Property & Casualty Exam Flashcards - Set 1

Comprehensive vocabulary flashcards covering the insurance industry structure, types of insurers, and department functions for the Property & Casualty Exam.

Actuarial Department

Calculates policy rates, reserves, and dividends; often described as the insurance company's math department.

Alien Insurer

An insurer whose principal/home office is outside the United States but is authorized to do business in a U.S. state.

Admitted (Authorized) Insurer

An insurer that has received a Certificate of Authority from the state's insurance department to conduct insurance business in that state.

Broker

Represents the insured/client in an insurance transaction.

Captive Insurer

An insurer established and owned by a parent company to insure the parent company's own loss exposures.

Certificate of Authority

A state-issued license that authorizes an insurance company to conduct insurance business in that state.

Claims Department

Processes, investigates, and pays claims.

Divisible Surplus

Company earnings available to be paid to policyowners as dividends after reserves, expenses, and other required funds are set aside.

Domestic Insurer

An insurer whose principal/home office is in the state where it is being considered.

Foreign Insurer

An insurer whose principal/home office is in another U.S. state.

Fraternal Benefit Society

A nonprofit benevolent organization that provides insurance to its members.

Industrial Insurer

Traditionally provides policies with small face amounts and weekly premiums; also called home service or debit insurance.

Insurance

The transfer of risk through the pooling or accumulation of funds.

Insured

The customer/person covered under an insurance policy.

Insurer

The insurance company.

Lloyd's of London

An association/market of individuals and companies that underwrite unusual risks; not an insurer itself.

Multi-line Insurer

An insurer that provides multiple lines/types of insurance, offering a one-stop shop for insurance needs.

Mutual Insurance Company

An insurance company owned by its policyowners; it usually issues participating insurance.

Non-admitted (Unauthorized) Insurer

An insurer that has not received a Certificate of Authority from the state's insurance department to conduct insurance business in that state.

Non-participating Plan

A plan in which the insured/policyowner is not entitled to share in the company's divisible surplus.

Participating Plan

A policy under which the policyowner can share in the company's earnings through dividends.

Private (Commercial) Insurer

A privately owned insurance company that offers one or more lines of insurance; it is not government-owned.

Reciprocal Insurer

An unincorporated organization in which members insure one another.

Reinsurance

The transfer of part of an insurer's risk to another insurer.

Reinsurer

An insurance company that accepts risk from another insurance company, helping it handle risks that may be too large to retain alone.

Risk Retention Group

A group-owned liability insurer that assumes and spreads certain commercial liability risks among its members.

Self-Insurer

A person or organization that uses a self-funded plan to cover potential losses rather than transferring the risk to an insurance company.

Stock Insurance Company

An insurance company owned and controlled by stockholders/shareholders; generally associated with non-participating policies.

Surplus Lines Insurance

Coverage for unusual or substandard risks that are not available through traditional/admitted insurance markets.

Underwriting Department

Reviews applications, approves or declines risks, and assigns risk classifications.

Actuary

Professional who calculates rates, reserves, and dividends.

Underwriter

Professional who selects and classifies risks.