Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
21 Cards in this Set
- Front
- Back
|
DIRECT MAIL SYSTEM
|
- solicitation is handled by mail, phone or internet.
|
|
|
UNDER "THE CODE", WHEN IS AN INSURER DEEMED INSOLVENT?
|
- if its paid-in capital is below the statutory level.
|
|
|
I.N.B.R. - INCURRED BUT NOT REPORTED
*** TEST QUESTION *** |
- amts set aside for losses that have occured but have not yet been reported.
|
|
|
RECIPROCAL COMPANIES (Inter-Insurance Exchange)
|
- Organized as Associations
- Not incorporated - Members insure eachother - Managed by an "Attorney-in-Fact" - Profits go to Members |
|
|
EXCLUSIVE AGENCY SYSTEM
|
- agents only represent one insurer.
- usually paid commission. |
|
|
MAJOR OPERATING DIVISIONS OF AN INSURER...
|
MARKETING/SALES - the sale & distribution of insurance products.
CLAIMS - investigates & pays losses. ACTUARIAL - calculates rates & estimates loss reserves. UNDERWRITING - selection, classification & pricing of risks. |
|
|
MUTUAL COMPANIES
|
- Organized as corporations
- Owned by the Policy Holders - No Stockholders - Profits go to Policy Holders in Dividends EX. State Farm Mutual, Liberty Mutual |
|
|
DIRECT WRITER SYSTEM
|
- Insurer owns the book of business.
- Employees are compensated by salary, commission or both. |
|
|
RISK RETENTION GROUPS
|
- Ins Co formed by entities
- Provided for & funded by members - No protection for members it the Company becomes insolvent. EX. OMIC - formed by Ophthalmologists for malpractice insurance. |
|
|
Purpose & Members of the CA Insurance Guarantee Association (CIGA)
|
- MEMBERS - All admitted insurers must be.
- PURPOSE - to protect policyholders & claimants if the admitted insurer becomes insolvent or financially impaired. |
|
|
RATING METHODS USED TO PRICE INSURANCE COVERAGES...
|
MANUAL - standard rates apply to all.
MERIT - rates are incrsd/decrsd based on specific charateristics that are likely to affect frequency or severity of losses. - JUDGEMENT - rates developed by an UW for a particular insured. |
|
|
INDEPENDENT AGENCY SYSTEM
|
- Agents who own their book of business.
- Usually represent several insurers. |
|
|
WITH RESPECT TO SOLVENCY, WHAT IS CONSERVATION?
|
- When an insurer is insolvent or financially impaired, the Insurance Commissioner may take over its operations & management in attempt to rehabilitate it.
|
|
|
HOW INSURERS ARE CLASSIFIED BY DOMICILE...
|
1. Domestic - organized under CA laws. (Farmers)
2. Foreign - organized under another states laws. (USAA) 3. Alien - organized outside USA. (Canadian Indemnity) |
|
|
STOCK INSURERS
|
- Organized as corporations
- Owned by stockholders. - Profits go to Stockholders in the form of dividends Ex. CNA Firemans Fund |
|
|
U/W TERMS:
1. ADVERSE SELECTION 2. SPREAD OF RISK |
1. poor risks w/ greater potential for loss tend to purchase & renew coverage.
2. mix of insureds w/ high, avg & low loss exposure. |
|
|
NON-ADMITTED INSURER
|
- Not Lic'd to do biz in CA
- Doesn't hold a Cert of Authority - Not subject to regulation by the CDI |
|
|
ADMITTED INSURER
|
- Lic'd to do business in CA
- Holds a Cert of Authority - Subject to regulation by CDI |
|
|
LLOYD'S OF LONDON
|
- NOT an Insurance Company
- An individual/corporation that accepts premiums in exchange for assuming the risks of others - Members pledge the full extent of their personal assets to pay cov'd claims. |
|
|
WHO MAY BE AN INSURER?
|
Any person that is capable of entering into a contract.
|
|
|
LOSS RESERVES
*** TEST QUESTION *** |
- funds set aside by the insurer to pay claims.
|
