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George Sayeh
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Principles of Insurance & Risk Management
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9:40
#4 The characteristics of Lloyd’s of London, Lloyd’s technically is not an insurance company, but is a society of members corporation and individuals who underwrite insurance in syndicates; the insurance is written by the various syndicated that belong to Lloyd’s; new individual member who belong to the various syndicates now have limited legal liability; corporation with limited legal liability and limited liability partnerships are also members of Lloyd’s of London; member must also meet stringent financial requirements and Lloyd’s is licensed only in a small number of jurisdictions in the United States.
#8a independent agency system also knower as American agency system, independent agency is a business firm that usually represents several unrelated insurers; agency owns the expirations or renewal right to the business; and independent agency is compensated by commissions that vary by line of insurance
#8b exclusive agency system, agent represents only one insurer or group of insurers under common ownership Agents do not usually own the expirations or renewal rights to the policies, and Agents are generally paid a lower commission rate on renewal business than on new business.
#8c direct writer is an insurer in which the salesperson is an employee of the insurer, not an independent contractor. Employees are usually compensated on a “salary plus” arrangement
#8d direct response insurer sells directly to the consumer by television or some other media under a direct response system, insurance is sold directly to customers without the services of an agent, Used primarily to sell personal lines of insurance.
#8e multiple distribution systems is distinction between the traditional marketing systems are breaking down as insurances use more than one distribution system to sell insurance, Many property and casualty insurers use multiple distribution systems.
(#2a) stock insurer is a corporation owned by stockholders, why mutual insurer is a corporation owned by the policy owner’s (#2b) stock insurer earns profit for stockholders Increase value of stock, Pay dividends, why May pay dividends to policy owners, or give a rate reduction in advance (#2c) Stockholders elect board of directors, why Policy owners elect board of directors, who have effective management control