LOMA 280 Principles Of Insurance
Questions and Answers Verified by Experts
Financial intermediary (insurance companies) Collects funds from one group of people
businesses and governments (suppliers) and channels them to another group (users)
Convergence The movement toward a single financial institution serving a customers
banking insurance and security needs (the current trend)
Holding company Aka parent company that owns and controls others knows as
subsidiaries (groups of subsidiaries are know as affiliates) this is how convergence is happening
Cinsolidation Combination of financial service institutions across sectors
Merger Assets and liabilities of toe companies combine
Acquisition One corporation purchases a controlling interest in a formerly independent
corp but both remain separate
,Domicile Jurisdiction on which an insurance company operates
Certificate of authority License that grants an insurer right to conduct business in a
jurisdiction
2 parts of insurance regulation Make sure insurers are solvent
Make sure insurers conduct business fairly and ethically
Solvent Able to meet and pay debts and policy benefits when they come due
How to calculate solvency Liabilities + assets = equity
2 components of stock insurance equity Capital-money owners invested in insurer through
the purchase of stock
Surplus-the amount of equity that exceeds the capital
Annual statement Accounting report insurer prepares each year and files with the
insurance department in each state that it does business in.
, On site auditing Insurance companies have one every 3-5 years
Stock insurance accounting equation Liabilities + owners equity (capital + surplus) =
assets
Mutual insurance accounting equation Liabilities + owners equity (surplus) = assets
Market conduct laws Regulate how insurance companies do business
Social insurance program Welfare plan established by law and administered by a
government
Provides population with income security
Provides payments to replace income lost because of age, disability, death,injury, and
unemployment
Also provides medical care
Contract Legally enforceable agreement between parties
Questions and Answers Verified by Experts
Financial intermediary (insurance companies) Collects funds from one group of people
businesses and governments (suppliers) and channels them to another group (users)
Convergence The movement toward a single financial institution serving a customers
banking insurance and security needs (the current trend)
Holding company Aka parent company that owns and controls others knows as
subsidiaries (groups of subsidiaries are know as affiliates) this is how convergence is happening
Cinsolidation Combination of financial service institutions across sectors
Merger Assets and liabilities of toe companies combine
Acquisition One corporation purchases a controlling interest in a formerly independent
corp but both remain separate
,Domicile Jurisdiction on which an insurance company operates
Certificate of authority License that grants an insurer right to conduct business in a
jurisdiction
2 parts of insurance regulation Make sure insurers are solvent
Make sure insurers conduct business fairly and ethically
Solvent Able to meet and pay debts and policy benefits when they come due
How to calculate solvency Liabilities + assets = equity
2 components of stock insurance equity Capital-money owners invested in insurer through
the purchase of stock
Surplus-the amount of equity that exceeds the capital
Annual statement Accounting report insurer prepares each year and files with the
insurance department in each state that it does business in.
, On site auditing Insurance companies have one every 3-5 years
Stock insurance accounting equation Liabilities + owners equity (capital + surplus) =
assets
Mutual insurance accounting equation Liabilities + owners equity (surplus) = assets
Market conduct laws Regulate how insurance companies do business
Social insurance program Welfare plan established by law and administered by a
government
Provides population with income security
Provides payments to replace income lost because of age, disability, death,injury, and
unemployment
Also provides medical care
Contract Legally enforceable agreement between parties
