1 - C Types of Insurers

Define: Reciprocal Insurer

Group of people or organization that insure each other

Define: Re-insurer

Insurance for insurers

What are 2 main points of Stock Insurers?

Publicly traded Stockholders participate in dividends (non-participating)

Cindy holds an insurance policy from Sine Nomine Insurance. This is not a publicly traded company, and Cindy can participate in the election of the board, receiving dividends if the company does well. Sine Nomine Insurance could be best described as a: A. Mutual insurance company B. Stock insurance company C. Fraternal benefits society D. A risk retention group

A. Mutual insurance company

Which of the following is NOT a characteristic of social insurance programs? A. Social insurance programs are for-profit programs B. Social insurance programs involve mandatory participation C. Social insurance programs are designed to meet the needs of the general public as a whole D. The benefits of a social insurance program may be prescribed by federal law

A. Social insurance programs are for-profit programs

Define: Risk retention group

An alternative to traditional insurance, owned by its members; provides liability coverage for multiple companies in the same business

A reciprocal insurer is: A. A publicly-traded insurance company owned by stockholders, which provide capital and participate in the insurer's profits and losses B. An unincorporated organization of subscribers that operates through an attorney-in-fact to provide insurance benefits for its members C. An insurance company that is owned by its policyholders, is not traded publicly, and is governed by a board of directors elected by the policyholders D. A non-profit mutual aid organization that engages in charitable or benevolent activities and provides insurance to its members

B. An unincorporated organization of subscribers that operates through an attorney-in-fact to provide insurance benefits for its members

A captive insurance company: A. Provides insurance that is designed to meet the needs of the general public B. Exists solely to provide insurance for its parent company C. Provides insurance for insurers D. Operates through an attorney-in-fact to provide insurance benefits for its members

B. Exists solely to provide insurance for its parent company

An insurer that adheres to the laws of a state but is located outside of that state is called a(n) _____ insurer. A. Alien B. Foreign C. Domestic D. National

B. Foreign

When an insurer buys insurance to reduce its exposure to loss, this is called: A. Mitigation B. Re-insurance C. Co-insurance D. Loss reduction

B. Re-insurance

Which of the following statements about risk retention groups is FALSE? A. Risk retention groups are subject to state laws regarding Unfair Claims Settlement practices B. Risk retention groups must be licensed in every state in which they operate C. Risk retention groups are a form of self-insurance D. Risk retention groups con provide commercial liability insurance

B. Risk retention groups must be licensed in every state in which they operate

A risk retention group can provide all of the following kinds of insurance, EXCEPT: A. Professional liability B. Workers compensation C. Medical malpractice D. Product liability

B. Workers compensation

Edward is a member of the Knights of Columbus, a religious group dedicated to voluntary service to the benefit of society. He also recently purchased a $100,000 life insurance policy from the organization. This was possible because Knights of Columbus is: A. A risk retention group B. A mutual insurer C. A fraternal benefit society D. A reciprocal insurer

C. A fraternal benefit society

Which of the following best describes a Fraternal Benefit Society? A. A fraternal benefit society is a for-profit provider of insurance B. A fraternal benefit society uses investors' money to pay claims C. A fraternal benefit society is a social organization based around common interests and beliefs D. A fraternal benefit society pays dividends to its stockholders

C. A fraternal benefit society is a social organization based around common interests and beliefs

Mark belongs to a non-profit organization that engages in charitable activities and provides Mark with death and disability insurance coverage. To what kind of organization does Mark belong? A. Reciprocal insurer B. Risk retention group C. Fraternal benefit society D. Mutual insurance company

C. Fraternal benefit society

SureTrust Insurance was founded and operates in Texas. In Texas, SureTrust is considered: A. An alien insurer B. A foreign insurer C. A state insurer D. A domestic insurer

D. A domestic insurer

Xavier owns a small insurance company. Recently the company won a bid to insure a new housing development in Omaha, NE. His company can handle any claims that arise, but if a series of tornados were to tear through the area and destroy the entire development, Xavier's company would suffer financially. Which type of insurer could help Xavier's company protect itself the most from this potential loss? A. A fraternal benefits society B. A stock insurer C. A reciprocal insurance group D. A re-insurer

D. A re-insurer

Frank purchases an automobile policy from publicly-traded XYZ Insurance. He pays regular monthly premiums, and also purchases stock in XYZ and receives dividends when the company turns a profit. From which type of company has Frank purchased insurance? A. Re-insurer B. Mutual insurer C. Reciprocal insurer D. Stock insurer

D. Stock insurer

What are the 3 main points of Government Insurers?

Mandatory Run by government Suited to needs of general public

What are the 2 main points of Mutual Insurers?

No stockholders Policyholders participate in dividends (participating)

Define: Fraternal benefit society

Non-profit, mutual aid organization that will usually offer insurance benefits to members and their families

What is the main point of Private Insurers?

Offer insurance products based on customer preferences