Chapter 1

Key Terms for Chapter one of XCEL Insurance Training

Actuarial Department

This is the department that calculates policy rates, reserves, and dividends.

Adjuster

This is the person who investigates claims and arranges for them to be settled or denied.

Alien Insurer

In the United States, this is an insurer whose principal office and domicile location is outside this country.

Admitted Insurer

This is an insurer that is licensed and authorized to conduct business in a particular state or jurisdiction.

Agent

This is an individual or organization that’s authorized to solicit, sell, and transact coverage for specific insurance providers under the terms of one or more agent contracts.

Authorized Insurer

This is an admitted insurer.

Broker

This is a person who represents himself and the insured. A broker cannot bind coverage on behalf of an insurance carrier because a broker is not appointed as an agent.

Captive Insurer

An insurer that’s owned and established by a parent firm for the purpose of insuring the parent firm’s loss exposure.

Certificate of Authority

A document that grants an insurer the legal permission to operate in a specific state or jurisdiction, ensuring it meets regulatory standards.

Claims Department

The department that’s responsible for processing, investigating, and paying claims.

Divisible Surplus

This is the amount of earnings that are paid to policy owners as dividends after the insurance company sets aside funds required to cover reserves, operating expenses, and general business purposes.D

Domestic Insurer

An insurance company that is incorporated or formed in a specific state, operating under that state's laws and regulations.

Foreign Insurer

An insurance company that is incorporated in one state but operates in another state, adhering to the regulations of both its home state and the state where it does business.

Fraternal Benefit Society

A type of nonprofit organization that provides insurance benefits to its members, often organized around a common bond such as ethnicity or religion.

Independent Insurance Agency

This is an agency that can represent any number of insurance companies through contractual agreements. Unlike a captive agency, they are not limited to one insurance company.

Insurance

This is the transfer of risk through the pooling or accumulation of funds.

Insured

This is the customer who receives insurance protection under an insurance policy.

Insurer

This is the insurance company.

Lloyds of London

This is NOT an insurer but a group of individuals and companies that underwrite unusual insurance policies.

Marketing Division

This is the division that’s responsible for acquiring prospective applicants through various advertising media.

Monoline Insurer

This is an insurance carrier that only sells one line of insurance.

Multi-Line Insurer

An insurance company that offers multiple types of insurance coverage, such as property, casualty, and liability, under one policy.

Mutual Insurance Company

This is an insurance company that’s characterized by having no capital stock, being owned by their policy owners, and typically issuing participating insurance.

Non-Admitted Insurer

This is an insurer that has not received a certificate of authority from the state department of insurance.

Nonparticipating Policy

A type of insurance policy that does not allow policyholders to receive dividends or share in the company's profits.

Participating Policy

A type of insurance policy that allows policyholders to receive dividends and share in the company's profits.

Personal Producing General Agency (PPGA)

This is an agency that represents one or more specific insurers. A PPGA is a similar agency system, but PPGAs don’t recruit, train, or supervise career agents.

Policy Owner

This is the person who’s responsible for the payment of premiums and who possesses all ownership rights of the contract. Typically, the policy owner is also the insured.

Private (Commercial) Insurer

This is an insurer that’s owned by private citizens or groups that offer one or more insurance lines. Commercial insurers are NOT government-owned.

Producer

This is an individual who’s licensed by one or more states to sell, solicit, or transact insurance in a given state.

Proposed Insured

This is the person whose life will be covered by an insurance policy.

Public Adjuster

This person acts on behalf of a consumer who’s settling an insurance claim.

Reciprocal Insurer

This is an unincorporated organization in which all members insure one another. An attorney-in-fact manages it.

Reinsurance

This is an arrangement where an insurance company purchases insurance from another insurer to manage risk and increase capacity.

Reinsurer

An insurance company that provides reinsurance to another insurer, helping them manage risk and cover large losses.

Risk Retention Group

This is a group-owned liability insurer that assumes and spreads product liability and other forms of commercial liability risks among its members.

Sales Department

This department acquires clients through one-on-one meetings in which consumers complete applications.

Self-Insurer

This is a company that establishes a self-funded plan to cover potential losses rather than transferring the risk to an insurance company.

Service Representatives

These are customer service employees. Service representatives are not required to obtain a license because they neither sell nor solicit coverage, and they don’t bind coverage.

Solicitors

These are the individuals who solicit and schedule sales meetings between consumers and the producers for whom they work. Some states separately license these individuals.

Stock Insurance Company

This is an insurance company that’s owned and controlled by a group of stockholders (or shareholders) whose investment in the company provides the safety margin necessary in the issuance of guaranteed, fixed premium, nonparticipating policies.

Surplus Lines Insurance

This is non-traditional insurance that’s only available from a surplus lines insurer. This type of insurance provides coverage for substandard or unusual risks and is not available through private or commercial carriers.

Unauthorized Insurer

Non-Admitted Insurer

Underwriting Department

This is the department within an insurance company that’s responsible for reviewing applications, approving or declining applications, and assigning risk classifications.