Insures Section

market conduct regulations

-Conflict of interest -A request of a gift or loan as a condition to complete business -Supplying confidential information

what are the types of authority?

Admitted/Authorized, Nonadmitted/nonauthorized

Personal Contract

An agreement between an insurance company and an individual that states that insurance policies cover the individual's insurable interest.

Fiduciary Responsibility

An ethical and legal obligation to perform a person's duties in a trustworthy manner.

alien insurer

An insurer domiciled in a country other than the United States.

Direct Response Marketing System

No agents Company advertises directly to consumers (through mail, Internet, television, other mass marketing) Consumers apply directly to the company

what must an insurance contract have to be legally binding?

Offer and acceptance, consideration, competent parties and legal purpose.

Exclusive Agency System/Captive Agents

One agent represents one company Exclusive Commissions on personal sales Renewals can only be placed with the appointinginsurer

Independent Agency System/American Agency System

One independent agent represents several companies Nonexclusive Commissions on personal sales Business renewal with any company

How can a private insurance company be classifed

Ownership, authority to transact business, location, marketing and distribution systems, or rating

What type of policies does a fraternal benefit society not offer?

Property or Liability policies

Conditional Contract

Requires that certain conditions must be met by the policyowner and the company in order for the contract to be executed, and before each party fulfills its obligations.

Government programs are funded by

Taxes and serve national and state social purposes

apparent authority

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

domestic insurer

an insurance company that is incorporated in this state

Express Authority

authority is the authority a principal intends to grant to an agent by means of the agent's contract. It is the authority that is written in the contract

Implied Authority

authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal. acting in the companies best interest.

certifacate of authority

certificate/ license an insurer must get in order to transact buisness

what happens when reinsurance is purchased on a policy?

classified as faculative reinsurance.

what are the characteristics of insurance contract?

contract of adhesion, aleatory contract, personal contract, unilateral contract, conditional contract

law of agency

defins the relationship between the princable and the agent/producer

what are the three types of agent authority?

express, implied, apparent

SS, medicare, medicaid and flood insurance are examples of what?

goverment insurance programs

Whats the major difference between government programs and private insurance programs?

goverment programs are funded by taxes and serve national/state social purposes.

Marketing/ distribution system includes?

independent, exclusive, general, managerial, and direct response marketing

foreign insurer

insurance company that is incorporated in another state

who does an agent represent?

insurer

Reinsurance

is a contract under which one insurance company (the reinsurer) indemnifies another insurance company for part or all of its liabilities

Estoppel

legal process that can be used to prevent a party to a contract from re-asserting a right or privilege after that right or privilege has been waived

indemnity

often refered to as reimbursement. in an envent of a loss the insured may ONLY collect to the extent of the loss

consideration

on the part of the insured is the payment of premium and the representations made in the application. The consideration on the part of the insurer is the promise to pay in the event of loss.

what is a frateral benefit society?

organization formed to provide insurance benefits for members of an affilated lodge

mutual companies

owned by policyowners and issue participating policies

private polices are funded by

premiums

social insurance programs

provided insurance in areas where private insurance is not avalable

domicile

refers to the location where an insurer is incorporated, not necessarily where the insurer conducts business.

what are the most common types of ownership?

stock companies, mutual companies, fraternal benefit society.

offer and acceptance

the applicant usually makes the offer when submitting the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.

Contract of Adhesion

the insured must accept the entire contract with all of its terms and conditions

Market conduct

the way companies should conduct their buisness. a code of ethics for producers.

Whats the purpose of reinsurance?

to protect insurers against catastrophic losses

Managerial System

Branch manager (supervises agents) Salaried Agents can be insurer's employees or independent contractors

Three types of domicile?

Domestic foreign and alien

Unilateral Contract

Insured makes no legally binding promises. however the insurer is legally bound to pay losses covered by policy in force. as long as preminum is current. (onesided)

Legal Purpose

The purpose of the contract must be legal and not against public policy.

Competent Parties

Those who are legally capable of entering into contracts. can understand the contract and not under influence of drugs/alcohol.

Aleatory Contract

a contract where the values exchanged may not be equal but depend on an uncertain event. The premium paid by the insured is small in relation to the amount that will be paid by the insurer in the event of loss