Lesson 4 Part 2 - LESSON 4 (2): Insurance Occupations 1...

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Unformatted text preview: LESSON 4 (2): Insurance Occupations 1 Insurance Marketing Internal functions Direct marketing Affinity groups (employees, students) E-commerce The The use of Internet to automate insurance and transactions and Cost saving Price comparison, brand identification 2 INSURANCE OCCUPATIONS Insurance Agent Loss Adjuster Underwriter Actuary Lawyer Other Occupations 3 INSURANCE AGENT Usual Usual link between the consumer and the insurance company for personal personal lines. lines. Commercial insurance often involves Commercial brokers. brokers. The agency relationship is controlled by The agency law agency 4 LAW OF AGENCY (Common Law) An agent is a person authorized to act on An agent behalf of another person who is the principal principal Duties of the agent: Loyalty Not to be negligent To obey instructions Duties of the principal (insurance company): Pay the agent for services rendered Meet other contractual obligations (training, Meet expense reimbursement, etc.) expense 5 Agent’s Authority Agents receive authority from principals in several Agents ways ways Agency agreement (contract) Rights and duties Agent receives actual authority Agent actual Express authority= details of the agents’ responsibilities and details duties duties Incidental authority= details necessary to accomplish the details specified acts specified Ratification – through a series of unauthorized and accepted Ratification repeated acts repeated Apparent authority – principal leads the public to believe the Apparent agency relationship exists agency Scope of authority is established in the agency Scope agreement - contract between agent and the agreement insurance company insurance Agency agreement spells out extent of authority as Agency well as all the contract specifics well 6 Types of Insurance Agents In Property and Liability When limited to soliciting business - called a When "special" or "soliciting" agent "special" When agent able to bind principal then called a When "general agent" "general In Life Insurance Insurance agents are soliciting agents because Insurance they do not have the power to bind they General agents (branch managers) are hired to General develop a geographic territory develop 7 Insurance Brokers Brokers also market insurance in both life and Brokers health and property and liability insurance health Brokers do not have the power to bind Broker is agent of the consumer - not the Broker company company Find an insurance company willing to accept Find a transfer of an insurance applicant’s exposure to loss exposure 8 Comparison of Agents and Brokers AGENCY RELATIONSHIP agent company BROKERAGE RELATIONSHIP consumer consumer consumer consumer broker broker company Questions: Who does the agent work for? What was the agent doing at the time of the incident? incident? 9 DISTRIBUTION OF INSURANCE Property and Liability Direct Writers •Employee / Agent usually paid by salary + Commission •Lower Price •Standard Contracts Independent Agents •Represents several companies •Exp: place insurance A in Company A and insurance B in company B, although they are the same customer •Own the business •Paid commissions •More service •Local help •Select company 10 DISTRIBUTION OF INSURANCE DISTRIBUTION Life Insurance Life Company General Agent or Branch Manager Soliciting or Special Agents Branch manager has control of territory and recruits and trains Branch soliciting or special agents soliciting Life insurance agents can never bind coverage - authority limited Life power to bind remains at the home office power 11 Agent’s Duties Inform clients Motivate clients to buy Motivate Selecting clients Must be familiar Continuous services 12 LOSS ADJUSTERS or Claims Investigator Loss Loss adjusters make the product perform - pays the claim perform Steps in adjusting a claim Steps Investigate Determine if policy covers Determine amount of the loss Pay the claim Independent Adjusters vs. Company Independent Adjusters vs. Public Adjusters (hired by the insured) insured) 13 LOSS ADJUSTERS QUESTION: Why do insurance agents and QUESTION: loss adjusters have to be very careful about what they tell insureds when they process a loss or adjust a claim? loss Waiver - voluntary relinquishment of a known Waiver right. right. Estoppel - legal order to create consistent Estoppel behavior. behavior. 14 UNDERWRITER Review applications for insurance and decide Job is to accept exposures at appropriate rate Reject application if underwriting rules do not allow Reject acceptance (too few exposures or lack of data to determine credibility of the class) determine Must be a skillful judge of people Goal is to produce a group of insureds by categories Goal whose actual experience will approximate or approach expected. approach Goal is not to reject people going to have losses. Goal not 15 Accountant Insurance Insurance company accounting is significantly different than manufacturing manufacturing Assets are mainly financial Liabilities are mainly reserves for loss Liabilities payments payments Costs can have long durations Early expensing of selling expenses 16 Accounting Standards Generally Generally Accepted Accounting Principles (GAAP) for insurance companies – publicly traded companies Statutory Accounting Principles (SAP) Statutory for regulatory reporting for International Accounting Standards International Board (IASB) produced International Financial Reporting Standards (IFRS) Financial 17 ACTUARY Develops Develops statistics and classifications for insurance rates for Reviews past and projected future Reviews results results Involved in product development Regulatory compliance issues Calculation of participating dividends 18 LAWYER Lawsuits Wording of insurance contracts Deal with regulatory agencies General advice and counsel 19 Other Occupations Financial administrators Accountants, Financiers, Managers, Accountants, Statisticians, Economists Architects, Engineers Doctors, Health Care Professionals Marketing, Advertising Personnel Administrators, Law Enforcement Computer System Operators and Software Computer Authors Authors ... 20 ...
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This note was uploaded on 10/08/2011 for the course FINANCE FINANCE taught by Professor Don'tknow during the Spring '09 term at American Internation College.

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