Exam (elaborations)
Personal Lines - General Insurance Questions and Answers Graded A+
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Personal Lines - General Insurance
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Personal Lines - General InsuranceInsurer - answer Insurance companies/carriers that sell insurance policies/contracts
which provide coverage
Insurance Agencies - answer independent organizations that recruit, contract, and
support sales agents and producers
Insurance Agents/Producers - answer Licensed individuals representing an insurance
company when selling the actual policies
Insure - answerThe person that buys the insurance
National Association of Insurance Commissioners (NAIC) - answer Provides Resources,
research, and legislative/regulatory recommendations to state insurance regulators
Federal Insurance Office - answer Monitors insurance industries and identifies issues
and gaps withing the state regulations. It also monitors to makes sure there is affordable
insured for under-served communities and persons.
Stock Insurance Company - answerOwned by shareholders; shareholders can receive
taxable dividends if the company profits
Mutual Insurance Company - answerOwned by policy holders; policyholders can
received non-taxable dividends if the company profits.
Reciprocal Insurance Company - answerOwned by individuals, firms, and businesses
known as "subscribers"; Each subscriber assumes part of the risk of all other
subscribers
Lloyds of London - answerNot an insurance company; consists of groups of
underwriters called "syndicates"; syndicates specialize in insuring particular types of
risks; provides a meeting place and clerical services to the members that actually
provide the insurance; Members are liable for their own risks
Fraternal Benefit Societies - answerSocial organizations that engage in charitable and
benevolent activities that provide heath and life insurance to members; member are
typically part of a particular faith, lodge, order, or society
Risk Retention Groups (RRGs) - answerGroup-owned insurance company; owned by
policyholders, who are groups which consist of a large number of similar units (like
water parks or amusement parks); each member assumes a portion of the risks
, Self-Insurer - answerTaking on the risk oneself. Usually only an option for large
companies
Residual Markets - answerA private coverage source available as a last resort to
businesses and individuals who have been rejected by voluntary market insurers.
Risk Sharing Plan - answerInsurers agree to spread among themselves the risks that
can't be obtained through normal insurance channels
Reinsurance - answerWhen an insurance company takes on a portion or all of a risk
from a primary (or ceding) insurance company; Example - A $10 Million policy originates
with Company "A" (The primary company), and "A" sells $5 Million of that to Company
"B"
Treaty Agreements (Type of Reinsurance) - answerReinsurance agreement that covers
all risks contained in the subject line of business automatically
Facultative Agreements (Type of Reinsurance) - answerReinsurance agreement that
allows ceding and reinsurance companies to negotiate coverage for individual risks
Financial Rating Services - answerCompanies that rate the financial stability of
insurance companies, which are available to the public. Producers are responsible for
making sure that policies they write are with financially sound companies
Domicile - answerThe state or country where an insurer is formed/incorperated
Domestic Insurer - answerInsurer organized under the laws of this state, regardless of
admittance or non-admittance
Foreign Insurer - answerInsurer not organized under the laws of this state, but still
within the US, regardless of admittance or non-admittance
Alien Insurer - answerInsurer organized outside of the US, regardless of admittance or
non-admittance
Admitted (Authorized) - answerInsurer is authorized by the State's Commissioner of
Insurance to do business in the state. Has a Certificate of Authority
Non-admitted (Unauthorized) - answerInsurer has either not applied to do business in a
state or has applied but been denied. No Certificate of Authority.
Surplus and Excess lines insurance - answerFinds coverage when insurance cannot be
obtained through admitted carriers. It can be placed with non-admitted carriers.
Regulated by each state and must be done through Surplus Lines Brokers/Producers
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