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61 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Transfer of Risk Contract |
Insurance |
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Uncertainty Possibility of Loss |
Risk |
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Loss or Gain Non-insurable |
Speculative Risk |
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Loss only Insurable |
Pure Risk
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A cause of loss What causes the loss |
Peril
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Hazard🚧 |
Physical Moral Morale |
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Can be seen |
Physicial Hazard |
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Dishonesty |
Moral Hazard Belief that causing a loss is acceptable |
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Carelessness |
Morale Hazard i.e. leaving doors open to house while you are not 🏠 |
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STARR Sharing Transfer Avoidance Retention Reduction |
Methods of Handling Risk
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CANHAM
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Elements of Insurance Risk C-Calculate A-Affordable N-Non-catastrophic H-Homogeneous A-Accidental M-Measurable |
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Larger the group the more accurate losses can be predicted |
Law of Large Number |
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Risks that have a higher chance of failing |
Adverse selection
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An Agreement 1st Party-customer insured 2nd Party-Insurance Co. or insurer |
Contract
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Insurance Company pays another Insurance Co to take some of their risk |
Reinsurance
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Evaluating Risk prior to transfer |
Facultative Reinsurance |
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Reinsurer accepts transfer according to agreement |
Treaty |
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Types of Insurers |
Stock Insurer Mutual Fraternal Reciprocal Lloyd’s Association Risk Retention Group Risk Purchasing Group Self Insurance |
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Stock Insurer |
Owned by stockholders Board of Directors Taxable dividends Issues non-par policies |
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Mutual |
Owned by policyholders Board of Directors Excessive premiums returned to policyholders Issues Par policy |
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Fraternal |
Must be a member of society Provides Insurance and other benefits |
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Reciprocal |
Unincorporated Assessed if loss to any member of group Run by Atty in fact |
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Lloyd’s Association |
Insurance provided by individual underwriters |
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Risk Retention Group=RRG |
Insurance companies created for policyholders from same industry. Car dealers 🚗 |
🚗🚙 |
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Risk Purchasing Group=RPG |
Group of businesses from same industry that group together to buy liability insurance. |
NOT AN INSURANCE Company |
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Self Insurance |
Business that pays its own claims |
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Private Residual- state and federal government |
Classification of Insurers |
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Insurance Company Location |
Domestic Foreign Alien |
🇺🇸🇺🇸🇺🇸🇺🇸 🇬🇧🎌🇬🇷🇨🇦 👽 |
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What is the state license for an insurance comapny |
Certificate of Authority Admitted-authorized, approved Non-admitted-unauthorized, not required to hold COA (surplus lines) |
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Surplus Lines |
Unauthorized Gaming industry, entertainment, mining, skyscrapers |
🎲🎤🎷🎻🏙 |
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Financial Strength Rating |
Company Report Card |
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Fiduciary |
= Trust |
Sends premiums to insurer Knowledge of products Comply with laws/regulations No commingling of funds |
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Elements of Contract Law CLOAC |
C=Consideration L=Legal Purpose O=Offer A=Acceptance C=Competent Parties |
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Characteristics of Insurance Contracts |
Adhesion Aleatory Good Faith/Reasonable Expectation Unilateral Personal Conditional Indemnity Representation Warranty Concealment Fraud/False Statements Waiver Estoppel |
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Policy written by insurance company |
Adhesion |
Glue |
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Not of equal value |
Aleatory |
Small premium large amount of coverage |
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Good Faith/Reasonable Expectation |
Promise Honesty |
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1 promise made |
Unilateral |
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Made with one person Not interchangable |
Made with 1 person Not interchangeable Personal |
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Payment must be made |
Conditional |
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Independent |
Sells multiple products multiple companies Represents the insured (Client) Owns expiration of policies |
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Representation |
Believed to be true |
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Material Misrepresentation |
False information Does effect insurance companies decision to cover |
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Misreresentation |
Information which is false Does NOT effect insurance company decision to cover |
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Indemnity |
Pay for loss Restore to orginial |
One-sided |
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Warranty |
Promise made by Insurance Company |
Guaranteed to be true |
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Concealment |
Failure to disclose Intentional = voided coverage Non-Intentional = non-voided coverage |
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Fraud/False Statements/Embezzlement
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Intentional Act to Cheat Voids policy |
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Punishment for Fraud |
Fine or Imprisonment 10-15 yrs or Both |
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Waiver |
Voluntarily giving up right |
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Estoppel |
Legal doctrine Prevents party from denying action of previously accepted action |
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Insurance Marketing Distribution Systems Exclusive |
Represents one company Compensated by commissions |
Insurance Marketing Distribution System |
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General Agent/Managing General Agent |
Hire, train, supervise agents in one geographical area Receives commissions on business produced by agents magaged |
Insurance Marketing Distribution Systems |
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Direct Writing Company |
Pay salaries to employees to sell insurance product No commissions Owner (insurer) owns all business produced |
Insurance Marketing Distribution Systems |
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Direct Response |
No producer/agent Sold directly to public by insurer |
Mail, advertisements, internet Insurance Marketing Distribution Systems |
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Law of Agency |
Insurance agent acts on behalf of the principal |
1 person |
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Agent Authority |
Expressed Implied Apparent |
Under law of agency |
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Express |
Written in contract between agent/company |
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Implied |
Not written but what agents do to sell insurance |
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Apparent |
Things agent does, not implied that a reasonable person would do to sell insurance |
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-deny coverage -increase premium -limit coverage Under what method________
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Methods to limit Adverse Selection |
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