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Life insurance exam
| Term | Definition |
|---|---|
| Insurance Companies (known as Insurers or Carriers) | manufacture and sell insurance coverage in the form of insurance policies or contracts of insurance |
| Insurance Agencies | captive or independent organizations that recruit, contract with, train, and support insurance producers |
| Insurance Producers | licensed individuals representing and appointed by an insurance company when transacting insurance business |
| An Insured | the person or entity that is covered by the Insurer, which covers losses due to loss of life, health, property, or liability |
| An owner | the person responsible for paying the policy's premium; this person is not necessarily the insured under the policy, but has various rights that are specified in the contract |
| The National Association of Insurance Commissioners (NAIC) | consists of all state and territorial insurance commissioners or regulators. It provides resources, research, legislative and regulatory recommendations and interpretations for state insurance regulators. |
| The National Association of Insurance Commissioners (NAIC) | It also promotes uniformity among states. Members may accept or reject recommendations. The NAIC has no legal authority to enact or enforce insurance laws. |
| Mutual Insurance Company | owned by policyholders (who may be referred to as members). A Board of Trustees or Directors is elected by policyholders. The directors and officers put in place a management team to carry out the company’s mission. |
| Reciprocal Insurance Company | main activity is risk sharing, unincorporated, and is formed by individuals, firms, and business corporations that exchange insurance on one another. members are called subscribers, assumes risk of other members |
| Lloyd's of London | Lloyd's of London is not an insurance company, but consists of groups of underwriters called Syndicates, each of which specializes in insuring a particular type of risk. |
| Self-Insurers | set aside money to cover the expected losses, are responsible for own risk |
| Risk Retention Groups (RRG) | group-owned insurers that primarily assume and spread the liability-related risks of its members. They are owned by their policyholders, and are licensed in at least one state. However, they may insure members of the group in other states. |
| Fraternal benefits society | Social org that engages in charitable activity, provides life insurance and annuities, non profit and only offers to its members |
| Residual markets | last resort private coverage source for businesses and individuals who have been rejected by the voluntary insurance market. Coverage is typically written as Workers’ Compensation, personal auto liability or property insurance on real property. |
| Joint Underwriting Association or Joint Reinsurance Pool | Requires insurers writing specific coverage lines in a given state to assume their share of profits/losses of the total voluntary market premiums written in that state. |
| Risk Sharing Plan | The Insurers agree to apportion among themselves those risks that are unable to obtain insurance through normal channels |
| Reinsurance Companies | operate to accept all or a portion of the financial risk of loss from the primary / eding company The risk of loss is shared with 1 + companies. All contractual obligations are on the original place and consumers have no direct contact |
| Treaty | Reinsurance agreement that automatically accepts all new risks presented by the ceding insurer (the company seeking or requesting the reinsurance from the reinsurer). |
| Facultative | Reinsurance agreement that allows the reinsurance company an opportunity to reject coverage for individual risks, or price them higher due to their substandard (higher risk) nature. |
| Domestic insurer | one within the same state |
| Foreign insurer | one that is outside of the state but within the country |
| alien insurer | one that is outside of the country |
| Admitted (Authorized) insurer | authorized by this State’s Commissioner of Insurance to do business in this State and has received a Certificate of Authority to do business in this State |
| Non-Admitted (Unauthorized | insurer has either applied for authorization to do business in this State and was declined or they have not applied. They do not have a Certificate of Authority to do business in the State |
| Surplus Lines Insurance | inds coverage when insurance cannot be obtained from admitted insurers. However, it cannot be utilized solely to receive lower cost coverage than would be available from an admitted carrier |
| Executives | Oversee the operation of the business |
| Actuarial Department | Gather and interpret statistical information used in rate making. An actuary determines the probability of loss and sets premium rates. |
| Underwriting Department | Responsible for the selection of risks (persons or property) to insure and rating that determines policy premiums |
| Marketing/Sales Department | Responsible for advertising and selling |
| Claims Department | Assists the policyholder, insured, or beneficiary in the event of a loss and processes, and pays the amount of the claim in a timely manner, based upon the contractual provisions and the amount insured |
| Exclusive or Captive Agency System | An exclusive or captive agent represents only one company or a group of companies that have common ownership. The insurer retains ownership rights to the business written by the agent |
| Direct Writing System | A producer or agent is an employee of the insurer, and the insurer owns the accounts. The agent may be paid a salary, salary and a bonus, or commission. |
| Independent Agency | An agent or agency enters into selling agreements with more than 1 insurer . The agency retains ownership of the business written independent contractors are paid a commission and must cover the cost of agency operations. |
| Career Agency System | Agents are recruited, trained and supervised by either a managing employee or General Agent who is contracted with the insurance company |
| Personal Producing General Agent | The agent sells insurance for carriers it is contracted with and maintains its own office and staff. These agents do not recruit career agents. |
| Direct Mail or Direct Response Company | Insurers sell insurance policies directly to the public via licensed employees or contractors use marketing system that utilizes mass media, |
| Mass Marketing | This type of marketing uses the direct response or direct mail method to target a specific type of insurance to a large group of individuals |
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rockcl