Insurance Industry Overview

Saunders Learning Group, LLC, Andover, KSSaunders Learning Group, LLC

Insurance Industry Overview

Date July 2012

Financial Services Industry Training

Saunders Learning Group, LLC, Andover, KS

Saunders Learning Group provides a variety of training programs, workshops and seminars targeted to the financial services industry.

Programs are available in a wide range of topics, and we are specialists in developing custom programs that are targeted to your needs.

Contact the founder, Floyd Saunders at 316-680-6482 or at [email protected] for more information.

2

Training from Saunders Learning Group

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1. What is Insurance2. Product Lines offered by Insurance Companies3. Types of Insurance 4. Insurance Company Organization

1. Stock company2. Mutual Company

Slide 3

Topics


Module 1 What is Insurance

Confidential and ProprietarySlide 4


Overview

Any risk that can be quantified can potentially be

insured. There is an exhaustive lists of the many different types of insurance that exist.

A single policy may cover risks in one or more of the

categories set out below. For example, vehicle insurance would typically cover both the

property risk (theft or damage to the vehicle) and the liability risk (legal claims arising from an accident).

A home insurance policy in the U.S. typically includes: coverage for damage to the home and the owner's belongings certain legal claims against the owner coverage for medical expenses of guests who are injured on

the owner's property.


What is Insurance?

Insurance is a form of “Risk Sharing” Everyone pays a little into a insurance fund so that one individual does not

have to pay a lot Insurance is based on statistics gathering and probability of an event

occurringThe more likely an event is to occur and cause damage, the higher the cost of

insurance Insurance is based on the idea that you should only risk what you can afford

to loseThe more you have to lose, the more you have a need for the protection that

insurance provides.


“Insurance is the One Thing that You Buy, that You Hope Never to Use”

~ anonymous


Useful Definitions

1. Policy – Insurance Contract2. Premium – Cost of Having an Insurance Policy3. Deductible – Cost of Using an Insurance Policy4. Claim – Act of Using an Insurance Policy5. Lapsed – A Policy Terminated by Non-payment of

Premium6. Dropped – Disallowed to Renew a Policy7. Declaration Page – Summary of Policy Terms


Module 2 Product Lines Offered by

Insurance Companies


Consumer Insurance lines

Home Insurance Life Insurance

Property Insurance

Health Insurance

Auto Insurance


Business Lines of Insurance

Liability insurance Errors & Omissions Casualty Insurance

Fire, Theft, Natural Disasters, terrorist

Employee benefits Health Dental Disability Life

Slide 11


Module 3 Types of Insurance


Life Insurance

Life insurance provides a benefit (typically money) to a descendant's family or other designated beneficiary. It may specifically provide for income to an insured person's family, burial, funeral

and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the

beneficiary either in a lump sum cash payment or an annuity (or stream of payments over the life of the beneficiary.


Types Life Insurance

There are several types of life insurance policies provided by insurance companies. Generally these can be defined as either “Term” policies and “Whole Life” or cash value policies. Term policies remain in effect for only a certain term (generally years),

then expire without a cash payout, unless the policy holders dies during the coverage period. Term is generally cheaper to buy than cash value policies.

A whole life policy covers a policy holder for their entire life and generally accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against.

http://en.wikipedia.org/wiki/Cash


Home Insurance

Home insurance provides coverage for damage or destruction of the policyholder's home.

In some geographical areas, the policy may exclude certain types of risks, such as flood or earthquake, that require additional coverage.

The policy may include inventory, or this can be bought as a separate policy, especially for people who rent housing.

In some countries, insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the household, including pets


Accident, sickness Insurance

Under this category there are four type of insurance are there1. Health insurance2. Disability insurance

long term disabilityShort term disabilityTotal Permanent disability

3. Disability overhead insurance4. Workers' compensation insurance


Health Insurance

Health insurance policies issued by private insurers and/or publicly-funded health programs, such as cost of medical treatments.

Dental insurance, like medical insurance, is protects policyholders for dental costs. In the U.S. and Canada, dental insurance is often part of an employer's benefits package, along with health insurance


Disability insurance

Disability insurance policies provide financial support in the event of the policyholder becoming unable to work because of disabling illness or injury.

It provides monthly support to help pay such obligations as mortgage loans and credit cards.

Short-term and long-term disability policies are available to individuals long-term policies are generally cover the cost of replacing part of your income if

you are unable to work for a longer period (generally more than six months). Short-term disability insurance covers a person for a period typically up to six

months, paying a stipend each month to cover medical bills and other necessities


Property Insurance

Property insurance provides protection against risks to property, such as fire, theft or weather damage.

This may include specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler(heating) insurance., be used as a broad category of various subtypes of insurance.

http://en.wikipedia.org/wiki/Fire

http://en.wikipedia.org/wiki/Theft

http://en.wikipedia.org/wiki/Weather

http://en.wikipedia.org/wiki/Flood_insurance

http://en.wikipedia.org/wiki/Earthquake_insurance

http://en.wikipedia.org/wiki/Home_insurance

http://en.wikipedia.org/wiki/Boiler_insurance

http://en.wikipedia.org/wiki/Boiler_insurance


Fire insurance is a insurance that cover property, such as home shop or other fixed asset protection against fire, burn Etc..

It also cover destruction of property due to fire Written for personal and business use.

Fire Insurance


Builder's risk insurance insures against the risk of physical loss or damage to property during construction.

Builder's risk insurance is typically written on an "all risk" basis covering damage arising from any not otherwise expressly excluded.

Builder's risk insurance is coverage that protects a person's or organization's insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from an insured peril.

Builder’s Risk insurance


Crop Insurance

Crop insurance may be purchased by farmers to reduce or manage various risks associated with growing crops.

Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease.


Earthquake Insurance

Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property.

Most ordinary home insurance policies do not cover earthquake damage. Earthquake insurance policies generally feature a high deductible.

Rates depend on location and hence the likelihood of an earthquake, as well as the construction of the home.


Flood insurance

Flood insurance protects against property loss due to flooding. Many insurers in the U.S. do not provide flood insurance in some parts of the country. In response to this, the federal government created the National Flood Insurance Program which serves as the insurer of last resort.


Marine insurance

Marine insurance and marine cargo insurance cover the loss or damage of vessels at sea or on inland waterways, and of cargo in transit, regardless of the method of transit. When the owner of the cargo and the carrier are separate corporations, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance. Many marine insurance underwriters will include "time element" coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss.


natural disaster insurance

natural disaster insurance covers specified expenses after a natural disaster renders the policyholder's home uninhabitable. Periodic payments are made directly to the insured until the home is rebuilt or a specified time period has elapsed.

Volcano insurance Windstorm insurance


Terrorism insurance provides protection against any loss or damage caused by terrorist activities.

In the U.S. in the wake of 9/11, the Terrorism Risk Insurance Act 2002(TRIA) set up a federal Program providing a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism.

The demand for terrorism insurance surged after 9/11

Terrorism insurance

http://en.wikipedia.org/wiki/9/11


Auto Insurance - Coverage

• Liability Insurance – Legal Requirement• Collision Insurance• Comprehensive Insurance• Medical Payments• Uninsured Motorist Coverage• Rental Reimbursement


Liability Insurance

• Protects Others• Two Types

o Bodily Injuryo Property Damage

• Limits – Each Person/Aggregate Limit• Legal Requirement in Illinois


Collision Coverage

• Protects Your Vehicle• Two Types

o Actual Cash Valueo Replacement Cost


Comprehensive Coverage

• Coverage for Problems Other than Driving• Theft, Fire, Etc.• Two Types

o Actual Cash Valueo Replacement Cost


Medical Payments

• Medical Costs for People Involved in an Accident

• Each Person


Uninsured/Underinsured Motorist Coverage

• Protects You From Others• Uninsured vs. Underinsured• Each Person/Aggregate Limit


Module 4Insurance Company

Organization


Growth and Organization of Insurance Companies Insurance companies may be organized in two

difference ways:A stock company is owned by shareholders and has a

profit motiveA mutual insurance company is owned by the

policyholders and attempts to provide the lowest cost insurance

Insurance companies grew until 1988, and have since fallen steadily.

Most insurance companies are Stock companies. With very few mutual insurance companies remaining.


Insurance Agents

Insurance companies strong sales force: Independent agents may sell the insurance products of a

number of different insurance companies. Exclusive agents only sell the products of

one company. An underwriter reviews each policy prior to its

acceptance to determine if the risk is acceptable.


Life Insurance: Company Assets and Liabilities Life insurance companies derive funds from

two sources:They receive premiums that must be used to

payout future claims when the insured diesThey receive premiums paid into pension funds

managed by the life insurance company

• The distribution of the typical life insurance company’s assets, as well as assets invested in mortgages.


Questions


Thank You !

Insurance Industry Overview

Economy & Finance

Transcript of Insurance Industry Overview