ChFC - HS311, Chap 03

26 terms by vishalv 

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domestic insurer

An insurer doing business in the state where it is
incorporated.

foreign insurer

An insurer doing business in a state other than its state
of incorporation.

alien insurer

An insurer incorporated in another country but doing business
in the United States.

admitted insurer

An insurer that is licensed by a state insurance department to do business in a policyholder's home state

nonadmitted insurer

An insurer that is not licensed by a state insurance department to do business in a policyholder's home state

surplus lines insurance

An insurer that provides coverages that would otherwise not be available, such as to high-risk applicants

stock insurance company

An insurance corporation owned by stockholders

mutual insurance company

Not-for-profit insurance company owned by its policyholders

advance-premium mutuals

An insurer that collects premiums up front and closely resembles a stock insurer in its operations

assessment mutuals

Amall mutual insurer that may or may not collect up front premiums, and assesses policyholders at the end of the year for a portion of its losses and expenses

demutualization

Shifting the legal structure of a mutual insurer to a stock insurer; this is commonly done for raising capital quickly

mutual holding company

A holding company created by a mutual insurer, in which at least 51 percent of its ownership is by stockholders, and then takes over the policies of the original mutual insurer

fraternal insurer

A special type of insurer that provides life insurance for its members; typically church oriented

reciprocal exchange

Unincorporated pool of funds owned by the policyholders and managed by an attorney-in-fact; typically regulated and licensed now in most states as an insurer.

Blue Cross and Blue
Shield plans

Organizations formed for the purpose of prepaying subscribers' medical care benefits; Blue Cross typically pays hospital costs and Blue Shield pays for physician services.

Lloyd's associations

Groups of individual insurers; often formed to provide reinsurance of unusual and difficult risks.

agent

The representative of a principal (insurance company) that produces and manages policies for an insurer.

binder

Temporary evidence of insurance that is superseded when a written policy is issued.

brokers

An independent contractor that represents the policyholder.

surplus lines broker

A special broker that places coverages with nonadmitted insurers when no other market is available in a state; typically for unusual or difficult risks.

direct-response marketing

A business model in which the insurer deals directly with the applicant without an agent.

general agency system

An individual entrepreneur granted a franchise by an insurer to hire and manage agents for that company in a designated geographic area.

branch office system

The insurer established branch offices in which a salaried employee hires and manages the agents in a geographic area.

personal producing
general agent (PPGA)

The insurer hires an individual agent, that is usually experienced and successful, to serve as the agent for a geographic area.

independent agency system

The agency is an independent organization that may represent multiple insurers.

exclusive agency system

The agent represents only one company or family of related companies.

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