RMIN 4000 Exam 2|111 Q’s and A’s
Major Types of Private Insurers - -Stock Insurers
Mutual Insurers
Lloyds of London
- Stock Insurer - --A corporation owned by stockholders.
-Objective is to earn profits for the stockholders by increasing stock and
paying dividends.
(Progressive, Allstate, Metlife, etc.)
- Mutual Insurer - --a corporation owned by policyholders.
-profits are distributed to policyholders by dividends or rate reductions.
(statefarm, nationwide, liberty mutual)
- types of mutual insurers - -assesement
advanced
fraternal
- Lloyd's (of London) - --NOT an insurer, but a society of members who
underwrite insurance in syndicates.
-World's leading market that provides services and physical facilities for its
members to write specialized lines of insurance
- Lloyd's broker - -represent policyholders to arrange coverage with
syndicates
- Lloyd's Syndicates - -those insurance companies that offer insurance
contracts in the market
- managing agents - -manage the syndicates, who typically specialize in
certain lines
- underwriters - -work for the syndicates to asses risks and determine
premiums
- other types of private insurers - -blue cross blue shield plans
health maintenance organizations (HMO'S)
captive insurers
- insurance agent - --someone who legally represents the principle
(insurance company) and has the authority to act on the principle's behalf
-the principle (insurance company) is legally responsible for all acts of an
agent when the agent is acting within the scope of authority
, - insurance binders - -provide temporary insurance until the policy is
actually written
-can be provided by property and casualty (P&C) agents
-life insurance agents usually have no authority to issue binders
- insurance broker - -Someone who legally represents the insured and:
◦Solicits applications and places coverage with the appropriate insurer.
◦Is paid a commission from the insurer.
◦In general, does NOT have the authority to bind
- large brokerage firms - --Very important in Commercial P&C coverage.
-May have knowledge of highly specialized insurance markets.
-May provide risk management and losscontrol services.
(AON, Marsh & McLennan, Willis Towers Watson)
- surplus lines broker - -Licensed to place business with a nonadmitted
insurer.
- surplus lines - -Insurance for which there is no readily available, admitted
market in the state
- nonadmitted insurer - -an insurer not licensed to do business in the state
- Distribution-Independent Agency - --Usually represents several unrelated
insurers. ---Agents are paid a commission which varies by the line of
insurance.
-The agency owns the expirations or renewal rights to the business.
-Agents may be authorized to adjust small claims and may provide loss
control services to their insurers
- Distribution-Exclusive Agency System (Captive Agents) - --Agent
represents only one insurer or group of insurers under common ownership.
-Agents are generally paid a lower commission rate on renewal business
than on new business.
-Agents usually do not own the expirations or renewal rights to the policies.
-Insurers provide strong support services to new agents
- direct writer - --An insurer in which the salesperson is an employee of the
insurer, not an independent contractor.
-Employees are usually compensated on a "salary plus" arrangement
- direct response - -Insurer sells directly to the consumer by television or
some other media
- independent agent - -usually represents several unrelated insurers
Major Types of Private Insurers - -Stock Insurers
Mutual Insurers
Lloyds of London
- Stock Insurer - --A corporation owned by stockholders.
-Objective is to earn profits for the stockholders by increasing stock and
paying dividends.
(Progressive, Allstate, Metlife, etc.)
- Mutual Insurer - --a corporation owned by policyholders.
-profits are distributed to policyholders by dividends or rate reductions.
(statefarm, nationwide, liberty mutual)
- types of mutual insurers - -assesement
advanced
fraternal
- Lloyd's (of London) - --NOT an insurer, but a society of members who
underwrite insurance in syndicates.
-World's leading market that provides services and physical facilities for its
members to write specialized lines of insurance
- Lloyd's broker - -represent policyholders to arrange coverage with
syndicates
- Lloyd's Syndicates - -those insurance companies that offer insurance
contracts in the market
- managing agents - -manage the syndicates, who typically specialize in
certain lines
- underwriters - -work for the syndicates to asses risks and determine
premiums
- other types of private insurers - -blue cross blue shield plans
health maintenance organizations (HMO'S)
captive insurers
- insurance agent - --someone who legally represents the principle
(insurance company) and has the authority to act on the principle's behalf
-the principle (insurance company) is legally responsible for all acts of an
agent when the agent is acting within the scope of authority
, - insurance binders - -provide temporary insurance until the policy is
actually written
-can be provided by property and casualty (P&C) agents
-life insurance agents usually have no authority to issue binders
- insurance broker - -Someone who legally represents the insured and:
◦Solicits applications and places coverage with the appropriate insurer.
◦Is paid a commission from the insurer.
◦In general, does NOT have the authority to bind
- large brokerage firms - --Very important in Commercial P&C coverage.
-May have knowledge of highly specialized insurance markets.
-May provide risk management and losscontrol services.
(AON, Marsh & McLennan, Willis Towers Watson)
- surplus lines broker - -Licensed to place business with a nonadmitted
insurer.
- surplus lines - -Insurance for which there is no readily available, admitted
market in the state
- nonadmitted insurer - -an insurer not licensed to do business in the state
- Distribution-Independent Agency - --Usually represents several unrelated
insurers. ---Agents are paid a commission which varies by the line of
insurance.
-The agency owns the expirations or renewal rights to the business.
-Agents may be authorized to adjust small claims and may provide loss
control services to their insurers
- Distribution-Exclusive Agency System (Captive Agents) - --Agent
represents only one insurer or group of insurers under common ownership.
-Agents are generally paid a lower commission rate on renewal business
than on new business.
-Agents usually do not own the expirations or renewal rights to the policies.
-Insurers provide strong support services to new agents
- direct writer - --An insurer in which the salesperson is an employee of the
insurer, not an independent contractor.
-Employees are usually compensated on a "salary plus" arrangement
- direct response - -Insurer sells directly to the consumer by television or
some other media
- independent agent - -usually represents several unrelated insurers
