RMIN 4000 Edmunds Exam 2
1. Stock
major types of private insurers 2.Mutual
3.Lloyd's of London
corporation owned by stockholders.
objective is to earn profit for stockholders
define stock insurers
by increasing the value of the stock and
paying dividends
a corporation owned by policyholders.
define Mutual insurers profits are distributed to policyholders by
dividends or rate reductions
1. advance premium mutual
types of mutual insurers 2. assessment mutual
3. fraternal insurer
insurer has the right to assess policy-
define assessment mutual holders an additional amount if the insur-
er's financial operations are unfavorable
insurer does not issue assessable poli-
what is a advance premium mutual
cies
a mutual insurer that provides life and
fraternal insurer health insurance to members of a social
or religious organization
The world's leading insurance market
that provides services and physical facil-
what is Lloyd's of London? ities for its members to write specialized
lines of insurance. They underwrite insur-
ance for syndicates.
Is Lloyd's of London an insurer? No
represent policyholders to arrange cov-
what do Lloyd's of London brokers do?
erage with syndicates
what do syndicates offer? offer insurance contracts in the market
1. members
who makes up a syndicate? 2. managing agents
3. underwriters
, RMIN 4000 Edmunds Exam 2
Someone who legally represents the
principal (insurance company) and has
define insurance agent
the authority to act on the principal's be-
half
Is the principal responsible for acts of an Yes, when the agent is acting within the
agent? scope of authority
provide temporary insurance until the
define Agent Binding Authority policy is actually written (typically with
P&C, NOT life
someone who legally represents the in-
define brokers sured, places appropriate coverage, is
paid commission from insurer, and
very important for commercial P&C, have
knowledge of specialized markets, and
importance of large brokerage firms
provide risk management and loss-con-
trol services
"Wholesalers" who work with retail
what is a surplus lines broker Agents and Brokers, licensed to place
business with a "non admitted" insurer
any type of insurance for which there is
define surplus lines
no available market in the state
an insurer not licensed to do business in
define non-admitted insurer
the state
represent several unrelated insurers,
what does independent agency distribu-
agency owns expirations and renewal
tion mean
rights
the agent represents only one insurer or
group of insurers under common owner-
define exclusive agency system
ship. agents do not own expirations or
renewal rights to policies
an insurer in which the salesperson is
an employee of the insurer, not an inde-
define direct writer system
pendent contractor. employees paid on
"salary plus"
, RMIN 4000 Edmunds Exam 2
Insurer sells directly to the consumer by
define direct response system
television or some other media
employer groups, labor unions, trade as-
what are some methods to sell individual
sociations, college and university alumni,
insurance policies to
and others groups like AARP or AAA
Products are sold through group rep-
resentatives employees who receive a
what is group insurance marketing salary and incentive payments based on
sales (can pay for insurance by payroll
deduction)
ratemaking, underwriting, production,
what are the major insurance company
claims settlement, reinsurance, and in-
operations?
vestments
the pricing of insurance and the calcula-
define ratemaking
tion of insurance premiums
Firms do not know the cost of their prod-
what is the problem with ratemaking?
ucts in advance
individual who uses complex statistical
methods and technology to analyze loss
define actuary
and other data to determine rates and
premiums
rates must be adequate, not be exces-
what are the regulatory goals of ratemak-
sive, and should not be unfairly discrimi-
ing?
natory
rates should be stable, responsible, pro-
what are the business goals of ratemak-
vide for contingencies, promote loss con-
ing?
trol, and be simple
The process of selecting, classifying,
and pricing applicants for insurance to
define underwriting
develop and maintain a profitable book of
business
states the company's underwriting policy
which includes: lines of business written,
what is the underwriting guide
policy forms and rating plan used, ac-
ceptable, borderline, and prohibited busi-
1. Stock
major types of private insurers 2.Mutual
3.Lloyd's of London
corporation owned by stockholders.
objective is to earn profit for stockholders
define stock insurers
by increasing the value of the stock and
paying dividends
a corporation owned by policyholders.
define Mutual insurers profits are distributed to policyholders by
dividends or rate reductions
1. advance premium mutual
types of mutual insurers 2. assessment mutual
3. fraternal insurer
insurer has the right to assess policy-
define assessment mutual holders an additional amount if the insur-
er's financial operations are unfavorable
insurer does not issue assessable poli-
what is a advance premium mutual
cies
a mutual insurer that provides life and
fraternal insurer health insurance to members of a social
or religious organization
The world's leading insurance market
that provides services and physical facil-
what is Lloyd's of London? ities for its members to write specialized
lines of insurance. They underwrite insur-
ance for syndicates.
Is Lloyd's of London an insurer? No
represent policyholders to arrange cov-
what do Lloyd's of London brokers do?
erage with syndicates
what do syndicates offer? offer insurance contracts in the market
1. members
who makes up a syndicate? 2. managing agents
3. underwriters
, RMIN 4000 Edmunds Exam 2
Someone who legally represents the
principal (insurance company) and has
define insurance agent
the authority to act on the principal's be-
half
Is the principal responsible for acts of an Yes, when the agent is acting within the
agent? scope of authority
provide temporary insurance until the
define Agent Binding Authority policy is actually written (typically with
P&C, NOT life
someone who legally represents the in-
define brokers sured, places appropriate coverage, is
paid commission from insurer, and
very important for commercial P&C, have
knowledge of specialized markets, and
importance of large brokerage firms
provide risk management and loss-con-
trol services
"Wholesalers" who work with retail
what is a surplus lines broker Agents and Brokers, licensed to place
business with a "non admitted" insurer
any type of insurance for which there is
define surplus lines
no available market in the state
an insurer not licensed to do business in
define non-admitted insurer
the state
represent several unrelated insurers,
what does independent agency distribu-
agency owns expirations and renewal
tion mean
rights
the agent represents only one insurer or
group of insurers under common owner-
define exclusive agency system
ship. agents do not own expirations or
renewal rights to policies
an insurer in which the salesperson is
an employee of the insurer, not an inde-
define direct writer system
pendent contractor. employees paid on
"salary plus"
, RMIN 4000 Edmunds Exam 2
Insurer sells directly to the consumer by
define direct response system
television or some other media
employer groups, labor unions, trade as-
what are some methods to sell individual
sociations, college and university alumni,
insurance policies to
and others groups like AARP or AAA
Products are sold through group rep-
resentatives employees who receive a
what is group insurance marketing salary and incentive payments based on
sales (can pay for insurance by payroll
deduction)
ratemaking, underwriting, production,
what are the major insurance company
claims settlement, reinsurance, and in-
operations?
vestments
the pricing of insurance and the calcula-
define ratemaking
tion of insurance premiums
Firms do not know the cost of their prod-
what is the problem with ratemaking?
ucts in advance
individual who uses complex statistical
methods and technology to analyze loss
define actuary
and other data to determine rates and
premiums
rates must be adequate, not be exces-
what are the regulatory goals of ratemak-
sive, and should not be unfairly discrimi-
ing?
natory
rates should be stable, responsible, pro-
what are the business goals of ratemak-
vide for contingencies, promote loss con-
ing?
trol, and be simple
The process of selecting, classifying,
and pricing applicants for insurance to
define underwriting
develop and maintain a profitable book of
business
states the company's underwriting policy
which includes: lines of business written,
what is the underwriting guide
policy forms and rating plan used, ac-
ceptable, borderline, and prohibited busi-
