Life and Health Insurance

Insurance is primarily regulated at the…

State Level, with federal laws.

federal laws include…

ACA adding specific requirements for insurance regulation

The state insurance department oversees…

licensing, policy approval, and consumer protection

Key regulations to study include the following:

ACA, COBRA, HIPAA and unfair trade practices.

Ethical behavior and full disclosure…

Are mandatory for licensed agents

Actuarial Department:

This department is responsible for calculating policy rates, determining reserves, and estimating dividends.

Alien Insurer:

An insurer operating in the United States but with its principal office and domicile outside the country.

Admitted Insurer:

Also known as an authorized insurer, this is a company that has been granted a certificate of authority by a state’s department of insurance, allowing it to conduct business within that state.

Broker:

A broker represents themselves and the client or insured, rather than the insurance company, in the insurance transaction.

Captive Insurer:

An insurer established and owned by a parent company to insure the risks and loss exposures of the parent firm.

Certificate of Authority:

A license issued by a state’s department of insurance that permits an insurer to conduct business within that state.

Claims Department:

The claims department is in charge of processing, reviewing, and issuing payments for claims.

Divisible Surplus:

This refers to the earnings available to be distributed as dividends to policyowners after the insurance company allocates funds for reserves, operating expenses, and other business needs.

Domestic Insurer:

An insurer that operates with its principal or home office located in the same state where it is authorized to conduct business.

Foreign Insurer:

An insurer that operates in a state different from the state where its principal office or domicile is located.

Fraternal Benefit Society:

A nonprofit organization that provides insurance benefits exclusively to its members, often based on a common social or religious affiliation.

Industrial Insurer:

A specialized branch of the insurance industry that offers small face amount policies with weekly premium payments. These insurers are also known as home service or debit insurers.

Insurance:

The process of transferring risk by pooling or collecting funds.

Insured:

The individual or entity that receives protection under an insurance policy.

Insurer:

The company or organization providing insurance coverage.

Lloyds of London:

Not an insurer itself, but a marketplace where individuals and companies come together to underwrite unique and unusual insurance risks.

Multi-line Insurer:

An insurance company or independent agent that offers a wide range of insurance products, providing coverage for various needs such as auto, home, life, health, and long-term care, all from a single source.

Mutual Insurance Company:

A type of insurance company that is owned by its policyowners and does not issue capital stock. Policyowners typically receive participating insurance, which may include dividends.

Non-admitted Insurer:

An insurer that has not been granted a certificate of authority to conduct business in a particular state, meaning they are unauthorized to sell insurance in that state.

Nonparticipating Policy:

A type of policy, usually issued by stock companies, that does not allow policyowners to receive dividends or vote for the company's board of directors.

Participating Plan:

An insurance policy that allows policyowners to share in the company’s profits through dividends and to vote for the company’s board of directors.

Private (Commercial) Insurer:

Private or commercial insurance companies are entities owned by individuals or groups that provide one or more types of insurance. These insurers are not owned or operated by the government.

Reciprocal Insurer:

An unincorporated group where members insure one another by sharing risk, with each member acting as both an insurer and an insured.

Reinsurance:

A process where one or more insurers (reinsurers) take on a portion of the risk from another insurer, who originally underwrote the entire policy.

Reinsurer

A company that provides insurance to other insurance companies, helping them manage large risks and enabling them to take on more business than they could handle alone.

Risk Retention Group:

A group-owned insurer that focuses on assuming and spreading liability risks, such as product or commercial liability, among its members.

Self-Insurers:

A self-insurer creates a self-funded plan to manage potential losses, rather than shifting the risk to an insurance company.

Stock Insurance Company:

An insurance company owned and operated by stockholders or shareholders. Their investment provides the financial stability necessary for issuing guaranteed, fixed premium, nonparticipating policies.

Surplus Lines Insurance:

A type of nontraditional insurance provided by surplus lines insurers for substandard or unusual risks that cannot be covered by standard private or commercial carriers.

Underwriting Department:

The underwriting department in an insurance company is tasked with evaluating applications, making decisions on approval or denial, and determining risk classifications.