Insurers and the Consumer

Table of Contents

 

 

Introduction

 

Table of Contents

1

Welcome

5

Chapter One:  Insurers

Page 7

Government Sponsorship

7

Private Sponsorship

8

Private Insurers

8

    Stock Companies

8

    Financial Soundness

9

          Capital Stock, surplus, surplus to policyholders

10

Lloyds of London

12

    Transacting Lloyds’ of London Business

14

          Excess business, surplus insurance

16

Self-Insurance

16

          Excess loss, share basis

17

Captive Insurance Companies

19

    Risk-Retention Groups (RRG)

20

Alternatives

21

          Compensating Balance Plans, Paid-loss retro

21

Chapter Two: Controlling Loss

Page 22

Risk/Chance of Loss

22

          Loss frequency, loss-severity

23

Loss Control

24

Engineering Approaches

25

Human Approaches

25

Prevention

26

Risk Awareness

30

Application of Loss Prevention

32

    Pre-Contact

32

    Contact

33

    Post-Contact

33

 

 

 

 

Chapter Three:  Underwriting & Reinsurance

Page 35

Pricing

35

          Adverse Selection, actuarial equity

36

Selective Underwriting

39

    The First Step in the Selection Process

39

    Level of Risk

40

          Standard risk, Preferred risk, Sub-standard risk

40

    Post-Selection

41

Adverse Selection

42

Moral Hazard

42

Morale Hazard

43

Competing in the Marketplace

43

Redlining

44

    Example

44

The Underwriting Cycle

45

    Example

45

What are we Insuring Against?

46

The Economic Burden of Risk

48

Types of Risk

49

Determining degrees of Risk

49

Probability of Loss

50

The Law of Large Numbers

51

Risk Information

51

    The Insurer’s View & The Consumer’s View

52

Deductible Clauses

54

Reinsurance

55

    Why is Reinsurance Used?

56

Pro Rata & Excess of Loss

57

    Pro Rata

58

    Excess of Loss

58

Shopping for Reinsurance

59

Brokers

61

What Else is Available?

62

Chapter Four: Ratemaking

Page 63

What is Ratemaking?

63

A Matter of Class

64

Territory Risk Groupings

65

    Special Aspects of Ratemaking

66

Catastrophes

66

Minimum Premiums

67

Merit Rating

67

Prospective Experience Rating

69

Retrospective Experience Rating

69

Fire Insurance

70

Construction

71

Occupancy

72

Exposure

72

Protection

72

Where is the Structure Located?

73

Time of Loss

73

Following Proper Procedures Essential

74

          Schedule-rated risks

75

Chapter Five: Insurance Regulation

Page 77

Do We Need So Many Hoops?

77

How Do These Traditions Come About?

82

    Paul versus Virginia

82

How Does State Regulation Work?

83

    The Commissioner’s Primary Powers Include …

87

Insurance: A Regulated Business

89

What Do the States Do?

89

Insurance Classes

90

Taxation

90

Regulating Agents & Brokers

93

Premium Rates

95

          Prior approval

96

          Modified prior approval, file-and-use

97

Insurer Assets

98

Chapter Six: Terrorism Risk Insurance Act

Page 101

Defining “Act of Terrorism”

101

TRIA

102

President Bush Signs the Act

103

The Role of Terrorism Insurance

104

Policy Restrictions

106

Business Interruption Insurance

106

    Example

108

Workers Compensation & Other Coverage

108

Coverage Under Terrorism Insurance

109

    Key Benefits

112

Chapter Seven:  Ethics

Page 115

“Agent, Protect Thyself”

115

  Why Would an Agent be Sued?

117

What Are the Agent’s Professional Responsibilities?

120

    Example

121

E & O Insurance

122

    Claims-Made Versus Occurrence Policies

123

    Example

123

On the Personal Side of Ethics

125

    Example

126

Valuing Human Relationships

126

Truly Ethical or Simply Ethical for Show?

127

    Example

129

Justice for All

131

Objectivist Ethics: Preserve Life

132

    Value & Virtue

134

What is Really Ethical?

136

Just the Facts

137

Viewing From a Different Angle

143

Mores

146

    Example

146

Relativism

148

“Ought Implies Can”

149

    Example

151

Personal Conditioning

153

    Example

154

    Example

155

    Example

156

    Example

157

The Legal System

159

    Example

160

    Example

162

Determining Right From Wrong

163

Last Page

165

 

 

United Insurance Educators, Inc.

8213 – 352nd Street East

Eatonville, WA  98328

 

(800) 735-1155

 

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