Insurers

Types of Insurers

1. Stock Insurance Company 2. Mutual Insurance Company 3.Fraternal Benefit Societies 4.Reciprocal Insurance Company 5. Risk Retention Groups

What are the 5 Operating Divisions of Insurers

1. Actuarial 2. Underwriting 3. Marketing/Sales 4. Claims 5. Executive Staff

What are the 3 types of Domicile of Insurers

1. Domestic Insurer 2. Foreign Insurer 3. Alien Insurer

What is an Admitted Insurer

An insurance company - whether domestic, foreign or alien - authorized to transact insurance in California by the California Department of Insurance. This is also known as a 'standard' insurer because it sells policies for the standard market, which covers average or better than average risks. When risks are too high for the standard market, they must be covered by other types of policies, such as surplus lines or assigned risk.

What is a Domestic Insurer

An insurer organized under the laws of this state, whether or not it is admitted to do business in this state.

What is an Actuarial operating division

Gather and interpret statistical information to aid in rate-making/setting.

Stock Insurance Company

a. A stock company is owned by stockholders. b. Stockholders direct the company's operation by electing directors and officers. c. Shareholders receive taxable stock dividends (return of profit).

What is a Nonadmitted Insurer

An insurance company not authorized to transact insurance in California by either failing to comply with California requirements or not seeking admission. Note: Not subject to financial solvency regulations that applies to admitted insurers.

What is an Alien Insurer

An insurer organized under the laws of any jurisdiction other than a state of the United States, whether or not it is admitted to do business in this state.

What is the Marketing/Sales operating division

Is responsible for advertising and selling insurance policies.

What is an Underwriting operating division

Is responsible for risk selection.

What is the Executive Staff operating division

Oversees and regulates the business.

________ cannot be obtained from admitted insurers.

Surplus Lines Insurance

What is a Foreign Insurer

An insurer not organized under the laws of this state, but in one of the other states within the United States, whether or not it is admitted to do business in this state.

What is the Claims operating division

Provides service to the policyholder in the event of a loss.

Risk Retention Groups

a. A group-owned insurer who assumes and spreads the liability risks of its members. b. They are an insurance company, licensed in at least one state that is owned by their policyholders, who are also their shareholders. Example: Theme parks, go-cart tracks, waterslides, etc. NOTE: Groups, employers in particular, can self-fund their coverage. Employer self- funded plans are governed by the Employer Retirement Income Security Act (ERISA). They are appealing to employers because of the greater level of flexibility that comes with being able to tailor the plan to their needs with fewer state-mandated features. While firms take on additional financial risk, they are able to limit their total risk through the purchase of a stop-loss policy. Further, they benefit from the increased cost savings typical of self-funded modes.

Reciprocal Insurance Company

a. A group-owned insurer whose main activity is risk sharing. b. A reciprocal insurer is unincorporated, and is an aggregation of individuals, firms, and business corporations, which exchange insurance on one another. Each member is known as a subscriber. c. The exchange of insurance is affected through an Attorney-In-Fact. d. Each subscriber assumes a part of the risk of all other subscribers. If premiums collected are insufficient to pay losses, an assessment of additional premium can be made.

Mutual Insurance Company

a. A mutual company is owned by its policyholders. b. Policyholders choose a Board of Trustees or Directors to manage the company. c. Profits are returned to policyholders as nontaxable dividends. d. Most mutual companies are non-assessable, meaning they cannot charge members a pro rata share of loss and expense at the end of the policy period. e. Demutualization is a process whereby a mutual insurer becomes a stock company.

Fraternal Benefits Societies

a. Fraternal societies are primarily social organizations that engage in charitable and benevolent activities that provide insurance, primarily life insurance to its members. b. Membership is typically drawn from members of a given lodge, order, or society. c. They are usually organized on a nonprofit basis.