Insurance Companies Flashcards
Domicile
Form of ownership & mode of operation of provider and marketing system.
Domestic Insurer
An insurance company that is incorporated in the state.
Foreign Insurer
An out-of-state insurer that is chartered by another state, but licensed to operate in the state
Alien Insurer
An insurance company that is incorporated outside the United States.
Stock Company
Owned by their stockholders, pay a portion of their earnings to stockholders as dividends, permit their stockholders to elect their Board of Directors, Do not pay dividends to policyholders.
Mutual Company
Are owned by their policyholders, Include all owners as insureds, Include all insureds as owners
Lloyd's of London
Not an insurance company, it is a large insurance marketplace where underwriters meet with brokers to create an insurance agreement.
Reciprocal Exchange
Private, unincorporated mutual insurers, that consist of associations that agree to share risk equally among it members.
Fraternal Benefit Societies
Must be nonprofit, have a lodge system, and offer insurance to its members only
Liability Risk Retention Act of 1981
This was passed by Congress to give product manufacturers mor options when insuring against product liability.
Residual Market Insurance
Insurance companies may be privately owned or operated by the state or federal government. The federal government provides: War risk insurance, nuclear energy liability insurance, federal flood insurance, federal crop insurance, and terrorism risk insurance.
Exclusive Agency System
the agent represents only one insurer or group of insurers under common ownership
Direct writer system of insurance
Comprised of employees of a single insurance company who only place the insurance of that company.
Direct response system
Insurance company that sells insurance through the mail or over the phone, no agents are involved.
Independent Agency System
Agencies that are independent contractors contract with several different companies to represent and sell for those companies.
Company Ratings are rated based on financial strength of the insurance company. Who rates the companies?
They are rated by A.M. Best, Standard & Poor's and Moody's
Insurance Producer
A license as;espressos working in an insurance agency to acquire new clients and sell policies to both new clients and existing clients of the agency.
Customer Sales Represenatives
Service insurance policies.
Insurance agent
Usually the owner of the agency and may be called the "principal agent.
Captive Agents
Represents a single insurance company
Independent agent
Represents many insurance companies
Insurance Broker
Provides advice to the customer as to who provides the best cover at the cheapest price.
Law or Concept
A legal term that describes a contractual agreement between a "principal" and an "agent".
Principal
The insurance company
Agent
Insurance agent or agency
Appointment
A contractual agreement that outlines the specific insurance products an agency may sell and the amount of the commission that will be paid, per product.
Power to bind
The authority of the agency to initiate a policy on behalf of the insurance company, and the commission that will be paid as well as any state-specific laws that may amend the contract.
Insurance brokers are not appointed by the insurers therefore,...
They do not have the power to bind insurance coverage.
Express authority
The authority specifically given to the agent either in writing or orally
Implied Authority
Authority that is given not in writing but that is necessary for the agent to transact insurance
Apparent Authority
A third party's reasonable belief that an agent has authority to act on the principal's behalf.
Fiduciary responsibility
The requirement that an agent not co-mingle insurance monies with their own funds is known as
Controlled business
The amount of insurance countersigned issued or sold by an agent or producer covering members of the agent/producer's immediate family, employer or employees.