for Policymakers Four assignments Insurance Principles Insurance Coverages Property and Casualty Insurance Coverages Life and Health Insurance Regulation and Legislation Insurance Fundamentals for Policymakers ID: 250950
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Slide1
Insurance Fundamentals
for PolicymakersSlide2
Four assignments:
Insurance PrinciplesInsurance Coverages: Property and CasualtyInsurance Coverages: Life and HealthInsurance Regulation and Legislation
Insurance Fundamentals for PolicymakersSlide3
The Homeowners Policy
The Personal Auto PolicyThe Surplus Lines MarketReinsuranceWorkers Compensation: Statutes and Methods of Demonstrating Financial SecurityInsurance Coverages
: Property and Casualty TopicsSlide4
Property
and casualty insurance covers real and personal property and the insured’s liability for others’ injuries or property damage.
The Homeowners PolicySlide5
Section I—Property
CoveragesDwellingOther StructuresPersonal Property
Loss of Use
Section II—Liability
Coverages
Personal Liability
Medical Payments to
Others
The Homeowners PolicySlide6
Protects:
House and structures attached to houseDetached structures on premisesPerils insured against depend on policy
Section I—Property
Coverages
, Dwellings and Other StructuresSlide7
Personal Property—property other than dwelling and other structures
Loss of Use—financial losses when an insured residence is uninhabitableReimbursement for living or meal expensesFair rental valueSection I—Property Coverages
, Personal Property and Loss of UseSlide8
Bodily injury or property damage for which the insured is legally
liableInsurer is obligated to defend the insuredSection II—Liability Coverages
, Personal LiabilitySlide9
For persons injured at insured’s
premisesApplies whether or not insured is liableClaim must be made within three years
Section II—Liability
Coverages
, Medical Payments to OthersSlide10
Owner-occupants
Tenants Condominium ownersPolicy Choices—InsuredsSlide11
Perils are causes of
lossNamed perils—Perils listed in the policyOpen perils—All perils not excluded by the policy
Policy Choices—PerilsSlide12
Owner-Occupant PoliciesSlide13
Other PoliciesSlide14
An
individual or family can use a personal auto policy (PAP) to insure against the consequences of losses involving ownership or use of an auto.
The Personal Auto PolicySlide15
Liability
Medical paymentsUninsured/underinsured motoristsPhysical damagePersonal injury
Coverage OptionsSlide16
Covers bodily injury and damage to others’ property caused by an insured in an auto accident.
Insured must be found legally responsible.Applies toCovered vehicles and other vehicles driven by an insuredOccasional drivers of covered vehicles
Liability CoverageSlide17
Covers reasonable and necessary medical expenses for injuries from auto accident to
Insured in any autoInsured pedestrian injured by autoOccupants of insured autoPaid regardless of faultCarries per-person limit
Medical Payments CoverageSlide18
Covers bodily injury caused by
At-fault uninsured motoristHit-and-run driverDriver who is insolvent
Uninsured Motorists CoverageSlide19
Added as endorsement to PAP
Covers insured’s injury caused by underinsured at-fault driverIn some states, also covers property damagePays difference between underinsured motorists coverage limit and at-fault vehicle’s liability limitsUnderinsured Motorists CoverageSlide20
Applies to insured’s covered autos
Applies to certain other autosNonowned auto not for insured’s regular useAuto or trailer used as temporary substitute (loaner)Has a deductiblePhysical Damage CoverageSlide21
Applies when covered auto
Strikes an objectCollides with another vehicleOverturnsPhysical Damage Coverage—CollisionSlide22
Applies to damage not resulting from collision
Examples: damage from fire, theft, vandalism, hail, animal contact, flood, and glass breakagePhysical Damage Coverage—Other Than CollisionSlide23
Pays benefits regardless of fault
Covers medical expenses, income loss, and other losses of injured occupants of covered autoMay restrict victims’ right to sue (“true” no-fault laws)Added by endorsementPersonal Injury Protection Slide24
The
surplus market includes unique or unusual exposures, as well as those exposures that the standard market is unwilling or unable to insure.
The Surplus Lines MarketSlide25
Classes of E&S business
Unusual or unique loss exposuresNonstandard businessInsureds needing higher coverage limits
Insureds
needing unusually broad coverage
Loss exposures that require new forms of coverage
Excess and Surplus Lines (E&S) Slide26
Standard insurance depends on a large number of similar exposures.
Without that, coverage is difficult to price.E&S coverage may be available.Unusual or Unique ExposuresSlide27
Standard insurers may not cover high-loss or uncontrollable-loss exposures.
Premiums may be too high.E&S coverage may be available.Nonstandard BusinessSlide28
In comparison to what the standard market provides, the E&S market provides:
Higher-limit coverages Broader coverage Coverage for new exposuresHigh Limits, Broad Coverage, New ExposuresSlide29
Some states maintain lists of approved E&S insurers.
Other states maintain lists of unapproved E&S insurers.Most states require all E&S business to be placed through an E&S broker. E&S Lines RegulationSlide30
Reinsurance
enables insurers to meet the needs of the public and handle their own risk portfolios efficiently. Reinsurance helped the United States insurance industry withstand such disasters as the September 11, 2001, terrorist attacks and Hurricane Sandy in 2012.
ReinsuranceSlide31
Insurer transfers liability for certain losses to reinsurer.
In exchange, insurer pays reinsurer a ceding commission.Insurer retains some of the loss, and coverage is subject to limits.Reinsurers also use reinsurance (retrocession).Basic Reinsurance ConceptsSlide32
Policyholders cannot collect directly from reinsurers.
Two exceptions:Cut-through endorsementPurchase of reinsurance for captive insurer or pool Indemnification of PolicyholdersSlide33
Workers
compensation (WC) laws provide an exclusive remedy for work-related injuries: employers are required to cover such injuries without regard to fault, and employees’ right to sue in such cases is limited.
Workers CompensationSlide34
Obligate employers to compensate employees for job-related injuries
Limit employees’ rights to sue employers for such injuriesGuarantee prompt payment Reduce court burdens and litigation costsState WC LawsSlide35
Medical expenses and wage loss
Work-related injuries and occupational diseasesScope of CoverageSlide36
Medical benefits
Disability income benefitsRehabilitation benefitsDeath benefitsBenefits PayableSlide37
Covered—Industrial workers and most workers of private employers
Exempt (varies by state)Small businesses with few employeesFarm labor Domestic employeesCasual employeesIndependent contractors
Persons Covered or ExemptSlide38
State laws require employers to demonstrate ability to pay WC claims.
Employers can meet this requirement through insurance or self-insurance.Employers’ Financial SecuritySlide39
Voluntary market—private insurers
Assigned risk planState fundWC Insurance Slide40
Self-insurance plans
Self-insured groupsSelf-Insurance for WCSlide41
Homeowners policies—property damage, loss of use, liability
Personal Auto Policy—losses from ownership/use of autosSurplus lines—unusual or unique exposuresReinsurance—insurance for insurersWC—medical expenses and wage loss
Summary