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An insurance policy that provides coverage for an employer’s two key exposures arising out of injuries sustained by employees. Part one of the policy covers the employer’s statutory liabilities under workers compensation laws and part two of the policy cover liability arising out of employees work related injuries that do not fall under the workers…

Reduced insuranced costs:Lower costs and premiumAccumulation of investment income to help reduce net loss costs. Coverage of risks • Not available in the commercial market • Not available at a realistic premium Capacity • Cannot get all limits required in the commercial market • Captive can be structured to provide desired capacity at necessary levels

Control • Design of more effective claims handling, loss control and risk management programs Capture insurance related profits • Underwriting profits and investment income accure to owners Access to reinsurance market Capture ceding commission paid by captive to reinsurer. Wholesale pricing versus retail pricing charged by insurance companies

Trailer interchange insurance is a type of trucking auto liability insurance that provides financial coverage for physical damage that may be caused to a trailer while it is being hauled by a party that does not own said trailer. Trailer interchange insurance functions similarly to cargo insurance. Example: • Accidents Theft • Accidental fire

The Period of time which elapses between the writing of an Insurance policy and the payment of the claim or between the loss occurrence (or the insurer’s knowledge of the loss) and the payment of the claim. This is also known as the tail length or tail factor of an insurance policy. EXAMPLE: • If…

Losses or Claims that pay out very quickly. These are losses that arise from events that have a short latency period or a short settlement period. EXAMPLE: • Life insurance, Property damage and Automobile liability claims.

RRGS are state chartered and are exempt from having to obtain a state license in every state in which they operate, and also are exempt from state laws that regulate insurance. They are mutual companies, meaning that they are owned by the members of the group. Members of an RRG must be engaged in similar…

The difference between the premium of all the policies and the aggregate loss of all the policies for a particular captive. Example: • If a captive has $10 million in premiums and $8 million in losses, the risk gap is $2 million.

Reinsurance is the transfer of risk from a ceding insurer to a reinsurer. Reinsurance is the insurance of the risks undertaken by insurance companies. Reinsurance company issues the insurance contract to the primary/ceding insurance company. Need for reinsurance: Stabilizing the insurance company results. Increase of capacity by Risk transfer/sharing. Reduction in claims volatility. EXAMPLE: >…

Example: > Quota share treaty is a purest form of a proportional treaty where a certain percentage % of each and every risk is transferred/shared with reinsurer.

Profit commissions are provisions found in some reinsurance agreements that provides for profit sharing. Parties agree to a formula for calculating profit, an allowance for the reinsurer’s expenses, and the cedant’s share of such profit after expenses. Example: • If a reinsurer agrees to pay 20% of its net profit to the cedant after deducting…

This type of insurance coverage designed to protect traditional professionalse.g., physicians) and quasi professionalse.g., real estate brokers) against liability incurred as a result of errors and omissions in performing professional services. Example: • A Doctor misdiagnoses a patient’s persistent headaches as stress-related and advices rest. The patient later has a stroke and discovers that the…

Physical damage insurance is a type of insurance policy that provides coverage for damages to your vehicle caused by accidents, theft, fire, natural disasters, and other incidents. It is usually offered as part of a comprehensive auto insurance policy. Example: > If your car is damaged in an accident, physical damage insurance would cover the…

First party insurance that indemnifies the owner or user of property for its loss, or the loss of its income-producing ability, when the loss or damage is caused by a covered peril, such as fire or explosion and insurance covering loss of income suffered by business when damage to its premises by a covered cause…

P & C insurance is a type of insurance that provides coverage for your assets, such as your home, car, and personal belongings, as well as liability coverage when you’re legally responsible for damages to someone else’s property or another person’s injuries. EXAMPLE: Auto Insurance: Provides coverage for your car in case of an accident,…

Non-trucking liability is a policy that covers you if you cause damage or injury to a third party while you’re driving your truck for personal purposes. It does not provide any coverage when you are using the vehicle for business purposes or when you are hauling cargo. The insurance provides coverage for bodily injury and…

Insurance written by an insurance company not licensed to do business in a certain state or country. In US jurisdictions such insurers can nevertheless write coverage through an excess and surplus lines broker licensed in that jurisdiction. EXAMPLE: • Non- Admitted insurance can create specialty policies. They also cover higher-risk policies and ensure high-risk individuals…

Motor truck cargo insurance is a type of insurance that covers cargo while it is being transported on trucks. It is highly important for shipping companies independent truckers because they often deal with very valuable cargo. This insurance can help cover losses that may occur from accidents or thefts. EXAMPLE: Misdelivery. Damage or loss of…

A Managing General Agency(MGA) is a type of insurance agent or broker that has the authority to underwrite and issue policies on behalf of an insurer. An MGA can also perform other functions, such as settling claims, appointing retail agents, and collecting premiums. An MGA can benefit both insurers and agents by providing specialized expertise,…