Insurance Companies (known as insurers or carriers)
manufacture and sell insurance coverage in the form of insurance policies or contracts of insurance.
Insurance Agencies
are captive or independent organizations that recruit, contract with, train and support insurance producers.
Insurance Producers
are licensed individuals representing and appointed by an insurance company when transacting insurance business.
An Insured
is the person or entity that is covered by the Insurer, which covers losses due to loss of life, health, property or liability.
An Owner
is not necessarily the insured under the policy but is responsible for paying the policy's premium and has various rights as specified in the contract.
What are the two trade and regulatory associations?
The National Association of Insurance Commissioners (NAIC) and the Federal Insurance Office (FIO).
The National Association of Insurance Commissioners (NAIC)
consists of all state and territorial insurance commissioners or regulators. Provides resources, research, legislative and regulatory recommendations and interpretations for state insurance regulators. Also promotes uniformity among states. Members may ac
Federal Insurance Office
was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Monitors the insurance industry and identifies issues and gaps in the state regulation of insurers. It also monitors access to affordable insurance by traditionally underser
Insurance is primarily regulated by?
individual states.
True or False: Trade associations also exist to provide education, support, networking and lobbying for insurance companies and producers.
True
Who writes and passes state insurance laws, statues and protects the insuring public?
legislative branch.
Who is responsible for interpreting and determining the constitutionality of the statues?
judicial branch.
Who enforces the existing statues that have been put into place?
executive branch.
this role is typically appointed by the Governor and has the power to issue rules and regulations to help enforce these statues.
Commissioner, Director or Superintendent of Insurance.
U.S. v. South-Eastern Underwriters Association (1944)
look up
McCarran-Ferguson Act (1945)
established that the federal government will not regulate the business of insurance in areas which the states have historically had the authority to do unless the state fails to cooperate.
Private Insurers
most insurance is written through.
Government Insurers
typically only in rare instances when catastrophic risks are present.
a stock company is owned by
stockholders/shareholders
issue non-participating policies, meaning that the policyholder is not entitled to receive any dividends.
Stock Insurers
own a mutual company.
Policyholders
issue Participating policies, meaning that policyholders are entitled to receive any dividends.
Mutual Insurers
a group-owned insurer whose main activity is risk sharing.
Reciprocal Insurance Company
unincorporated and is formed by individuals, firms and business corporations that exchange insurance on one another. Each member is known as a subscriber and each subscriber assumes a part of the risk of all other subscribers.
Reciprocal Insurer
a group of underwriters called Syndicates, each of which specializes in insuring a particular type of risk. Members are individually liable for each risk they assume and coverage provided is underwritten by a syndicate manager such as an attorney in fact.
Llyod's of London
primarily social organizations that engage in charitable and benevolent activities that can provide life and health insurance to their members. Members usually consist of people within a faith order of society. Usually organized on a non-profit basis.
Fraternal Benefit Societies
group-owned insurers that primarily assume and spread the liability related risks of its members. Owned by their policyholders. Large groups of similar units. Membership is limited to risks with similar liability exposures i.e. theme parks, go cart tracks
Risk Retention Groups (RRG)
assume all of the financial risk faced without transferring that risk to an insurer.
Self Insurers
refers to the jurisdiction where an insurer is formed or incorporated.
Domicile
insurer organized under the laws of this state, whether or not it is admitted to do business in this state.
Domestic Insurer
insurer organized under the laws of any other state, possession, territory or the District of Columbia of the US, whether or not it is admitted to do business in this state.
Foreign Insurer
insurer organized under the laws of any jurisdiction outside the US, whether or not it is admitted to do business in this state.
Alien Insurer
An insurer incorporated in New York is considered ..... to New York?
Domestic Insurer
An Insurer incorporated in NY is considered .... to Kansas?
Foreign Insurer
An insurer incorporated in Canada is considered ... to NY?
Alien Insurer
refers to whether or not an insurer is approved or authorized to write business in this State.
Admitted v. Non-admitted
authorized by this State's Commissioner of Insurance to do business in this State and has received a Certifacte of Authroity to do business in this state.
Admitted (Authorized) Insurer
has either applied for authorization to do business in this State and was declined or they have not applied; they are not authorized to transact insurance in this State.
Non-admitted (Unauthorized) Insurer
finds coverage when insurance cannot be obtained from admitted insurers.
Surplus Lines Insurance
protects consumer privacy and protects the public from overly intrusive information collection practices. Ensures data collected is confidential, accurate, relevant and used for a proper and specific purpose. Must inform applicant that a credit report can
Fair Credit Reporting Act
credit reporting agency must reinvestigate within 6 months if applicant challenges accuracy.
Applicant Challenge
agency must forward to applicant inaccurate information given out within previous 2 years.
Inaccuracies
report must not include lawsuits over 7 years old or bankruptcies more than 10 years old.
Disallowed Information
consumer reporting agencies must provide the information on file if requested.
Disclosure Upon Request
a consumer reporting agency may not provide a credit report to any party that lacks a permissible purpose, such as the evaluation of an application for a loan, credit, service or employment. Permissible purposes also include several business and legal use
Limited Access to Information
if a consumer's file contains inaccurate information, the agency must promptly investigate the matter with the source that provided the information. If the investigation fails to resolve the disputem, a statement may be added to the credit file explaining
Investigation Of Disputed Information
a consumer reporting agency must correct or, if necessary, delete from a credit file the information that is found to be inaccurate or can no longer be verified. The consumer reporting agency is not required to remove accurate data from a file unless it i
Correct Or Delete Inaccurate Information
new requirements and standards put in place to deal with money laundering.
USA Patriot Act
paying for an entire policy up front with cash, early cancellation of policy with no regard to cancellation fees, heavy use of third parties for policy transactions and strong reliance on wire or electronic fund transfers to foreign accounts.
Money Laundering Red Flags
protects producers, brokers and insurers in the event fraudulent information is provided by consumer.
State Fraudlent Insurance Acts
requires finanancial institutions, including insurers, to provide each consumer with a privacy notice at the time the consumer relationship is established and annually thereafter.
The Financial Privacy Rule
must explain information collected, where it's shared, how it's used and how it's protected.
Privacy Notice
made it a felony for a person to engage in the business of insurance after being convicted of a state or federal felony crime involving dishonesty or breach of trust. Violations include embezzling money.
Violent Crime Control and Law Enforcement Act of 1994
refers to misrepresentation, untruthfulness, falsification.
Dishonesty
is based on fiduciary relationship of parties and the wrongful acts violating the relationship.
Breach of Trust
fines and possible prison time.
Penalties
if consent is granted by any state, other states must allow the applicant to work in their states as well.
Reciprocity
if conditions of consent are not continually met, the consent may be withdrawn.
Consent Withdrawal
legal contract protecting the insured against a loss, damage or liability arising from an unexpected event. Transfers risk from the insured to the insurer.
The Insurance Contract
insured is intended to be restored to the same financial or economic condition that existed prior to the loss. Insured should not profit but just be returned to normal.
Principal of Indemnity
ability of an applicant to meet an insurer's underwriting requirements.
Insurability
the process of selecting, classifying and rating a risk for the purpose of issuing or not issuing insurance coverge.
Underwriting
any event, past or present, which may cause loss or damage or create legal liability on the part of an insured.
Insurable Event
must exist in every inforceable insurance contract.
Insurable Interest
pertains to the formation and enforcement of contracts.
Contract Law
torts are civil wrongs; not crimes or breaches of contract. Result in injueies or harm that constitute the basis of a claim by a third party.
Tort Law
a contractual agreement that transfers the liability of one party to another party; it is used by landlords, contractors and others as a way to avoid or rduce risk.
Hold Harmless Agreement
what a reasonable and prudent policy owner would expect; the reasonable expectations of policyowners are honored by the Courts although the strict terms of the policy may not support these expectations.
Reasonable Expectations Doctrine