Terms in this set (61)
What is an agent?
Someone who legally represents the principal and has the authority to act on the principal's behalf
What is a broker?
Someone who legally represents the insured and:
- solicits applications and attempts to place coverage with an appropriate insurer
- is paid a commission from the insurers where the business is placed
- does not have the authority to bind the insurer
The majority of life insurance policies and annuities sold today are through what?
Personal selling distribution systems
What are career or affiliated agents?
Full-time agents who usually represent one insurer and are paid on a commission basis
What happens in a multiple line exclusive agency system?
Agents who sell primarily property and casualty insurance also sell individual life and health insurance products
What is an independent agency?
A business firm that usually represents several unrelated insurers
What is the exclusive agency system?
The agent represents only one insurer or a group of insurers under a common ownership
What is a direct writer?
An insurer in which the salesperson is an employee of the insurer, not an independent contractor
What is a direct response insurer?
They sell directly to the consumer by television or some other media
What is ratemaking?
The pricing of insurance and the calculation of insurance premiums
What is a rate?
The price per unit of insurance
What is an exposure unit?
The unit of measurement used in insurance pricing
What is underwriting?
The process of selecting, classifying, and pricing applicants for insurance
What does a statement of underwriting policy do?
Establishes policies that are consistent with the company's objectives
What is worker's compensation?
A form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue their employer for the tort of negligence
How/when did workers compensation start?
Started in the early 20th century during Industrial Revolution:
- Contributory negligence: claim can be denied if you were also at fault
- "Fellow servant rule": law that says you are not covered from a coworker's mistake
-"Assumption of risk": your fault because you accepted the risks of the job
All of these are no longer legal
Who is covered by workers comp?
Almost all employees, minors, non-citizens, part-time employees
What is covered by workers comp (benefits)?
Weekly income during disability
Awards for permanent disability
Mileage to appointments
Workers comp settlement
A file is not "done" until it is settled out.
A file can always re-open, unless it is settled
Name and briefly describe included workers comp settlements
-PPD: Permanent partial disability. Some form of permanent impairment exists making the person unable to perform to full capacity
-Future medical treatment
- Future increases in PPD
- Future TT/TP: Temporary total disability/temporary partial disability. TT is wage replacement for not being able to work at all. TP is given when your employer cannot accommodate you but you need to prove that you are looking for a job.
- Section 31-308a benefits: additional benefits for PPD
- Medicare set aside: allocates a portion of workers comp settlement to set aside for future medical payments
Name the four banking risks
Give the 5 C's of credit
1. CHARACTER: integrity of borrower
2. COLLATERAL: what the borrower "pledges" to secure financing (2:1 collateral to loan ratio)
3. CAPACITY: Ability to repay a new loan (MOST IMPORTANT)
4. CONDITIONS: Assesses borrower's industry and economic condition
5. CAPITAL: assesses the amt of money the owner has invested in the business
What are the primary functions of a bank?
Insured by FDIC
Draw the chart from the captives presentation. For each column, give:
- risk transferred
- amount of admin
- cash flow
- certificate of insurance
-100% risk transfer
-no cash flow
-partial risk transfer
-no cash flow
-lot of collateral
-partial risk transfer
-some cash flow
-no risk transfer
-100% cash flow
Disadvantages of captive
No cash flow
Need to give lots of collateral
Collateral from captive is usually more than a deductible
What is a captive insurer?
An insurance company owned by its parent company
What does "self-insured" mean?
Someone who does not have insurance but has a plan for losses. They are taking and assuming all the risk.
Differs from uninsured (people with no plan who are not prepared for risk)
What is product liability?
Legal responsibility of the manufacturer/wholesaler/retailer/etc to a buyer/user arising from bodily injury, death, or damages caused by a defective product
Product liability insurance
- Included in a commercial general liability insurance policy
- Insures for third party liability only (does not insure the product)
- May include deductible or self-insured retention
- Limits of liability can vary
- Can purchase excess liability insurance
Types of product defects
-PRODUCT DESIGN defect: a product, even though made properly, is unreasonably dangerous
-MANUFACTURING defect: product designed to be safe but due to a mistake in manufacturing it is unreasonably dangerous
-FAILURE TO WARN: failure to inform user of non-obvious risk of product
Loss prevention/claims handling at Phillips
-Third party claim admin
- Internal and external attorneys
-Cause and origin experts
What is Bob's definition of risk?
The potential that a chosen action or activity will lead to a loss. Almost all human endeavors involve risk
Pure/absolute vs speculative risk
- Pure: a loss or no loss. Insurable.
-Speculative risk: a gain, a loss, or nothing. Not insurable.
Bob's 5-point risk management process
1. IDENTIFY: figure out where, when, why, and how issues might occur
2. ASSESS: which risks are more critical than others?
3. EVALUATE: cost/benefit analysis and decide which risk to address
4. MANAGING: risk and maximizing opportunity. Selecting and implementing a technique
5. MONITORING: checking that what you have been doing has worked
What is ARRTE?
(A)voidance: don't cross the street
(R)eduction: cross at sidewalk, look both ways
(R)etention: i will cross the street with you
(T)ransfer: someone else will cross for me
(E)xcel: use to best advantage
Why would a firm retain some risk?
- Save on insurance company overhead, transaction costs, taxes/residential market loads
- Reduce market volatility
- Move away from insurance regulations
- Control defense costs and claim costs
- Insurance is unavailable for your entity/enterprise
- Auto physical damage exposures
What is ERM?
Enterprise risk management
- Deals with ALL the risks facing an entire organization
- A holistic approach to identifying, defining, quantifying, and treating all the risks facing an organization, whether insurable or not
- Deals with hazard or event risk, operational risk, credit risk, and financial risk
What is NAPHIA?
North American Pet Health Insurance Association
- body of pet health insurers
3 basic types of pet insurance
Pet Well Care Protection
What types of animals does pet insurance cover?
Dogs, cats, exotics
Name some underwriting factors for pet insurance
What is Waymo?
Google's self-driving car project. Unassisted driving and test driving on the freeway.
Advanced Technologies Center
Real-world testing of autonomous cars in Pittsburg
Amazon Prime Air
Drones which deliver Amazon packages in <30min. In UK only.
Drone risks; insurance for drones
Fitness trackers: apple heart study
App designed to monitor irregular rhythms
Define travel insurance
An insurance policy for risks that one may potentially face while traveling either in one's own country or internationally
What does travel insurance cover?
Loss/theft of belongings
What are the 2 primary categories of travel insurance?
Trip Cancellation Insurance
Travel Medical Insurance
Who needs student health insurance?
All universities require full-time students to maintain health coverage
7 sections of UConn's student health plan
2. Eligibility, enrollment, termination
3. Student Health Center referral
5. Exclusions and Limitations
6. Certificate Provisions
7. Appeals Procedure
Define cyber insurance
Insurance meant to protect against internet-related risks
Why would a company need to buy cyber insurance?
Security breach notifications law was enforced and made it mandatory to notify individuals of an incident in which their personal information is compromised
Define kidnap/random/extortion insurance
A policy that provides coverage for monies paid to kidnappers and other expenses that may arise as a result of attempted extortion or illegal detention
What is covered in K&R insurance?
Loss of income
Subsequent medical and psychiatric care
Costs of crisis management team
Losses due to extortion
Who is covered under a K&R policy?
Employees of the policy holder
Medical care provider network "hubs"
-Vast data platforms that store all the data that comes in from providers
- Allows providers to be assigned a care rating, get reviewed
- Increases patients access to providers
How is the internet improving healthcare?
-Self-diagnosis tools like Zipnosis
- Ability to look up doctors, read reviews
- Doctors have unlimited supply of online resources
- Better individual health management (fitness trackers)
DaVinci robot has widespread acceptance
- Allows for less invasive procedures
- Large investment
- Not enough data to determine if the investment is worth it
What risks are insured in trade credit insurance?
- No pay
- Late pay
- Direct link with trade transaction
- Transactions not subject to dispute
5 situations where your trade credit insurance claim can get rejected
1. Late claim filing
2. Omission of pivotal details
3. Risks that are excluded
4. Failure to receive advance payment as per contract
5. Failure to stop shipping
Benefits of trade credit insurance
- Lowers risk of loss
- Improves sales growth and market penetration
- Better access to working capital
- Helps manage credit risk
- Reduces bad debts
- Avoiding unexpected catastrophes
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