insurance institutions. i. introduction a. type of insurance 1. social insurance 2. private...
Post on 19-Dec-2015
220 views
TRANSCRIPT
Insurance Institutions
I. Introduction
A. Type of Insurance
1. Social Insurance
2. Private Insurance• American System
– Life Insurance
– Property/Casualty Insurance
• European System
B. Risk
1. Outcome• Pure Risk
The outcome can only be a loss or no loss with no possibility for gain.
• Speculative Risk
Uncertainty about an event could result in either a gain or a loss.
2. Insurability• Statistical Concepts
– Law of Large Numbers– Measurable Objective Risk
Objective risk is the deviation of actual losses from expected losses and can be measured statistically.
• Commercial Insurability– Homogeneous exposure units
There is a large number of homogeneous exposure units so that losses can be predicted on the law of large numbers.
– Accidental and unintentional occurrence
The law of large numbers is based on randomness.
– Identifiable circumstances of loss
The time, location, cause, and amount should be identifiable.
– Calculable probability of loss
The is required for the purpose of calculating premium.
– Non-catastrophic loss
A large portion of the exposure units should not experience a loss at the same time.
– Affordable premium
This is to ensure a sizable market.
II. Life Insurance Companies
A. Industry Structure1. Insurers• By Organizational Form
– Stock Life Insurance Companies– Mutual Life Insurance Companies– Fraternal Life Insurance Companies– Government Agencies– Mutual Savings Banks
• By Reserve Requirement– Legal Reserve Companies– Assessment Insurance Companies
• By Reinsurance– Primary Companies (Ceding Companies)– Reinsurance Companies
2. Distribution Network• Branch Offices• General Agencies• Direct Mail
B. Financial Operations
1. Life Insurance Policies• By Purpose
– Risk
– Term Insurance• Duration
1-year, 3-year, 5-year, 10-year• Face Amount
Constant term, decreasing term, increasing term
• Expiration Protection
Renewable term, convertible term
– Risk/Investment• Endowment Life• Whole Life (Straight Life)• Variable Life• Universal Life• Variable Universal Life (Universal
Life II)• Single Premium Life
PremiumDeathBenefit
CashValue
WholeLife
Fixedpremium
Fixed deathbenefit
Fixed cashvalue
VariableLife
Fixedpremium
Variablewithguaranteedminimum
Variablewithguaranteedminimum
PremiumDeathBenefit
CashValue
UniversalLife
Variableexcept initialperiod
Variablewithguaranteedminimum
Variablewithguaranteedminimum
VariableUniversalLife
Variablepremium
Variablewithoutguaranteedminimum
Variablewithoutguaranteedminimum
• By Market Segment– Individual Life (Ordinary Life)– Business Life– Group Life– Credit Life– Industrial Life (Home Service Life)
• By Dividend Received– Participating Contract (rec. dividends)– Non-Participating Contract (no dividend)
2. Annuity
3. Health Insurance
4. Investments• Corporate Bonds
• Mortgages
• Government Securities
C. Regulations• National Association of Insurance
Commissioners (NAIC)
• Insurance Regulatory Information System
III. Property/Casualty Insurance Companies
A. Industry Structure
1. Insurers• By Ownership
– Stock Companies– Mutual Companies– Reciprocals (Interinsurance Exchanges) – Domestic Lloyd
• By Corporate Control– Independent Companies– Captive Companies
• By Premium Assessment– Assessment Companies– Non-Assessment Companies
• By Reinsurance– Primary Companies (Ceding Companies)– Reinsurance Companies
2. Distribution Network• Branch Offices
• General Agencies
• Direct Mail
B. Financial Operations
1. Property/Liability Policies• By Parties Covered
– First Person Insurance– Third Party Liability Insurance
• By Pattern of Loss Payments– Short-Tailed Insurance Lines
– Long-Tailed Insurance Lines
• By Risk Category– Property Insurance
• Named Peril Policies
A named peril policy cover perils that are specifically named, such as lightning, flood, theft, etc.
• All-Risk Policies (Open Perils)
An all risk policy protect the insured against loss from all perils except those specifically excluded.
– Liability Insurance– Marine Insurance
• Ocean Marine Insurance• Inland Marine Insurance
– Multiline Policies
A multiline policy contain both property and liability insurance coverages. Examples include homeowner’s policies and personal auto policies.
– Surety Insurance– Fidelity Insurance
2. Health Insurance
3. Investments• Corporate stocks• Revenue bonds• Corporate bonds• U. S. government securities
C. Regulations
IV. Trends
A. Bancassurance• Cross-Sectoral Investing (i.e., crossing
industry lines)
• Interpenetration of Markets (i.e., merges and acquisitions)
• Cooperative Arrangement (i.e., cooperating between independent banks and insurance companies)
B. Cross-Border Activities• Mergers and Acquisitions
• Branching
V. Social Insurance
A. Institutions• Social Security Administration, Department
of Health and Human Services• Bureau of Employment Security,
Department of Labor• Bureau of Employees’ Compensation,
Department of Labor
B. Financial Operations• Old-Age, Survivor, Disability, and
Health Insurance (OASDHI)
• Unemployment Insurance
• Worker’s Compensation