Term
| WHAT IS AN "ADMITTED" COMPANY? |
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Definition
| A company approved to do business in a given state is known as an "admitted" company and is considered to be authorized. |
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Term
| WHAT IS A "NONADMITTED" COMPANY? |
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Definition
| A company that is not approved to do business in a given state and is considered to be unauthorized. |
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Term
| WHAT IS A COMPANY GIVEN ONCE THEY ARE APPROVED TO OPERATE IN A STATE? |
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Definition
| Certificate of Authority. |
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Term
| WHAT IS A COMPANY KNOWN AS IF THEY MAY OPERATE IN A STATE AND ARE NOT CONSIDERED AN "ADMITTED" COMPANY? |
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Definition
| Surplus lines companies. They market their products through surplus lines agents. |
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Term
| WHAT IS DIFFERENT ABOUT SURPLUS LINES COMPANIES? |
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Definition
| They do not file their rates and forms and they don't participate in the state's guaranty funds. |
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Term
| WHAT ARE THE THREE CLASSIFICATIONS OF INSURANCE COMPANIES? |
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Definition
1) Domestic Insurer-an insurance company formed and domiciled under the laws of a particular state.
2) Foreign Insurer-An insurance company formed under the laws of the United States or a particular state of the United States.
3) Alien Insurer-An insurance company formed under the laws of a country other than the U.S, its districts, territories, commonwealths, possessions and the Panama Canal Zone. |
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Term
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Definition
| An incorporated insurance company with its capital divided into shares. Owned by its stockholders. |
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Term
| WHAT IS A MUTUAL COMPANY? |
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Definition
| An incorporated insurance company without permanent stock that is owned by its stockholders. |
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Term
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Definition
A member of the reciprocal agrees to share in the risk. Not a company, but a corporate body. The corporate body consists of members, represented by underwriters who place the risk among its members. In case of a loss, the amount paid is shared by the participating members who accepted the risk. |
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Term
| WHAT IS A FRATERNAL BENEFIT SOCIETY? |
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Definition
An incorporated society, without capital stock, that is operated on the lodge system and conducted solely for the benefit of its members and their beneficiaries, and not for profit. |
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Term
| WHAT IS RISK RETENTION AND PURCHASING GROUPS? |
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Definition
Product manufacturers establish group self-insurance programs called risk retention groups to protect them against product liability exposures.
When they do it on a group basis, its called a purchasing group. |
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Term
| WHAT IS A GOVERNMENT INSURER? |
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Definition
The government sometimes steps in to provide insurance that is not ordinarily available from private insurers.
ex. War risk insurance, nuclear energy liability insurance. |
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Term
| WHAT IS A CAPTIVE INSURANCE COMPANY? |
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Definition
An insurance company that may apply to the commissioner for a license to conduct any and all insurance,
except
workers' compensation insurance, personal motor vehicle insurance or homeowner insurance. |
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Term
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Definition
Part or all of the risk of loss is borne without the benefit of insurance coverage to fall back on if a loss occurs. |
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Term
WHAT ARE THE 4 BASIC
DISTRIBUTION SYSTEMS
USED TO MARKET INSURANCE? |
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Definition
1) Exclusive Agency System.
2)Direct Writer System.
3)Direct Response System.
4) Independent Agency System. |
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Term
WHAT IS THE
EXCLUSIVE AGENCY
(OR CAPTIVE) SYSTEM? |
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Definition
The means of marketing insurance where the insurance company contracts with agencies, which are independent businesses, to represent and sell insurance only for that insurance company. |
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Term
WHAT IS THE
DIRECT WRITER
SYSTEM? |
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Definition
The means of marketing insurance where the insurance company's agents are actually employees. |
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Term
WHAT IS THE
DIRECT RESPONSE
SYSTEM? |
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Definition
A means for marketing insurance where the companies sell through direct mail or over the phone and use no agents. |
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Term
WHAT IS THE
INDEPENDENT AGENCY
SYSTEM? |
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Definition
A means for marketing insurance where independent contractors contract with several different companies to represent and sell for those companies. |
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