What Are Some Different Types of Insurers?
There are a few types of insurers. The following is a list of these types and how they operate: Stock companies, in which stock holders provide the money for the company and receive profits based on the success of the company; Mutual companies, in which there are no stockholders, but capital is provided by an individual or group, who elect a board of directors and receive dividends from the company; Fraternal benefit societies, which are non-profit organizations that give health insurance to their members; Reciprocals, which are associations of policy holders who insure each other; Lloyd’s associations, which are a group of individuals and companies that underwrite insurance for their accounts as well as provide specialized coverage, but the members are grouped in syndicates that are responsible for their own contracts; Surplus/excess lines, which is when an insurer gives high-risk coverage by acting as a liason for a carrier in another state; and finally Risk Retension groups, which is a form of self insurance, in which businesses set aside some money to help them in case they need to pay for a claim in the future.
Types of Insurers
Today, we’re going to talk a little bit about types of insurers and just go through them quickly and briefly. We’ll begin with stock companies. A stock company is a company which stockholders own shares, stockholders provide the capital for the company, and they receive a portion of the profits and losses. It’s considered a no-participating company since policyholders are not eligible for dividends.
The second type of insurer would be a mutual company. This company has no stockholders. Capital is provided by a single individual or by a group. Policyholders are responsible for electing the board of directors. Since policy owners receive the benefits of dividends, mutual companies are referred to as participating companies. Next, fraternal benefit societies. Fraternal benefit societies are non-profit organizations that provide complimentary health insurance for the members.
Next, reciprocals. Reciprocals are an association of policyholders, each of which insurers the other. These organizations are managed by a designated attorney. Next, Lloyd’s associations, like Lloyd’s of London. Lloyd’s associations are a group of individuals and companies that underwrite insurance for their own accounts. These groups also provide specialized coverages. Although the members are joined together in syndicates, they are each responsible and liable for their insurance contracts.
Surplus or excess lines are insurers who give high risk coverage by acting as a liaison to a carrier in another state. Surplus or access lines are often used when there is no authorized carrier for the insurance. Finally, risk retention groups are a form of self-insurance in which businesses set aside a specific amount of money in order to pay for future claims. These are just a few of the types of insurers.
Provided by: Mometrix Test Preparation
Last updated: 06/27/2018