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CPCU 520 Key Words And Definitions Questions And Answers With Verified Solutions Already Passed Latest Updated 2024 $14.49   Add to cart
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CPCU 520 Key Words And Definitions Questions And Answers With Verified Solutions Already Passed Latest Updated 2024

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CPCU 520 Key Words And Definitions Questions And Answers With Verified Solutions Already Passed Latest Updated 2024

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  • August 14, 2024
  • 36
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • proprietary insurer
  • mutual insurer
  • cpcu 520 key words and definitions questions and a
  • reciprocal insurance exchange interinsurance exch
  • fair access to insurance requirements fair plans

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  • CPCu

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CPCU 520 Key Words And Definitions
Questions And Answers With Verified
Solutions Already Passed Latest
Updated 2024
Proprietary Insurer - ANSWER✔✔ Insurer formed for the purpose of earning a
profit for its owners


Mutual Insurer - ANSWER✔✔ An insurer that is owned by its policyholders and
formed as a corporation for the purpose of providing insurance to them


Reciprocal Insurance Exchange (interinsurance exchange) - ANSWER✔✔ An
insurer owned by its policyholders, formed as an unincorporated association for
the purpose of providing insurance coverage to its members (called subscribers),
and managed by an Attorney-in-Fact. Members agree to mutually insure each
other, and they share profits and losses in the same proportion as the amount of
insurance purchased from the exchange by that member.


Fair Access to Insurance Requirements (FAIR) plans - ANSWER✔✔ An insurance
pool through which private insurers collectively address an unmet need for
property insurance on urban properties, especially those susceptible to loss by
riot or civil commotion.


Residual Market - ANSWER✔✔ The term referring collectively to insurers and
other organizations that make insurance available through a shared risk
mechanism to those who cannot obtain coverage in the admitted market.


Surplus Lines Broker - ANSWER✔✔ A person or firm that places business with
insurers not licensed (nonadmitted) in the state in which the transaction occurs

,but that is permitted to write insurance because coverage is not available through
standing market insurers.


Independent Agency and brokerage marketing system - ANSWER✔✔ An
insurance marketing system under which producers (agents and brokers), who
are independent contractors, sell insurance, usually as representatives of several
unrelated insurers.


Direct Writer marketing system - ANSWER✔✔ An insurance marketing system
that uses sales agents (or sales reps) who are direct employees of the insurer.


Exclusive agency marketing system - ANSWER✔✔ An insurance marketing system
under which agents contract to sell insurance exclusively for one insurer (or for an
associated group of insurers).


Distribution Channel - ANSWER✔✔ The channel used by the producer of a
product or service to transfer that product or service to the ultimate customer.


Probable Maximum Loss (PML) - ANSWER✔✔ The largest loss that an insured is
likely to sustain.


Loss Ratio - ANSWER✔✔ Incurred Losses (including LAE)/Earned Premiums


Expense Ratio - ANSWER✔✔ Incurred UW Expenses/Written Premiums


Combined Ratio - ANSWER✔✔ Loss Ratio + Expense Ratio

,Investment Income Ratio - ANSWER✔✔ Net Investment Income/Earned
Premiums


Overall Operating Ratio - ANSWER✔✔ Combined Ratio (trade basis)-Investment
Income Ratio


Return on Equity - ANSWER✔✔ Net Income/Owner's Equity


Underwriting - ANSWER✔✔ The process of selecting insureds, pricing coverage,
determining insurance policy terms and conditions, and then monitoring the
underwriting decisions made.


Book of business - ANSWER✔✔ A group of policies with a common characteristic,
such as territory or type of coverage, or all policies written by a particular insurer
or agency.


Underwriting Guidelines - ANSWER✔✔ A written manual that communicates an
insurer's underwriting policy and that specifies the attributes of an account that
an insurer is willing to insure.


Adverse Selection - ANSWER✔✔ In general, the tendency for people with the
greatest probability of loss to be the ones most likely to purchase insurance.


National Association of Insurance Commissioners (NAIC) - ANSWER✔✔ An
association of insurance commissioners from the fifty U.S. States, D.C., and the
five U.S. territories and possessions, whose purpose is to coordinate insurance
regulation activities among the various state insurance departments.

, Model Law - ANSWER✔✔ A document drafted by the NAIC, in a style similar to a
state statute, that reflects the NAIC's proposed solution to a given problem or
issue an provides a common basis to the states for drafting laws that affect the
insurance industry. Any state may choose to adopt the model bill or adopt it with
modifications.


Model Regulation - ANSWER✔✔ A draft regulation that may be implemented by a
state insurance dept. if the model law is passed.


Domestic Insurer - ANSWER✔✔ An insurer doing business in the jurisdiction in
which it is incorporated.


Foreign Insurer - ANSWER✔✔ An insurer licensed to operate in a state but
incorporated in another state.


Alien Insurer - ANSWER✔✔ An insurer domiciled in a country other than the US


Capital Stock - ANSWER✔✔ A balance sheet value that represents the amount of
funds that a corporation's stockholders have contributed through the purchase of
stock.


Paid-In Surplus - ANSWER✔✔ The amount stockholders paid in excess of the par
value of the stock.


Insolvency - ANSWER✔✔ A situation in which an entity's current liabilities (as
opposed to its total liabilities) exceed its current assets.

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