Insurers Part 1

Purchasing groups

members of the purchasing group must have similar business or activities *one purpose of the group must be the purchaser of liability insurance on a group basis *purchase insurance from an insurer that issues the policies and serves as the risk bearer.

Lloyd's Associations

offers a forum for large companies to find brokers or insurers. groups of insurers that mainly write fire or auto-physical damage insurance. Their financial strength depends on the financial strength of its members- members can be a person or company & their liability is limited *play a relatively small role in the US insurance market- many are based in Texas

Reciprocal Insurers

sometimes referred to as a reciprocal exchange, is an unincorporated group of persons or organizations that exchange risks for the purpose of paying the cost of retained losses and purchasing reinsurance *With a reciprocal insurer, risks are transferred to other members of the exchange. Another difference is that a reciprocal is managed by an attorney-in-fact

Self Insurance Company Example

sometimes smaller companies will ban together and form self-insurance groups which provide worker compensation benefits to injured employees *each group is a shared risk pool- members of the group are responsible for each other's losses

Self Insurance Companies

usually large companies who are willing & financially able to retain certain risks and to self-fund for that purpose. Through a formal program of some kind, they set aside funds to pay claims as well as the administrative costs of running an internal insurance program.

Reinsurance Companies

Like business's and individuals, insurance companies also use insurance. To transfer some or all of the risks involved with its operational practices insurance companies will purchase reinsurance

Mutual Insurance companies

Mutual companies are owned by their policy holders. A mutual company has no stockholders. The policy owners are the people and organizations who own insurance policies that the mutual insurance company has issued. When mutual companies pay dividends, those dividends are paid to the policy owners. *Managed by a board of directors

Private vs Government Insurers

Private: includes all forms of insurance provided by privately owned insurers: stocks, mutuals, etc Government: exists because certain types of necessary insurance does not meet the insurable risks standards of most private insurers *examples: flood or crop

Admitted vs Non-admitted Insurers

Admitted- a company that is licensed to do insurance in the state or country in which the insured exposure occurs in Non-admitted- an insurance company that does excess or surplus line insurance

Reinsurance Company example

An insurer that sells insurance to the public (a primary insurer) enters into an agreement with another insurance company to accept some of its risk. The insurer seeking to transfer some of its risk is known as the ceding company or cedent. The insurer accepting some of the risk being transferred is known as the reinsurance company or reinsurer. *Some insurance companies sell only reinsurance. *When a reinsured loss occurs, the reinsurer indemnifies the ceding company.

Federal insurance offered

Social Security, Medicare, the National Flood Insurance Policy, Crop Insurance, the Federal Deposit Insurance Policy

Stock Insurance Companies

Stock insurance companies are owned by stockholders who purchase shares of stock as an investment. If profitable, stock insurance companies may pay dividends to their stockholders

County Mutuals

Traditionally, county mutuals sold property insurance in one limited geographical area or county in a particular state, and specialized in farm insurance. Many of these companies now write more lines of insurance in broader geographical areas.

Government insurance offered

Workers compensation, unemployment insurance, state-run medical insurance plans

Fraternal Benefit Societies

a group of people who usually share a common ethnic, religious, or vocational affiliation. This type of society may provide insurance to it's members. *primarily life insurance providers, many are church affiliated- insureds are typically members of this society

Risk Retention Groups

a special type of captive that provides liability insurance to its members *members must be engaged in similar business or activities *issue policies to their members and cover their risks *retain risks

Captive Insurance Companies

an insurance company that is designed to cover the risk of the parent company, or organizations that owns it *single-owner or single-parent companies are only owned by one company for which they provide insurance *association captives-owned by and cover the risks of multiple associations *or group captive if it is multiple companies