Reinsurance
Allows an insurance company to sell part of the risk they have assumed from a policyholder and thereby write more insurance and protect the
... [Show More] company from any large losses it would not be able to handle on its own.
Stock Companies
Insurance companies owned by stockholders. Charge non-assessable fixed premiums. If company creates a profit, they may pay stockholders through dividends
Mutual Companies
Insurance company owned by the policyholders. Can pay dividends to policyholders when it makes a profit. Can assess policyholders to obtain additional funds to keep company solvent.
What types of insurances companies are non-admitted and have no rate regulations?
County Mutual Companies Farm Mutual Companies Reciprocal Exchanges Risk Retention Groups Purchasing Groups Lloyds Plan
Speculative Risk
When a chance is taken that may result in a financial gain such as gambling or the stock market.
Self- Insurers
Some companies choose to self-insure rather than pay premium to an insurance company. They take risk on themselves.
Private vs. Government Insurers
Most insurance is through private insurersSome insurance can only be purchased through the federal government because private insurers do not want to take on higher risks. Flood insurance is an example of government insurers.
Authorized Insurer
Admitted companyMeets minimum requirements of financial strength and licensing.Has a certificate of authority.
Risk Management
Managing risks rather than just paying premiums to an insurance company.Right premium for right risk
Unauthorized Users
Not regulatedNon-admittedSurplus lines
Domestic Insurer
Organized under the laws of a particular state where it is housed or domiciled.GEICO is based in DC, therefore in DC it is considered a domestic insurer
Foreign Insurer
Organized under laws of some other state within the United States
Alien Insurer
Organized under the laws of a county other than the United States.
RESPONSIBILITIES to insurer
An agent has a fiduciary responsibility which requires a higher degree of care.
What may you be held liable for?
Making mistakesFailure to follow company instructionsFailure to disclose informationDelay in forwarding informationExceeding the express or implied authority given by a company.
What items can an agent be reprimanded for in not taking care of the insured?
Misrepresenting insurance coverageFailure to procure insuranceProcurement of inadequate coverageFailure to inform insured of renewalFailure to investigate an insurer's financial solvency
Law of Agency
Agents or producers represent an insurance company or insurer and usually hold a contract with that company.
Independent - usually represents several insurance companies on a commission basis
Express Authority
Derived from a written or oral contract between the agent and the insurance company. Describes rights and responsibilities. Issuing of binder [Show Less]