RISK
IS THE CHANCE OF A FINANCIAL LOSS
INDEMNITY
RESTORE AND INSURE TO THE SAME FINANCIAL CONDITION THEY WERE IN PRIOR TO THE LOSS
PERIL
A CAUSE OF LOSS
LOSS
ANY REDUCTION IN QUALITY QUANTITY OR VALUE
LOSS RATIO
RATIO OF LOSSES PAID VS TOTAL PREMIUMS RECEIVED
STATUE OF LIMITATIONS
TIME LIMITED ESTABLISHED
BOOK OF BUSINESS
AGENT OR INSURANCE COMPANY'S CUSTOMERS AND POLICYHOLDERS
ARBITRATION
USED TO RESOLVE CLAIMS DISPUTES UMPIRE
SUBROGATION
RIGHT OF RECOVERY- IT KEEP THE INS. FROM COLLECTION TWICE
PROOF OF LOSS
DOC MUST BE SUBMITTED AFTER A LOSS WITHIN 91 DAYS
ACTUAL CASH VALUE
REPLACEMENT COST MINUS DEPRECIATION
AGREED VALUE
VALUES ARE AGREED ON BETWEEN THE INSURED AND THE INSURER AT THE SAME TIME THE POLICY IS ISSUED
Subrogation
Right of recovery
Pro Rate
Returned premiums
Replacement Cost
The current price to replace property with out depreciation
Market Value
A willing buyer and willing seller that agree on amount on a piece of property
Representation
written/oral statement made by the insured, person buying insurance represents himself.
Misrepresentation
false statement made by the insured. Customer misrepresented himself. If related to the risk this is known as material misrepresentation and will void a policy.
Warranties
insured promise relating to the nature of the risk, if breach of warranty occurs, it can void a policy.
Concealment
failure to disclose known facts, can void a policy
Fraud
intentional perversion of the truth, can void a policy.
Admitted Insurer
This insurer is authorized, they have been granted a Certificate of Authority from the Department of Insurance, they meet all guidelines and are a member of the Guaranty Association.
Non Admitted
This insurer is unauthorized, they do not qualify for a Certificate of Authority, they meet some but not all requirements, however they can still do business in the state. Often called SURPLUS LINE INSURANCE companies.
Mutual Companies
are owned by policy holders
Risk Retention Groups
Liability Insurance companies owned by its policyholders who retain the risk. Membership to those with similar risk.
Stock Companies
are owned by stockholders
Purchasing Groups
groups main purpose is to purchase insurance on a group basis for its members who have similar or related liability exposures arising out of common business, product, or trade.
Lloyd's Plan
same regulation as others, but does not apply when it comes to rate regulations. Words LLOYDS must be in their names. Can't cover life insurance and are generally run by an attorney and owners are underwriters.
Reinsurance
insurance for insurance companies, it allows the insurer to sell part of the risk they have assumed from policy holders, writing more insurance. this protects from large losses that would not be able to be handled on its own.
Avoidance
elimate the exposure, underwriting rejects a policy.
Retention
insured assumes all or part of the risk, deductible.
Sharing
risk is pooled together and chance of loss ; partnership.
Reduction
when the possibility or seriousness of the risk , alarm.
Transfer
take risk from yourself to an insurance company, insurance.
Independence
many people must be exposed to the same or similar risk in order for the 'law of large numbers' to work. EX: people living in a rural area are not as likely to get into an accident as those living in a heavily populated area.
Similarity of Exposures
is use a small group who are not exposed to the same risk, then indefinable patterns would not show up.
Definiteness
Terms of Cause, Time, Place, and Amount. the risk to be insurable must meet these qualifications, otherwise, the next element would be impossible to do.
Calculability
damages amount must be frequent enough and in an amount sufficient to permit Actuaries are the people who work for insurance companies and take the numbers and determine the amount of money(rate) to charge a particular group of people and most importantly
Accidental
losses must be at random event which insured has no control over, losses must not be catastrophic,(War, Nuclear)no insurance company can afford these. *Intentional acts are never covered by the insurance policy.
Adverse Selection
theory that states that there is a tendency of below average risk to buy and maintain insurance. EX: if your building is on known flood plain then you would purchase flood insurance.
Domestic Insurer
companies organized under the laws of a particular state, TEXAS
Foreign Insurer
companies organized under laws of another state. FLORIDA
Alien Insurer
companies organized under the laws of another country. MEXICO.
Authority Agents: Express
written or oral
Authority Agents: Implied
assumed by actions
Authority Agents: Apparent
overstep boundaries, not having the authority.
(MGA) must
resident of texas and pass an exam. may approve daily reports, monthly accounts, agency balances, adjust losses, appoint or direct LRA.
Local Recording Agent (LRA)
can solicit, bind coverage, sign policies, and direct solicitors and ISR.
Solicitior
person who bona fide representative of an LRA
Surplus Lines Agent
agent licensed by the state may not issue or cause to be issues an insurance contract with an eligible surplus lines insurer unless the agent has a current surplus lines license.
RISK MANAGER
for compensation, he examines,asses, and evaluates risk for and provides advise for reduction of risk for people seeking coverage.
Emergency License w/ no exam
when an agent is involved in a horrible accident, the department of insurance can issue an emergency license which is good for 90 days in any 12 consecutive months, upon request can be extended 90 extra days.
Temporary License
LRA must pass an exam, issued a temporary license which is good for 12 months. within those 12 months you must complete 100 hours of education requirements. this license cannot be extended. If the 80 hours are not completed the license is voided and the e
Maintenance and Duration
MGA, LRA, Solicitor, and ISR required to complete 30 hours of continuing education every 2 years, must maintain records for 4 years. After licensed for 20 years or more do not have to continue the education