General Insurance (Classification of Insurers)

cso683's version from 2016-01-26 05:17


Question Answer
Two Broad types of InsurersPrivate and Government
Private Insurer CharacteristicsMOLAR - Marketing and Distribution Systems, Ownership, Location, Authority to transact business, Rating (financial health)
Types of Ownership of InsurersFMS - Fraternal, Mutual, Stock
Ownership (Fraternal)Issues insurance only to members (considered a charitable organization, not subject to same regulations)
Ownership (Mutual)Owned by stockholders, issues participating policies (can return non-taxable excess premiums to policy holders)
Ownership (Stock)Owned by stockholders, issues non-participating policies (only taxable dividends returned to policy holders)
Authority of Company within a stateAdmitted insurers have been granted a license and met the financial requirements in a state, Non-Admitted have not
Location of Incorporation (Domicile) TypesFAD - Foreign - Incorporated in another state Alien - Incorporated outside the US Domestic - Incorporated in this state
Agent / Producer relationship to Principal / InsurerPICK - Payment to agent is payment to insurer, Insurer (Agent represents them), Contract (When agent acts within contract, insurer is responsible), Knowledge of the agent = knowledge of the insurer
Agent ResponsibilitiesSAD - Submitting policy to underwriters, Accurately completing applications, Delivering policy to insured
Types of Agent AuthorityAEI - Apparent - appearance of assumption of authority (rate books, etc.), Express - Authority written into the contract, Implied - Not in contract, but assumed in order to do business
Responsibility of AgentFiduciary responsibility (person of trust), can't commingle premiums with person funds
Market conduct / Code of EthicsAvoid conflict of interest, request for a loan as a condition of doing business, supplying confidential information
Elements of a Legal ContractCALC - Consideration, Acceptance, Legal Purpose, Competent parties
Consideration - Insurance definitionSomething of value each party gives to the other - Insured - Premium, Insurer - Agrees to pay losses
Legal Interpretations affecting contractsFIRUCRAW - Fraud, Indemnity (Reimbursement), Reasonable Expectations, Utmost Good Faith, Concealment, Representations, Ambiguities in a contract, Warranties
RepresentationsThought to be true at time of statement - Material Misrepresentation - affects underwriting of policy - Intentional Misrepresentation = Fraud
WarrantiesKnown to be true at time of statement - breach of these is grounds for cancelling policy

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