Insurance Types
Types of Insurance
Government
Captive
Reinsurance
Fedral
State
Private Insurers
Type Stock Insurer Purpose Earns profit for its stockholders Legal Form Corporation Ownership Stockholders Method of operation The board of directors, elected by stockholders appoints officers to manage the company
Mutual Insurer
Corporation
Policyholders
The board of directors, elected by Policyholders appoints officers to manage the company Subscribers choose an attorney-in-fact to operate the reciprocal The committee of Lloyd's is the governing body and must approve all investors for membership
Reciprocal To provide reciprocity for subscribers Lloyd's of London To earn profit for its individual investors
Subscribers
Investors
Other Programs :Other programs provide coverage for loss exposures that private insurers have avoided largely because of the potential for catastrophic losses
Other State Insurance Programs Following are the other insurance programs operated by State Government: Unemployment insurance programs Automobile insurance plans FAIR plans Beachfront and windstorm pools
Reinsurance Companies
Reinsurance is a contractual arrangement that transfers some or all of the Reinsurance enables small insurer to provide insurance for large accounts whose insurance needs would potential costs of insured losses from policies written by one insurer to another insurer.
Insurance Regulation
Maintain broad powers to regulate insurance business in the public interest. Monitors the operations of insurance companies an to investigate complaints from insured's. Scrutiny by insurance regulation helps to protect the public from irresponsible, unwise, or dishonest activities that could leaves consumers with worthless insurance policies. Insurance regulation vary by state.
Rate Regulation
Insurance rates developed by Insurers affect most people, the laws of nearly all states give the state insurance commissioner the power to enforce regulation of insurance rates. Ratemaking - Process by which insurers calculate rates that determine the premium for insurance policy. Rate The price of insurance for each unit of exposure. Premium- Periodic payment by an insured to an insurance company in exchange for insurance coverage. Rate x Number of exposure units = Premium
File-and-use laws
Rates must be filed but do not have to be approved before use
Use-and-file laws
Rates must be filed within specified period after they are used first.
State-mandated rates
State specified rates must be used by all insurers.
Solvency Surveillance
Solvency Ability of an insurance company to meet its financial obligations. Solvency Surveillance process conducted by state insurance regulators of verifying solvency of insurance companies and determining whether the financial condition of insurers enables them to meet their obligations and to remain in business in the long term.
Consumer Protection
Licensing insurers Licensing insurance company representatives Approving policy conduct Examining market conduct Investigating consumer complaints.