Insurance vocab chapter 2

5. Captive insurer, or captive

is generally defined as an insurance company that is wholly owned and controlled by its insureds; its primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits.

2. Stock insurer

A capital stock insurance company is a company that gets its capital from contributions from its stockholders in addition to its surplus accounts and reserve accounts.

15. Admitted insurer

purchased from a company that is admitted (or licensed) in the state in which the policy was sold. Admitted insurance must also be sold by an agent who is licensed in that state.

24. Market conduct regulation

regulation of the practices of insures in regard to four areas of operation: sales practice, claims practices, and bad faith actions.

7. Underwriting

sign and accept liability under (an insurance policy), thus guaranteeing payment in case loss or damage occurs.

25. Unfair trade practices law

state law that specifies certain prohibited business practices.

9. Claim

state or assert that something is the case, typically without providing evidence or proof.

8. Underwriter

is a company or other entity that administers the public issuance and distribution of securities from a corporation or other issuing body.

4. Reciprocal insurance exchange (inter-insurance exchange)

is a form of insurance company. A reciprocal inter-insurance exchange is not a "mutual insurance company," which is generally an incorporated entity; rather it is an unincorporated association of subscribing members who exchange contracts of indemnity with each other.

6. Reinsurance

is a process whereby one entity takes on all or part of the risk covered under a policy issued by an insurance company in consideration of a premium payment.

10. Risk control

is an important action taken by firms that is intended to proactively identify, manage and reduce or eliminate risks.

3. Mutual insurer

is an insurance company owned entirely by its policyholders. Any profits earned by a mutual insurance company are rebated to policyholders in the form of dividend distributions or reduced future premiums.

12. Domestic insurer

is one formed under the laws of this state; (2) A "foreign" insurer is one formed under the laws of any state, other than this state; (3) An "alien" insurer is one formed under the laws of any country other than a state of the United States.

14. Alien insurer

An insurer that is formed following the laws of one country and offers insurance or reinsurance in another country. For example, an insurer that is formed under the laws of Germany that wishes to offer insurance in the United States is an alien insurer.

13. Foreign insurer

is one formed under the laws of this state; (2) A "foreign" insurer is one formed under the laws of any state, other than this state; (3) An "alien" insurer is one formed under the laws of any country other than a state of the United States.

11. Premium audit

methodical examination of a policyholders operations,records, and books of account to determine the actual exposure units and premium for insurance coverages already provided.

18. Mandatory rate law

State law under which insurance rates are set by state agency or rating bureau and all licensed insures are required to use those rates.

26. Solvency surveillance

The process, conducted by state insurance regulators, of verifying the solvency of insurers and determining whether their financial condition enables them to meet their financial obligations and to remain in business.

20. File-and-use law

an insurance rating law in which the insurer must file rates and supporting rules with the state insurance department prior to their use, but the rates can then be used immediately without specific approval.

19. Prior-approval law

an insurance rating law in which the rates and supporting rules must be filed with and approved by the state insurance department before they can be used.

21. Use-and-file law

an insurance rating law in which the rates must be filed with the state insurance department within a specified period after they are put into use.

17. Surplus lines laws

insurance obtained from non admitted insures when protection is not available from admitted insurers.

23. Open competition (no-file law)

an insurance rating law that allows insurers to develop and use rates without having to file with or get approval from the state insurance department.

22. Flex rating law

an insurance rating law under which prior approval is required only if the new rates exceed a certain percentage above(and sometimes below) the rates previously filed.

16. Non-admitted insurer

are usually referred to as "surplus" or "excess lines insurers". Non-admitted carriers are not regulated in that state and do not contribute to the State Guaranty Fund, which prot

1. Private insurer

companies are typically for-profit organizations. Each company develops their own policies and regulations regarding durable medical equipment (DME) coverage. That is what can make the funding process so confusing.