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