Colquitt/Rejda-McNamara Chapter 5 5

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Colquitt/Rejda‐McNamara Chapter 5 Chapter 5: Types of Insurers and Marketing Systems Overview of Private Insurance in the Financial Services Industry ‐
The financial services industry consists of: o Commercial banks o Savings and loan institutions o Credit unions o Life and health insures o Property and casualty insurers o Mutual funds o Securities brokers and dealers o Private and state pension funds o Government‐related financial institutions Types of Private Insurers ‐
Size of the insurance market o Life and health insurers: _______________  these insurers sell life and health insurance products, annuities, mutual funds, pension plans, and related financial products o Property and casualty insurers: ______________  these insurers sell property and casualty insurance and related lines, including inland marine coverages and surety and fidelity bonds ‐
Insurers can be classified by their organizational form: o
Stock insurers o
Mutual insurers o
Lloyd’s of London o
Blue Cross and Blue Shield Plans o
Health maintenance organizations (HMOs) 5‐1 Colquitt/Rejda‐McNamara Chapter 5 ‐
A ____________________________________________ is a corporation owned by stockholders o
‐
Objective: earn profit for stockholders 

o
Stockholders elect board of directors o
o
Insurer cannot issue an assessable policy A ___________________________________________ is a corporation owned by policy owners o
Policy owners elect board of directors, who have effective management control o
‐
______________________________________________ is not an insurer, but a society of members who underwrite insurance in syndicates o
Membership includes corporations, individual members (called Names), and limited partnerships o
o
Members must meet stringent financial requirements ‐
_________________________________________________________ are generally organized as nonprofit, community oriented plans o
o
Blue Shield plans provide coverage for physicians’ and surgeons’ fees o
o
Many sponsor HMOs and PPOs o
5‐2 Colquitt/Rejda‐McNamara Chapter 5 ‐
A _________________________________________________________________ provides comprehensive health care services to its members o
o
Cost control is emphasized o
o
Less costly forms of treatment are often provided Agents and Brokers ‐
An ______________________ is someone who legally represents the principal and has the authority to act on the principal’s behalf ‐
‐
A property and casualty agent has the power to bind the insurer o
‐
A life insurance agent normally does not have the authority to bind the insurer o
‐
A ______________________________ is someone who legally represents the insured, and: o
Solicits applications and attempts to place coverage with an appropriate insurer o
o
Does not have the authority to bind the insurer 5‐3 
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