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19 Cards in this Set
- Front
- Back
Determining insurable interest (2 questions used to determine) |
1. Is there a bond of love and affection is found in family relationships? 2. Is there a financial relationship is found between partners in business or stockholders? |
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Insurable risks (CAM-U-EL) |
Catastrophic, adverse selection, measurable, uncertain, economic hardship, law of large numbers |
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Catastrophic |
Catastrophic events do not fall into a model of predictability, from this standpoint, it is logical to exclude catastrophic perils |
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Adverse selection |
Occurs when a potential client can take advantage of an insurance company. |
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Measurable |
The last must first be Measurable meaning the insurer must be able to place a monetary value on that loss |
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Uncertain |
The definition of pure risk applies here. Insurance is meant to reduce or eliminate uncertainty, meeting that the writing of insurance for intentional acts such as suicide is not allowed. |
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Economic hardship |
The idea that an economic hardship would result from the occurrence of apparel is an essential reason for insurance coverage |
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Law of large numbers |
Allows a more accurate prediction of future losses and thereby insurable or uninsurable risk |
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Indemnity |
The underlying concept of indemnity is that no one should profit from a loss |
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Types of insurers |
Private commercial, private non-commercial, the United States government or public |
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Stock insurance |
Consist of stockholders who owns shares in the company |
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Mutual Company |
There are no stockholders and ownership rests with the policy owners |
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Reciprocal organization |
An unincorporated group of individuals, with each party ensuring the other members |
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Risk retention group |
Usually set up by its members to only provide certain types of liability insurance protection, specifically for individuals who engage in similar activities or businesses |
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Fraternal benefit society |
Life insurance companies that exist as social organizations, are distinguished by the fact that their membership is usually drawn from those who are members of the lodge or fraternal organization, Cell participating policy is just as mutual companies does they pay insurance dividends to the policy owner, different than either stock or mutual companies in that fraternal society may be assessed additional funds if there is not enough money available to pay claims. Part of the premiums paid for the insurance go toward the support of the charitable causes of the fraternal order |
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Reinsurance |
A form of insurance between insurers. this is used when there is a very large amount of insurance covering one individual |
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Treaty reinsurance |
A pre-negotiated agreement |
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Facultative reinsurance |
Done on a case by case basis |
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Lloyds associations |
Groups of individuals to ban together to assume risks in the area of surplus lines |