When shopping for any type of insurance policy, finding the "average cost" may be the first thing that comes to mind. While such a number may be useful in some respects, especially if you are comparing rates, it is not the most accurate method of gauging an appropriate price.
The average cost of insurance reflects what all consumers actually spend on insurance, meaning those with the cheapest rates are pooled with those with the most expensive premiums, and those who buy minimum coverage are included with those who buy extensive protection. Average car insurance rates change every month. If you’re looking for insurance for your car, you should first understand the value of average car insurance rates on where you live. This is important because average car insurance rates are very volatile.
The average monthly cost car insurance is affected such things as age, gender, level of risk the driver, car type, geographic location, credit, driving history, insurance coverage and more. Most likely the car insurance more expensive for teenagers than adults because a greater level of risk.
Choosing Car Insurance Companies?
Now how do you choose the best car insurance company that you need? There is a lot of car insurance companies in the world offer premium car insurance quotes. If you are American citizens can also read the information:
Car Auto Insurance Learning Center We recommend that before you decide to take the cheap car insurance. Because the monthly cost is quite high, be careful in choosing to obtain the optimal insurance benefits for you and your car.
The pedestrian ran for the pavement, but I got him.
The guy was all over the road. I had to swerve a number of times before I hit him.
I was sure the old fellow would never make it to the other side of the road when I struck him.
To avoid hitting the bumper of the car in front I struck a pedestrian.
The pedestrian had no idea which way to run as I ran over him.
The car in front hit the pedestrian but he got up so I hit him again.
I saw a slow moving, sad faced old gentleman as he bounced off the roof of my car.
A pedestrian hit me and went under my car.
I saw her look at me twice. She appeared to be making slow progress when we met on impact.
Accidents with other vehicles.
I collided with a stationary truck coming the other way.
A truck backed through my windshield into my wife's face.
The other car collided with mine without giving warning of its intention.
My car was legally parked as it backed into another vehicle.
When I saw I could not avoid a collision I stepped on the gas and crashed into the other car.
I started to slow down but the traffic was more stationary than I thought.
The accident occurred when I was attempting to bring my car out of a skid by steering it into the other vehicle.
I was backing my car out of the driveway in the usual manner, when it was struck by the other car in the same place it had been struck several times before.
I was unable to stop in time and my car crashed into the other vehicle. The driver and passengers then left immediately for a vacation with injuries.
The gentleman behind me struck me on the backside. He then went to rest in a bush with just his rear end showing.
The car in front of me stopped for a yellow light, so I had no choice but to hit him. (She pushed him through the intesection)
Collisions, calamities, and injuries.
Coming home I drove into the wrong house and collided with a tree I don't have.
I told the police that I was not injured, but on removing my hat found that I had a fractured skull.
I pulled away from the side of the road, glanced at my mother-in-law and headed over the embankment.
I thought my window was down, but I found it was up when I put my head through it.
As I approached an intersection a sign suddenly appeared in a place where no stop sign had ever appeared before. I was unable to stop in time to avoid the accident.
In an attempt to kill a fly, I drove into a telephone pole.
I saw two kangaroos having it off in the middle of the road. So I hit them, which caused me to ejaculate through the sunroof.
I was thrown from my car as it left the road. I was later found in a ditch by some stray cows.
The telephone pole was approaching. I was attempting to swerve out of the way when I struck the front end.
I pulled in to the side of the road because there was smoke coming from under the hood. I realized there was a fire in the engine, so I took my dog and smothered it with a blanket.
The claimant had collided with a cow. The questions and answers on the claim form were - Q: What warning was given by you? A: Horn. Q: What warning was given by the other party? A: Moo.
Who is to Blame?
No one was to blame for the accident but it would never have happened if the other driver had been alert.
I didn't think the speed limit applied after midnight.
I had been shopping for plants all day and was on my way home. As I reached an intersection a hedge sprang up, obscuring my vision and I did not see the other car.
The indirect cause of the accident was a little guy in a small car with a big mouth.
I was going at about 70 or 80 mph when my girlfriend reached over and grabbed my testicles so I lost control.
I was on the way to the doctor with rear end trouble when my universal joint gave way causing me to have an accident.
On approach to the traffic lights the car in front suddenly broke.
The accident was caused by me waving to the man I hit last week.
Windshield broke. Cause unknown. Probably Voodoo.
No witnesses would admit having seen the mishap until after it happened.
I had been learning to drive with power steering. I turned the wheel to what I thought was enough and found myself in a different direction going the opposite way.
The accident happened when the right front door of a car came round the corner without giving a signal.
I had been driving for forty years when I fell asleep at the wheel and had an accident.
I left for work this morning at 7am as usual when I collided straight into a bus. The bus was 5 miniutes early.
An invisible car came out of nowhere, struck my car and vanished.
I knew the dog was possessive about the car but I would not have asked her to drive it if I had thought there was any risk.
The accident happened because I had one eye on the truck in front, one eye on the pedestrian, and the other on the car behind.
I started to turn and it was at this point I noticed a camel and an elephant tethered at the verge. This distraction caused me to lose concentration and hit a bollard.
(Best Syndication) Employer based health coverage is disappearing leaving many employed individuals to make their own health care insurance decisions. Due to the high cost of health insurance, many employers are either scaling back their coverage or eliminating it all together, according to a survey by the non-partisan Kaiser Family Foundation.
So what are the differences in health care planes, and which one is best for you? This presentation will provide some information. But first: what is health insurance? Health insurance is a form of group insurance, where policy holders share the risk. Not everyone gets sick at the same time, so most of the premiums go to paying the expenses of those who are. For the most part, in the United States, health insurance is provided by private insurance companies who must make a profit. .
Here are some terms:
Premium: A premium is the amount of money the policy holder pays each month for their coverage.
Deductible: The deductible is the amount the policy holder has to pay out-of-pocket before the health plan kicks in and pays. If a policy holder has a $1,000 deductible, he or she must pay the first one thousand dollars. The expenses may include doctor's visits, medication, hospitalization etc.
Copayment: The copayment is the amount that the policy holder must pay for a doctor's visit or other service. For instance, a policy holder may have to pay a $10 co-pay for each doctor visit.
Coinsurance: Coinsurance is similar to a copayment, except this is a "percentage" the policy holder must pay for a service. A customer may have to pay 20% of the cost of surgery.
Coverage Limits: The coverage limit is the maximum an insurance company will pay for a procedure. For instance, if an insurance company only will pay a maximum $100,000 for heart surgery, but the hospital charges $120,000, the policy holder will have to pay the extra $20,000.
Maximum annual or Lifetime Coverage: The lifetime coverage is the maximum an insurance company will pay out in total over your lifetime. There maybe yearly caps as well.
Out-of-pocket Maximums: The out of pocket maximum is where the member's payment obligation ends. The health insurance company may pay all of the costs after this level is reached. For instance, some insurance policies will pay for every prescription drug after the $500 yearly threshold is reached.
Exclusions: The insurance company may exclude certain procedures or drugs. They may exclude experimental options.
Becoming a life insurance agent may be one of the most challenging, but rewarding careers. Finding people who need your services and products is not easy, but you will be putting food on people’s tables and keeping the roofs over the heads after a primary wage earner has died. People will never turn you away when you are in the process of delivering a check.
You don’t need much education to be a life insurance agent. The law requires only that you pass the licensing exam for your state ad that you obtain an appointment with the company or companies of your choice. You don’t need formal education or experience although if you have had sales experience, it can help with developing your success story.
Have a focus
Insurance is a career with an extremely high turnover. The average new agent survives about 9 months. Of those who stick with it, only about 10% make the “dream” incomes of over $100,000. The reasons are varied, but the most common is probably simply a lack of focus. Successful insurance careers don’t usually happen overnight. It takes time to build your clientele of people who prefer to do business with you over the competition. And once you have your client list, it takes work to hang onto them and to keep getting referrals. Nevertheless, for those with a plan, the industry has high rewards.
Before spending a lot of money for your license, decide why you are choosing life insurance sales as your career? If you regard it as a job which you took because you couldn't find anything else, it may not be the career for you. If, however, you enjoy working with people and have a genuine desire to help them make financial and insurance decisions that are in their own best interests, you will find that life insurance is emotionally and financially rewarding.
The license
Each state licenses its own agents via a state exam following a 36 hour course of study that can be completed in a week long class, online, or in your own home with approved materials. When you purchase your materials, you have to indicate the line of insurance you want. Depending on the state, you may choose life only or life and health. Be aware, however, that many life insurance products have health components which require that you have a health producer’s license as well. As with all state exams, you must score at least a 70%, but you can take the test as many times as you need to—for a price, of course.
The appointment
Many agents begin their insurance careers as captive agents because of the support. Usually, if you work with a limited number of companies, you have more support in terms of materials; you have an office administrator who keys the applications to the home office, and you may have a bonus structure as part of your compensation. Independent brokers and agents, on the other hand, often have higher commissions, a greater variety of products, and more freedom in advertising. Still, an independent also has much more administrative work and higher expenses. Either alternative can lead to a very successful career, so it’s really a matter of how labor intensive you want the career to be.
On the job training
Most companies will have training sessions and seminars to help you learn the products, although captive companies often have a more defined education program. The training involves a week or two in the office followed by a few weeks with a field trainer whom you will observe with actual clients. As soon as you can learn the presentations and become comfortable with your own appointments, you will be on your own.
Establishing you clients
The most challenging aspect of selling insurance is locating quality prospects. Some captive companies have a lead generation system for which they charge you a percentage of your commission. Most, however, expect you to buy leads, attend product fairs or conduct your own advertising. Many internet sites also sell leads, but check these out carefully as not all lead services are created equal.
Keeping your clients
Once you have made a sale and established a client, you have to work to keep him. When the economy is tight, clients may purchase on simply price, but most people value service and dependability and will pay a little more than your competition if you prove to be a good agent who can help them to understand the importance of value.
No one can promise you a successful career in insurance, but it is certainly achievable. You will not be guaranteed a starting salary, but you will also have no limit on what you can make. You will find that the average person is severely underinsured, but it will be up to you to convince them that they need what you have to offer. You will also need to network with other agents, attend sales seminars and join trade organizations. As you develop your circle of associates, you will also grow your business.
A successful career in life insurance takes some creativity, a lot of commitment, and the sheer guts to ride through the slow times—which will come, by the way. However, if you develop a plan and stick with it, you will be able to achieve your dreams.
Keen competition is expected for these highly coveted jobs.
College graduates with related experience, a high level of creativity, and strong communication and computer skills should have the best job opportunities.
High earnings, substantial travel, and long hours, including evenings and weekends, are common.
Because of the importance and high visibility of their jobs, these managers often are prime candidates for advancement to the highest ranks.
Nature of the Work
Advertising, marketing, promotions, public relations, and sales managers coordinate their companies' market research, marketing strategy, sales, advertising, promotion, pricing, product development, and public relations activities. In small firms the owner or chief executive officer might assume all advertising, promotions, marketing, sales, and public relations responsibilities. In large firms, which may offer numerous products and services nationally or even worldwide, an executive vice president directs overall advertising, marketing, promotions, sales, and public relations policies. (Executive vice presidents are included in the Handbook statement on top executives.) Advertising managers. Advertising managers direct a firm’s or group’s advertising and promotional campaign. They can be found in advertising agencies that put together advertising campaigns for clients, in media firms that sell advertising space or time, and in companies that advertise heavily. They work with sales staff and others to generate ideas for the campaign, oversee a creative staff that develops the advertising, and work with the finance department to prepare a budget and cost estimates for the campaign. Often, these managers serve as liaisons between the firm requiring the advertising and an advertising or promotion agency that actually develops and places the ads. In larger firms with an extensive advertising department, different advertising managers may oversee in-house accounts and creative and media services departments. The account executive manages account services departments in companies and assesses the need for advertising. In advertising agencies, account executives maintain the accounts of clients whereas the creative services department develops the subject matter and presentation of advertising. The creative director oversees the copy chief, art director, and associated staff. The media director oversees planning groups that select the communication medium—for example, radio, television, newspapers, magazines, the Internet, or outdoor signs—that will disseminate the advertising. Marketing managers. Marketing managers work with advertising and promotion managers to promote the firm's or organization's products and services. With the help of lower level managers, including product development managers and market research managers, marketing managers estimate the demand for products and services offered by the firm and its competitors and identify potential markets for the firm’s products. Marketing managers also develop pricing strategies to help firms maximize profits and market share while ensuring that the firms' customers are satisfied. In collaboration with sales, product development, and other managers, they monitor trends that indicate the need for new products and services and they oversee product development. Promotions managers. Promotions managers direct promotions programs that combine advertising with purchasing incentives to increase sales. Often, the programs are executed through the use of direct mail, inserts in newspapers, Internet advertisements, in-store displays, product endorsements, or other special events. Purchasing incentives may include discounts, samples, gifts, rebates, coupons, sweepstakes, and contests. Public relations managers. Public relations managers plan and direct public relations programs designed to create and maintain a favorable public image for the employer or client. For example, they might write press releases or sponsor corporate events to help maintain and improve the image and identity of the company or client. They also help to clarify the organization’s point of view to their main constituency. They observe social, economic, and political trends that might ultimately affect the firm, and they make recommendations to enhance the firm's image on the basis of those trends. Public relations managers often specialize in a specific area, such as crisis management, or in a specific industry, such as healthcare.
In large organizations, public relations managers may supervise a staff of public relations specialists. (See the Handbook statement on public reaction.) They also work with advertising and marketing staffs to make sure that the advertising campaigns are compatible with the image the company or client is trying to portray. In addition, public relations managers may handle internal company communications, such as company newsletters, and may help financial managers produce company reports. They may assist company executives in drafting speeches, arranging interviews, and maintaining other forms of public contact; oversee company archives; and respond to requests for information. Some of these managers handle special events as well, such as the sponsorship of races, parties introducing new products, or other activities that the firm supports in order to gain public attention through the press without advertising directly. Sales managers. Sales managers direct the distribution of the product or service to the customer. They assign sales territories, set sales goals, and establish training programs for the organization’s sales representatives. (See the Handbook statement on sales representatives, wholesale and manufacturing). Sales managers advise the sales representatives on ways to improve their sales performance. In large multiproduct firms, they oversee regional and local sales managers and their staffs. Sales managers maintain contact with dealers and distributors, and analyze sales statistics gathered by their staffs to determine sales potential and inventory requirements and to monitor customers' preferences. Such information is vital in the development of products and the maximization of profits. Work environment. Advertising, marketing, promotions, public relations, and sales managers work in offices close to those of top managers. Working under pressure is unavoidable when schedules change and problems arise, but deadlines and goals still must be met.
Substantial travel may be required in order to meet with customers and consult with others in the industry. Sales managers travel to national, regional, and local offices and to the offices of various dealers and distributors. Advertising and promotions managers may travel to meet with clients or representatives of communications media. At times, public relations managers travel to meet with special-interest groups or government officials. Job transfers between headquarters and regional offices are common, particularly among sales managers.
Long hours, including evenings and weekends are common. In 2008, over 80 percent of advertising, marketing, promotions, public relations, and sales managers worked 40 hours or more a week.
Advertising, marketing, promotions, public relations, and sales managers often serve as liaisons between the firm requiring the advertising and an advertising or promotion agency that develops and places the ads.
Training, Other Qualifications, and Advancement
A wide range of educational backgrounds is suitable for entry into advertising, marketing, promotions, public relations, and sales manager jobs, but many employers prefer college graduates with experience in related occupations. Education and training. For marketing, sales, and promotions management positions, employers often prefer a bachelor's or master's degree in business administration with an emphasis on marketing. Courses in business law, management, economics, accounting, finance, mathematics, and statistics are advantageous. In addition, the completion of an internship while the candidate is in school is highly recommended. In highly technical industries, such as computer and electronics manufacturing, a bachelor's degree in engineering or science, combined with a master's degree in business administration, is preferred.
For advertising management positions, some employers prefer a bachelor's degree in advertising or journalism. A relevant course of study might include classes in marketing, consumer behavior, market research, sales, communication methods and technology, visual arts, art history, and photography.
For public relations management positions, some employers prefer a bachelor's or master's degree in public relations or journalism. The applicant's curriculum should include courses in advertising, business administration, public affairs, public speaking, political science, and creative and technical writing.
Most advertising, marketing, promotions, public relations, and sales management positions are filled through promotions of experienced staff or related professional personnel. For example, many managers are former sales representatives; purchasing agents; buyers; or product, advertising, promotions, or public relations specialists. In small firms, in which the number of positions is limited, advancement to a management position usually comes slowly. In large firms, promotion may occur more quickly. Other qualifications. Computer skills are necessary for recordkeeping and data management, and the ability to work in an Internet environment is becoming increasingly vital as more marketing, product promotion, and advertising is done through the Internet. Also, the ability to communicate in a foreign language may open up employment opportunities in many rapidly growing areas around the country, especially cities with large Spanish-speaking populations.
Persons interested in becoming advertising, marketing, promotions, public relations, and sales managers should be mature, creative, highly motivated, resistant to stress, flexible, and decisive. The ability to communicate persuasively, both orally and in writing, with other managers, staff, and the public is vital. These managers also need tact, good judgment, and exceptional ability to establish and maintain effective personal relationships with supervisory and professional staff members and client firms. Certification and advancement. Some associations offer certification programs for these managers. Certification—an indication of competence and achievement—is particularly important in a competitive job market. Although relatively few advertising, marketing, promotions, public relations, and sales managers currently are certified, the number of managers who seek certification is expected to grow. Today, there are numerous management certification programs based on education and job performance. In addition, the Public Relations Society of America offers a certification program for public relations practitioners that is based on years of experience and performance on an examination.
Although experience, ability, and leadership are emphasized for promotion, advancement can be accelerated by participation in management training programs conducted by larger firms. Many firms also provide their employees with continuing education opportunities—either in-house or at local colleges and universities—and encourage employee participation in seminars and conferences, often held by professional societies. In collaboration with colleges and universities, numerous marketing and related associations sponsor national or local management training programs. Course subjects include brand and product management; international marketing; sales management evaluation; telemarketing and direct sales; interactive marketing; product promotion; marketing communication; market research; organizational communication; and data-processing systems, procedures, and management. Many firms pay all or part of the cost for employees who complete courses.
Because of the importance and high visibility of their jobs, advertising, marketing, promotions, public relations, and sales managers often are prime candidates for advancement to the highest ranks. Well-trained, experienced, and successful managers may be promoted to higher positions in their own or another firm; some become top executives. Managers with extensive experience and sufficient capital may open their own businesses.
An insurance policy should not contain provisions that allow one side or the other to unilaterally void the contract in exchange for benefit. Provisions that void the contract for failure to perform or for fraud or material misrepresentation are ordinary and acceptable.
The policy should have a term of not more than about three years.
This is not a hard and fast rule. Contracts of over five years duration are classified as ‘long-term,’ which can impact the accounting treatment, and can obviously introduce the possibility that over the entire term of the contract, no actual risk will transfer. The coverage provided by the contract need not cease at the end of the term (e.g., the contract can cover occurrences as opposed to claims made or claims paid).
The contract should be considered to include any other agreements, written or oral, that confer rights, create obligations, or create benefits on the part of either or both parties. Ideally, the contract should contain an ‘Entire Agreement’ clause that assures there are no undisclosed written or oral side agreements that confer rights, create obligations, or create benefits on the part of either or both parties. If such rights, obligations or benefits exist, they must be factored into the tests of reasonableness and significance.
The contract should not contain arbitrary limitations on timing of payments. Provisions that assure both parties of time to properly present and consider claims are acceptable provided they are commercially reasonable and customary.
Provisions that expressly create actual or notional accounts that accrue actual or notional interest suggest that the contract contains, in fact, a deposit.
Provisions for additional or return premium do not, in and of themselves, render a contract something other than insurance. However, it should be unlikely that either a return or additional premium provision be triggered, and neither party should have discretion regarding the timing of such triggering.
All of the events that would give rise to claims under the contract cannot have materialized prior to the inception of the contract. If this "all events" test is not met, then the contract is considered to be a retroactive contract, for which the accounting treatment becomes complex.
The analysis of reasonableness and significance is an estimate of the probability of different gain or loss outcomes under different loss scenarios. It takes time and resources to perform the analysis, which constitutes a burden without value where risk transfer is reasonably self-evident. Guidance exists for insurers and reinsurers, whose CEO's and CFO's attest annually as to the reinsurance agreements their firms undertake. The American Academy of Actuaries, for instance, identifies three categories of contract as outside the requirement of attestation:
Inactive contracts. If there are no premiums due nor losses payable, and the insurer is not taking any credit for the reinsurance, determining risk transfer is irrelevant.
Pre-1994 contracts. The attestation requirement only applies to contracts that were entered into, renewed or amended on or after 1 January 1994. Prior contracts need not be analyzed.
Where risk transfer is "reasonably self-evident."
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Risk transfer is reasonably self-evident in most traditional per-risk or per-occurrence excess of loss reinsurance contracts. For these contracts, a predetermined amount of premium is paid and the reinsurer assumes nearly all or all of the potential variability in the underlying losses, and it is evident from reading the basic terms of the contract that the reinsurer can incur a significant loss. In many cases, there is no aggregate limit on the reinsurer's loss. The existence of certain experience-based contract terms, such as experience accounts, profit commissions, and additional premiums, generally reduce the amount of risk transfer and make it less likely that risk transfer is reasonably self-evident.
Neither FAS 113 nor SAP 62 defines the terms reasonable or significant. Ideally, one would like to be able to substitute values for both terms. It would be much simpler if one could apply a test of an X percent chance of a loss of Y percent or greater. Such tests have been proposed, including one famously attributed to an SEC official who is said to have opined in an after lunch talk that at least a 10 percent chance of at least a 10 percent loss was sufficient to establish both reasonableness and significance. Indeed, many insurers and reinsurers still apply this "10/10" test as a benchmark for risk transfer testing.
An attempt to use any Nmerical Rule such as the 10/10 test will quickly run into problems. Suppose a contract has a 1 percent chance of a 10,000 percent loss? It should be reasonably self-evident that such a contract is insurance, but it fails one half of the 10/10 test.
Excess of loss contracts, like those commonly used for umbrella and general liability insurance, or to insure against property losses, will typically have a low ratio of premium paid to maximum loss recoverable. This ratio (expressed as a percentage), commonly called the "rate on line" for historical reasons related to underwriting practices at Lloyd's of London, will typically be low for contracts that contain reasonably self-evident risk transfer. As the ratio increases to approximate the present value of the limit of coverage, self-evidence decreases and disappears. Contracts with low rates on line may survive modest features that limit the amount of risk transferred. As rates on line increase, such risk limiting features become increasingly important.
In the insurance policy is a (generally between the
insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for payment, known as the premium, the insurer pays for damages to the insured which are caused by covered perils under the policy language. Insurance contracts are designed to meet specific needs and thus have many features not found in many other
types of contracts. Since insurance policies are standard forms, they feature biolerplate language which is similar across a wide variety of different types of insurance policies.
The insurance policy is generally an integrated contract, meaning that it includes all forms associated with the agreement between the insured and insurer.In some cases, however, supplementary writings such as letters sent after the final agreement can make the insurance policy a non-integrated contract. One insurance textbook states that "courts consider all prior negotiations or agreements ... every contractual term in the policy at the time of delivery, as well as those written afterwards as policy riders and endorsements ... with both parties' consent, are part of written policy".The textbook also states that the policy must refer to all papers which are part of the policy. Oral agreements are subject to the and may not be considered part of the policy. Advertising materials and circulars are typically not part of a policy. Oral contracts pending the issuance of a written policy can occur.
Certain insurance products and practices have been described as by critics.That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of their premium payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are made. Sometimes this tax deferral is the only reason people use these products. Another example is the legal infrastructure which allows life insurance to be held in an irrevocable trust which is used to pay an while the proceeds themselves are immune from the estate tax.
New assurance products can now be protected from copying by united states
A recent example of a new insurance product that is patented is Uasage Based Auto Insurance Early versions were independently invented and patented by a major U.S. auto insurance company, and a Spanish independent inventor, Salvador Minguijon Perez.
Many independent inventors are in favor of patenting new insurance products since it gives them protection from big companies when they bring their new insurance products to market. Independent inventors account for 70% of the new U.S. patent applications in this area. Many insurance executives are opposed to patenting insurance products because it creates a new risk for them. The Hartford insurance company, for example, recently had to pay $80 million to an independent inventor, Bancorp Services, in order to settle a patent infringement and theft of trade secret lawsuit for a type of corporate owned life insurance product invented and patented by Bancorp. There are currently about 150 new patent applications on insurance inventions filed per year in the United States.The rate at which patents have issued has steadily risen from 15 in 2002 to 44 in 2006. Inventors can now have their insurance U.S. patent applications reviewed by the public in the program.The first insurance patent application to be posted was It was posted on March 6, 2009. This patent application describes a method for increasing the ease of changing insurance companies.
Redlining is the practice of denying insurance coverage in specific geographic areas, supposedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial Profiling or Redlining has a long history in the property insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.
In July, 2007, The Federal Trade Commission (FTC) released a report presenting the results of a study concerning credit-based insurance score in automobile insurance. The study found that these scores are effective predictors of risk. It also showed that African-Americans and Hispanics are substantially overrepresented in the lowest credit scores, and substantially underrepresented in the highest, while Caucasians and Asians are more evenly spread across the scores. The credit scores were also found to predict risk within each of the ethnic groups, leading the FTC to conclude that the scoring models are not solely proxies for redlining. The FTC indicated little data was available to evaluate benefit of insurance scores to consumers. The report was disputed by representatives of the Consumer Federation of America, the National Fair Housing Alliance, the National Consumer Law Center, and the Center for Economic Justice, for relying on data provided by the insurance industry.
All states have provisions in their rate regulation laws or in their fair trade practice acts that prohibit unfair discrimination, often called redlining, in setting rates and making insurance available.
However, the use of such factors is often considered to be unfair or unlawfully discrimaintory and the reaction against this practice has in some instances led to political disputes about the ways in which insurers determine premiums and regulatory intervention to limit the factors used.
An insurance underwriter's job is to evaluate a given risk as to the likelihood that a loss will occur. Any factor that causes a greater likelihood of loss should theoretically be charged a higher rate. This basic principle of insurance must be followed if insurance companies are to remain solvent.Thus, "discrimination" against (i.e., negative differential treatment of) potential insureds in the risk evaluation and premium-setting process is a necessary by-product of the fundamentals of insurance underwriting. For instance, insurers charge older people significantly higher premiums than they charge younger people for term life insurance. Older people are thus treated differently than younger people (i.e., a distinction is made, discrimination occurs). The rationale for the differential treatment goes to the heart of the risk a life insurer takes: Old people are likely to die sooner than young people, so the risk of loss (the insured's death) is greater in any given period of time and therefore the risk premium must be higher to cover the greater risk. However, treating insureds differently when there is no actuarially sound reason for doing so is unlawful discrimination. What is often missing from the debate is that prohibiting the use of legitimate, actuarially sound factors means that an insufficient amount is being charged for a given risk, and there is thus a deficit in the system. The failure to address the deficit may mean insolvency and hardship for all of a company's insureds The options for addressing the deficit seem to be the following: Charge the deficit to the other policyholders or charge it to the government (i.e., externalize outside of the company to society at large).
Economists and consumer advocates generally consider insurance to be worthwhile for low-probability, catastrophic losses, but not for high-probability, small losses. Because of this, consumers are advised to select high deductible and to not insure losses which would not cause a disruption in their life. However, consumers have shown a tendency to prefer low deductibles and to prefer to insure relatively high-probability, small losses over low-probability, perhaps due to not understanding or ignoring the low-probability risk. This is associated with reduced purchasing of insurance against low-probability losses, and may result.
Insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. As a result, people may buy policies on unfavorable terms. In response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertise and sold.
For example, most insurance policies in the English language today have been carefully drafted in plain English; the industry learned the hard way that many courts will not enforce policies against insureds when the judges themselves cannot understand what the policies are saying. Typically, courts construe ambiguities in insurance policies against the insurance company and in favor of coverage under the policy.
Many institutional insurance purchasers buy insurance through an insurance broker. While on the surface it appears the broker represents the buyer (not the insurance company), and typically counsels the buyer on appropriate coverage and policy limitations, it should be noted that in the vast majority of cases a broker's compensation comes in the form of a commission as a percentage of the insurance premium, creating a conflict of interest in that the broker's financial interest is tilted towards encouraging an insured to purchase more insurance than might be necessary at a higher price. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the Market for the best rates and coverage possible.
Insurance may also be purchased through an agent. Unlike a broker, who represents the policyholder, an agent represents the insurance company from whom the policyholder buys. Just as there is a potential conflict of interest with a broker, an agent has a different type of conflict. Because agents work directly for the insurance company, if there is a claim the agent may advise the client to the benefit of the insurance company. It should also be noted that agents generally can not offer as broad a range of selection compared to an insurance broker. An independent insurance consultant advises insureds on a fee-for-service retainer, similar to an attorney, and thus offers completely independent advice, free of the financial conflict of interest of brokers and/or agents. However, such a consultant must still work through brokers and/or agents in order to secure coverage for their clients.
By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer), a concept known as moral hazard To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in behavior that grossly magnifies their risk of loss or liability.
For example, life insurance companies may require higher premiums or deny coverage altogether to people who work in hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from torts committed by or at the direction of the insured. Even if a provider were so irrational as to want to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal.
Insurance companies may be classified into two groups:
Life insurance companies, which sell life insurance, annuities and pensions products.
Non-life, general, or property/casualty insurance companies, which sell other types of insurance.
General insurance companies can be further divided into these sub categories.
Standard lines
Excess lines
In most countries, life and non-life insurers are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between the two types of company is that life, annuity, and pension business is very long-term in nature — coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers a shorter period, such as one year.
In the United States, standard line insurance companies are "mainstream" insurers. These are the companies that typically insure autos, homes or businesses. They use pattern or "cookie-cutter" policies without variation from one person to the next. They usually have lower premiums than excess lines and can sell directly to individuals. They are regulated by state laws that can restrict the amount they can charge for insurance policies. Excess line insurance companies (also known as Excess and Surplus) typically insure risks not covered by the standard lines market. They are broadly referred as being all insurance placed with non-admitted insurers. Non-admitted insurers are not licensed in the states where the risks are located. These companies have more flexibility and can react faster than standard insurance companies because they are not required to file rates and forms as the "admitted" carriers do. However, they still have substantial regulatory requirements placed upon them. State laws generally require insurance placed with surplus line agents and brokers not to be available through standard licensed insurers.
Insurance companies are generally classified as either mutual or stock companies. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. Demutualization of mutual insurers to form stock companies, as well as the formation of a hybrid known as a mutual holding company, became common in some countries, such as the United States, in the late 20th century. Other possible forms for an insurance company include reciprocal, in which policyholders reciprocate in sharing risks, and Lloyd's organizations.
Insurance companies are rated by various agencies such as The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products.
Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well. Captive Insurance companies may be defined as
limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house self-insurance vehicle. Captives may take the form of a "pure" entity (which is a 100% subsidiary of the self-insured parent company); of a "mutual" captive (which insures the collective risks of members of an industry); and of an "association" captive (which self-insures individual risks of the members of a professional, commercial or industrial association). Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices.
The types of risk that a captive can underwrite for their parents include property damage, public and product liability, professional indemnity, employee benefits, employers' liability, motor and medical aid expenses. The captive's exposure to such risks may be limited by the use of reinsurance.
Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent.
This can be understood against the following background:
heavy and increasing premium costs in almost every line of coverage;
difficulties in insuring certain types of fortuitous risk;
differential coverage standards in various parts of the world;
rating structures which reflect market trends rather than individual loss experience;
insufficient credit for deductibles and/or loss control efforts.
There are also companies known as 'insurance consultants'. Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies. Similar to an insurance consultant, an 'insurance broker' also shops around for the best insurance policy amongst many companies. However, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client.
Neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions. Third party administrators are companies that perform underwriting and sometimes claims handling services for insurance companies. These companies often have special expertise that the insurance companies do not have.
The financial stability and strength of an insurance company should be a major consideration when buying an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool or other arrangement with less attractive payouts for losses). A number of independent rating agencies provide information and rate the financial viability of insurance companies.
Some communities prefer to create virtual insurance amongst themselves by other means than contractual risk transfer, which assigns explicit numerical values to risk. A number of religious groups, including the Amish and some Muslims groups, depend on support provided by their communities when disasters strike. The risk presented by any given person is assumed collectively by the community who all bear the cost of rebuilding lost property and supporting people whose needs are suddenly greater after a loss of some kind. In supportive communities where others can be trusted to follow community leaders, this tacit form of insurance can work. In this manner the community can even out the extreme differences in insurability that exist among its members. Some further justification is also provided by invoking the moral hazard of explicit insurance contracts. In the United Kingdom, The Crow (which, for practical purposes, meant the (Civil Service) did not insure property such as government buildings. If a government building was damaged, the cost of repair would be met from public funds because, in the long run, this was cheaper than paying insurance premiums. Since many UK government buildings have been sold to property companies, and rented back, this arrangement is now less common and may have disappeared altogether.
Fraternal insurance is provided on a cooperative basis by (fraternal benefit societies) or other social organizations.
No-Fault insurance a type of insurance policy (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident.
Protected self-insurance is an alternative risk financing mechanism in which an organization retains the mathematically calculated cost of risk within the organization and transfers the catastrophic risk with specific and aggregate limits to an insurer so the maximum total cost of the program is known. A properly designed and underwritten Protected Self-Insurance Program reduces and stabilizes the cost of insurance and provides valuable risk management information.
Retrospectively rated insurance is a method of establishing a premium on large commercial accounts. The final premium is based on the insured's actual loss experience during the policy term, sometimes subject to a minimum and maximum premium, with the final premium determined by a formula. Under this plan, the current year's premium is based partially (or wholly) on the current year's losses, although the premium adjustments may take months or years beyond the current year's expiration date. The rating formula is guaranteed in the insurance contract. Formula: retrospective premium = converted loss + basic premium × tax multiplier. Numerous variations of this formula have been developed and are in use.
Formal self insurance is the deliberate decision to pay for otherwise insurable losses out of one's own money. This can be done on a formal basis by establishing a separate fund into which funds are deposited on a periodic basis, or by simply forgoing the purchase of available insurance and paying out-of-pocket. Self insurance is usually used to pay for high-frequency, low-severity losses. Such losses, if covered by conventional insurance, mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies. While this is true for all insurance, for small, frequent losses the transaction costs may exceed the benefit of volatility reduction that insurance otherwise affords.
Reis a type of insurance purchased by insurance companies or self-insured employers to protect against unexpected losses. Financial reinsurance is a form of reinsurance that is primarily used for capital management rather than to transfer insurance risk.
Social insurance can be many things to many people in many countries. But a summary of its essence is that it is a collection of insurance coverages (including components of life insurance, disability income insurance, unemployment insurance, health insurance, and others), plus retirement savings, that requires participation by all citizens. By forcing everyone in society to be a policyholder and pay premiums, it ensures that everyone can become a claimant when or if he/she needs to. Along the way this inevitably becomes related to other concepts such as the justice system and the welfare state.
All-risk insurance is an insurance that covers a wide-range of incidents and perils, except those noted in the policy. All-risk insurance is different from peril-specific insurance that cover losses from only those perils listed in the policy. In car insurance, all-risk policy includes also the damages caused by the own driver.
High-value horses may be insured under a bloodstock policy
Bloodstock insurance covers individual horses or a number of horses under common ownership. Coverage is typically for mortality as a result of accident, illness or disease but may extend to include infertility, in-transit loss, veterinary fees, and prospective foal.
Business interruption insurance covers the loss of income, and the expenses incurred, after a covered peril interrupts normal business operations.
Collateral protection insurance (CPI) insures property (primarily vehicles) held as collateral for loans made by lending institutions.
Defense base Act insurance provides coverage for civilian workers hired by the government to perform contracts outside the U.S. and Canada. DBA is required for all U.S. citizens, U.S. residents, U.S. Green Card holders, and all employees or subcontractors hired on overseas government contracts. Depending on the country, foreign nationals must also be covered under DBA. This coverage typically includes expenses related to medical treatment and loss of wages, as well as disability and death benefits.
Expatriate insurance provides individuals and organizations operating outside of their home country with protection for automobiles, property, health, liability and business pursuits.
Kidnap and ransom insurance is designed to protect individuals and corporations operating in high-risk areas around the world against the perils of kidnap, extortion, wrongful detention and hijacking.
legal Expensive insurance covers policyholders for the potential costs of legal action against an institution or an individual. When something happens which triggers the need for legal action, it is known as "the event.
Locked funds Insurance is a little-known hybrid insurance policy jointly issued by governments and banks. It is used to protect public funds from tamper by unauthorized parties. In special cases, a government may authorize its use in protecting semi-private funds which are liable to tamper. The terms of this type of insurance are usually very strict. Therefore it is used only in extreme cases where maximum security of funds is required.
Livestoke insurance is a specialist policy provided to, for example, commercial or hobby farms, aquariums, fish farms or any other animal holding. Cover is available for mortality or economic slaughter as a result of accident, illness or disease but can extend to include destruction by government order.
Media liability insurance is designed to cover professionals that engage in film and television production and print, against risks such as defamation.
Pet Insurance insures pets against accidents and illnesses; some companies cover routine/wellness care and burial, as well.
Pollution insurance usually takes the form of first-party coverage for contamination of insured property either by external or on-site sources. Coverage is also afforded for liability to third parties arising from contamination of air, water, or land due to the sudden and accidental release of hazardous materials from the insured site. The policy usually covers the costs of cleanup and may include coverage for releases from underground storage tanks. Intentional acts are specifically excluded.
Purchase insurance is aimed at providing protection on the products people purchase. Purchase insurance can cover individual purchase protection care plans and even mobile phone insurance. Such insurance is normally very limited in the scope of problems that are covered by the policy.
Traval insurance is an insurance cover taken by those who travel abroad, which covers certain losses such as medical expenses, loss of personal belongings, travel delay, and personal liabilities.
The average monthly cost car insurance is affected such things as age, gender, level of risk the driver, car type, geographic location, credit, driving history, insurance coverage and more. Most likely the car insurance more expensive for teenagers than adults because a greater level of risk.
Becoming a life insurance agent may be one of the most challenging, but rewarding careers. Finding people who need your services and products is not easy, but you will be putting food on people’s tables and keeping the roofs over the heads after a primary wage earner has died. People will never turn you away when you are in the process of delivering a check.
