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IMch22 - CHAPTER 22 Risk Management and the Insurance...

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CHAPTER 22 Risk Management and the Insurance Industry THE FIELD OF INSURANCE Personal Coverages Property Coverages Private and Public Insurance Voluntary and Involuntary Coverages TYPES OF INSURERS Stock Companies Mutual Companies Class Mutuals Farm Mutuals Factory Mutuals General Writing Mutuals Fraternal Carriers Reciprocals Lloyd’s Associations London Lloyd’s Relative Importance of Private Insurers Insolvency of Insurers Employment in Insurance Ownership of Insurance CHANNELS OF DISTRIBUTION IN INSURANCE Direct Distribution in Life Insurance Group Insurance Individual Agents Reasons for Direct Distribution in Life Insurance Need for Close Control over Product Need for Control over Sales Promotion and Competition Infrequent Purchase of Life Insurance Better Living through Specialization The Changing Environment in the Life Insurance Company Direct Writing in Property-Liability Insurance Indirect Distribution (American Agency System) Brokers versus Agents Is the American Agency System Doomed? Outlook for the Agency System and Direct Writing Direct Response Mass Merchandising GLOBALIZATION OF RISK MANAGEMENT AND THE INSURANCE INDUSTRY Global Risk Management Global Risk Exposure Global Insurance Programs Globalization of the Insurance Business KEY TERMS AND CONCEPTS American Agency System Assessable policy Attorney-in-fact 1
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Broker Class mutuals Direct response Direct writers Exclusive agent Factory mutual Farm mutual Fraternal carrier General agent General insurance General writing mutual Guaranty funds Independent agent Interinsurance exchange Involuntary coverage Lloyd’s association Mass merchandising Mutual company Name Participating and deviating Personal coverages Private insurance Property coverages Public insurance Reciprocal Stock company Surplus line market Syndicates Voluntary coverage ANSWERS TO QUESTIONS FOR REVIEW AND DISCUSSION 1. a. The student might answer private and government or personal and property as the two major types of insurance. b. Depending on the classification used, the answer is that private insurance is larger than government insurance gauging from premium income, and personal insurance is more than three-fourths of the total of all insurance.
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