Florida Insurance 2-14 Exam Terms / Actual
Questions & Verified Answers, .
Terms in this set (350)
Financial protection against loss or harm - An
arrangement by which company gives customers
Insurance
financial protection against loss or harm such as theft
or illness in return for premium payments.
Is based on actuarial or mathematical principles and
Life Insurance guarantees a specified sum of money upon the death
of the person who is insured.
Provide a stream of income by making a series of
Annuities payments to the annuitant for the annuitant's lifetime
or for a specifically designated period of time.
Uncertainty regarding loss; the probability of loss
Risk
occurring for an insured or prospect
Speculative Risks Involve the possibility of loss and gain. (Not Insurable)
Pure Risks Involve the possibility of loss only. (Insurable)
Peril Cause of risk (when a building burns, fire is the peril)
Hazards The source of danger
A hazard being of physical nature.
Physical Hazard A person being treated of cancer, the disease is the
physical endangerment. (Blindness & deafness)
Occurs when individuals evade risk entirely. "If you
Risk Avoidance don't drive, then you avoid getting in an auto
accident."
,Risk Reduction Takes place when the chances of loss are lessened.
Changing a lifestyle to minimize a known risk.
Risk Retention Being aware of the risks involved and taking
precautions for financial protection. Auto policy's
deductible is an illustration of risk retention
Risk Transference The act of shifting the responsibility of risk to another in the
form of an insurance contract.
Adverse Selection Refers to the tendency for those individuals who present
less favorable insurance risk to seek or continue insurance
to a great extent than other risks.
Insuring Pure Risk Loss must be due to chance
Loss must be definite and measurable
Risk must be predictable
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
Mutual Insurers Participating policies
Owned by policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
Assessment Mutual Prohibited in Florida
Insurers
Pure Assessment Mutual Don't pay premium and total loss is divided among members
Company
Lloyds of London NOT considered an insurance company
- An association of individuals and companies that individually
underwriter insurance.
Fraternal Benefit Societies Must be nonprofit, have a lodge system, and offer insurance to
its members only
,Home Service Insurer Insurer that offers relatively small policies with premiums
payable on a weekly basis.
A.k.a. Career agents
Captive Agents Works for only one insurer and sells only that insurers
products
Is self-governing and actually works for himself. This
Independent Agents affords him the versatility to represent several insurers and
their different insurance products.
Usually not license and don't sell insurance. Assist
Special Agents insurance companies field representatives.
(GA) - Build sales staffs and agents are treated as
Career Agency System employees. They are recruited and trained. A principal of
the company supervises agents.
(PPGA) - The agent supplies his own working
Personal Producing environment. Agents hired by a PPGA are considered General Agency System
employees of the PPGA, not the insurance company, and are supervised by the regional salary.
Agents represent several insurers through signed
Independent Agency contracts and are paid on commission or fee basis,
System not through salary.
Legislation
Regulating the business of
The Court System
insurance
State Insurance Departments
- State tried to control insurance domiciled
fromanother state.
- U.S. Supreme Court sided against insurance
Paul v. Virginia
company
- Upholding the right of sate to regulate insurance
- States WIN
, United States v. - Ruling is a form of interstate commerce
Southeastern - Should be regulated by the federal government
Underwriters Association - Fed Gov. WINS
(SEUA)
- Gave back some regulatory authority to the states
The McCarran-Ferguson - Did not provide the states to regulate individually Act -
Insurance regulated by state law "is in the publics
best interest"
- Dealing with variable annuities
- Securities and Exchange Commission (SEC)
shouldregulate the variable annuities (since they're used for
Intervention by SEC investments) & variable life insurance.
- Therefore, agents must obey the rules to both
SECand state regulation.
- Fair and accurate report of information
aboutconsumers
- Insurers must inform them about any investigations
Fair Credit Reporting Act being made
- Then insurers must let the applicants know the
nameof the reporting agency
- Revoking the Glass-Steagall Act
- This changed the industry so commercial banks,
Financial Services investment banks, retail brokerages, and insurance
Modernization Act companies can now enter each other's lines of business
Admitted insurance - Office of Insurance Regulation has licensed them to
company carry out business in Florida
Nonadmitted Insurance - Have not been licensed by the the Florida Office of
Company Insurance Regulation
- An action which eliminates the original policy or
Policy Replacement diminishes its benefits or values
Questions & Verified Answers, .
Terms in this set (350)
Financial protection against loss or harm - An
arrangement by which company gives customers
Insurance
financial protection against loss or harm such as theft
or illness in return for premium payments.
Is based on actuarial or mathematical principles and
Life Insurance guarantees a specified sum of money upon the death
of the person who is insured.
Provide a stream of income by making a series of
Annuities payments to the annuitant for the annuitant's lifetime
or for a specifically designated period of time.
Uncertainty regarding loss; the probability of loss
Risk
occurring for an insured or prospect
Speculative Risks Involve the possibility of loss and gain. (Not Insurable)
Pure Risks Involve the possibility of loss only. (Insurable)
Peril Cause of risk (when a building burns, fire is the peril)
Hazards The source of danger
A hazard being of physical nature.
Physical Hazard A person being treated of cancer, the disease is the
physical endangerment. (Blindness & deafness)
Occurs when individuals evade risk entirely. "If you
Risk Avoidance don't drive, then you avoid getting in an auto
accident."
,Risk Reduction Takes place when the chances of loss are lessened.
Changing a lifestyle to minimize a known risk.
Risk Retention Being aware of the risks involved and taking
precautions for financial protection. Auto policy's
deductible is an illustration of risk retention
Risk Transference The act of shifting the responsibility of risk to another in the
form of an insurance contract.
Adverse Selection Refers to the tendency for those individuals who present
less favorable insurance risk to seek or continue insurance
to a great extent than other risks.
Insuring Pure Risk Loss must be due to chance
Loss must be definite and measurable
Risk must be predictable
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
Mutual Insurers Participating policies
Owned by policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
Assessment Mutual Prohibited in Florida
Insurers
Pure Assessment Mutual Don't pay premium and total loss is divided among members
Company
Lloyds of London NOT considered an insurance company
- An association of individuals and companies that individually
underwriter insurance.
Fraternal Benefit Societies Must be nonprofit, have a lodge system, and offer insurance to
its members only
,Home Service Insurer Insurer that offers relatively small policies with premiums
payable on a weekly basis.
A.k.a. Career agents
Captive Agents Works for only one insurer and sells only that insurers
products
Is self-governing and actually works for himself. This
Independent Agents affords him the versatility to represent several insurers and
their different insurance products.
Usually not license and don't sell insurance. Assist
Special Agents insurance companies field representatives.
(GA) - Build sales staffs and agents are treated as
Career Agency System employees. They are recruited and trained. A principal of
the company supervises agents.
(PPGA) - The agent supplies his own working
Personal Producing environment. Agents hired by a PPGA are considered General Agency System
employees of the PPGA, not the insurance company, and are supervised by the regional salary.
Agents represent several insurers through signed
Independent Agency contracts and are paid on commission or fee basis,
System not through salary.
Legislation
Regulating the business of
The Court System
insurance
State Insurance Departments
- State tried to control insurance domiciled
fromanother state.
- U.S. Supreme Court sided against insurance
Paul v. Virginia
company
- Upholding the right of sate to regulate insurance
- States WIN
, United States v. - Ruling is a form of interstate commerce
Southeastern - Should be regulated by the federal government
Underwriters Association - Fed Gov. WINS
(SEUA)
- Gave back some regulatory authority to the states
The McCarran-Ferguson - Did not provide the states to regulate individually Act -
Insurance regulated by state law "is in the publics
best interest"
- Dealing with variable annuities
- Securities and Exchange Commission (SEC)
shouldregulate the variable annuities (since they're used for
Intervention by SEC investments) & variable life insurance.
- Therefore, agents must obey the rules to both
SECand state regulation.
- Fair and accurate report of information
aboutconsumers
- Insurers must inform them about any investigations
Fair Credit Reporting Act being made
- Then insurers must let the applicants know the
nameof the reporting agency
- Revoking the Glass-Steagall Act
- This changed the industry so commercial banks,
Financial Services investment banks, retail brokerages, and insurance
Modernization Act companies can now enter each other's lines of business
Admitted insurance - Office of Insurance Regulation has licensed them to
company carry out business in Florida
Nonadmitted Insurance - Have not been licensed by the the Florida Office of
Company Insurance Regulation
- An action which eliminates the original policy or
Policy Replacement diminishes its benefits or values
