individuals who engage in similar activities or businesses

Front 15

Fraternal benefit society

Back 15

Life insurance companies that exist as social organizations, are distinguished by the fact that their membership is usually drawn from those who are members of the lodge or fraternal organization, Cell participating policy is just as mutual companies does they pay insurance dividends to the policy owner, different than either stock or mutual companies in that fraternal society may be assessed additional funds if there is not enough money available to pay claims. Part of the premiums paid for the insurance go toward the support of the charitable causes of the fraternal order

Front 16

Reinsurance

Back 16

A form of insurance between insurers. this is used when there is a very large amount of insurance covering one individual

Front 17

Treaty reinsurance

Back 17

A pre-negotiated agreement

Front 18

Facultative reinsurance

Back 18

Done on a case by case basis

Front 19

Lloyds associations

Back 19

Groups of individuals to ban together to assume risks in the area of surplus lines