Risk Exam 2 (5)

Front 1

Major trends in the financial services industry

Back 1

1. Consolidations
2. Convergence

Front 2

The number of firms has declined due to mergers and acquisitions

Back 2

Consolidations

Front 3

Existing financial institutions now sell a wide variety of financial products that earlier were outside their core business area

Back 3

Convergence

Front 4

Insurer organizational forms

Back 4

stock insurer, mutual insurer,Lloyd’s of London,captive insurer

Front 5

corporation owned by stockholders

Back 5

stock insurer

Front 6

corporation owned by the policyowners

Back 6

mutual insurer

Front 7

is not an insurer, but a marketplace whose members underwrite insurance in syndicates

Back 7

Lloyd’s of London

Front 8

is an insurer owned by a parent firm for the purposes of insuring the parent firm’s loss exposures

Back 8

captive insurer

Front 9

Trends among mutual insurers:

Back 9

1. Mergers
2. Demutualization
3. Creation of mutual holding companies

Front 10

an insurer owned by a parent firm for the purposes of insuring the parent firm’s loss exposures

Back 10

captive insurer

Front 11

someone who legally represents the principal (insurer) and has the authority to act on the principal's behalf

Back 11

agent

Front 12

legally represents the insured

Back 12

broker

Front 13

1. represents several insurers
2. Paid by commission
3. Agency owns the expirations or renewal rights to the business
4. Compensated by commissions that vary by line of insurance

Back 13

Independent agent

Front 14

1. represents only one insurer (or group)
2. Paid by commission (higher for new business than renewals)
3. Agents (usually) do not own the expirations or renewal rights to the policies

Back 14

Exclusive agent

Front 15

an insurer in which the salesperson is an employee of the insurer, not an independent contractor.

Back 15

direct writer

Front 16

insurer sells directly to the consumer by television or some other media

Back 16

direct response