stock insurance company
owned by stockholders, non participating policies
mutual insurance company
owned by policyholders who receive non taxable dividends
reinsurance
transfer of risk between insurance companies
domestic insurer
organized under the laws of a resident state
foreign insurer
organized under the laws of another state
alien insurer
organized under the laws of a country outside the U.S.
admitted insurer
authorized to do business in the state
underwriting department
responsible for the selection of risks to insure
agent/producer
can be the employee of an insurance company that owns the agent book of business
the law of agency
three-party relationship where a principal authorizes an agent to act on its behalf to create a legal relationship wit ha third party
express authority
is written into the producers agency contract
implied authority
that which the public assumes the agent possesses
apparent authority
is created when the agent exceeded express authority and the insurer does not respond
Fair Credit reporting act
protects consumer privacy by ensuring that any data collected by an insurer remains confidential, and is accurate, relevant, and used for a proper specific purpose
risk
uncertainty of loss
peril
cause of loss
hazard
increases the probability of a loss
principle of indemnity
does not allow the insured to profit from a loss, instead it restores them to the same financial or economic condition before the loss, with no loss or gain
insurable interest
must exist at the time of loss
insurance contract
the insurer prepares the contract and presents it to the insured who must accept it on a take it or leave it basis
underwriting factors
used to determine premium include the nature of the risk, hazards, claims history, and other factors that very depending on the risk
State commissioner
supervisor, or director of insurance is the chief insurance regulator who protects the insuring population by regulating all insurers and insurance professionals doing business in the state