Description
- Describe the major types of private insurers, including the following:
- – Stock insurers
- – Mutual insurers
- – Reciprocal exchanges
- – Lloyd’s of London
- – Blue Cross and Blue Shield plans
- – Health maintenance organizations
- Describe the major distribution systems for selling life insurance, including
- – Personal selling systems
- – Financial institution distribution systems
- – Direct response system
- – Other distribution systems
- Describe the major distribution systems in property and casualty insurance, including the following:
- – Independent agency system
- – Exclusive agency system
- – Direct writer
- – Direct response system
- – Mixed systems
Explanation & Answer
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Private insurers are in financial industry services and are consists of government-related
financial institutions, private and state pension funds, mutual funds, commercial banks, savings
and loan institutions, credit unions, property and casualty insurers and finally, is consist of life
and health insurers. All properties in these areas are prepared up regularly from banking,
securities, and pensions. An insurer is a person or in our case is a company that guarantees an
insurance risk. It underwrites the party in insurance contract where it assures the compensation
payment of the uncertainty in a deal. The private insurer is in most cases the nongovernmental
sources which guarantee the insurance prospectors of the ensuring risk for example life insurance
or insurance of property and casualty. (Cummins 521-531)
There are essential types of private insurers which include: Stock insurers, Mutual
insurers, Reciprocal exchanges, Lloyd's of London, Blue Cross and Blue Shield plans and Health
maintenance organizations.
The stock insurer is a type of private insurer which is maintained by stockholders. This is
a corporation where the primary objective is to benefit and add profit to the owners,
stockholders. The advantage is obtained from increasing the stock value and in other means of
dividends paid. Stockholders and insurer tolerate all losses can issue no measurable policy. They
have the voting right and election right over the board of directors. There are boards of directors
who are elected by stockholders. The main work of these directors is to appoint officers of the
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executive for the management of the stock insurer corporation. The corporations' charter
specifies the insurance type that the insurer will sell. (Kahn 1629-1639)
The mutual insurer is a private insurer which is under the ownership of policy owners.
The board of directors is elected by these policy owners who own the corporation. The board of
directors usually appoints the executives who ride this mutual insurer. They raise their capital
through the selling of surplus notes, but they cannot raise their money through stock issuing.
Surplus notes are unsecured debt. It is minor to indebtedness and responsibilities to
policyholders. This gives the surplus to the insurer and has tax-deductible in their interest
payments. This corporation works with dividends and rate of reductions. The insurer can pay the
profit, or it can give them the rate of decline. The company can be either in three forms that are a
fraternal insurer, premium mutual or premium mutual.
An advance premium mutual merely is a mutual insurer which owned by the
policyholders. Stockholders do not exist in this incentive shared, and the insurer has no power to
give out assessable policies. The second category of the mutual insurer is an assessment joint. In
this case, when the financial operations of the insurer are unfavorable, they are given a chance to
assess policyholders a plus amount. The last category is a fraternal insurer where the mutual
insurer who is in charge to provide insurance of health and life to the religious groups and social
organizat...
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