Define and Differentiate some Insurance Terms

15.07.2019
|
0 Comments
||
|

1. Insured:
The insured is the person or entity who is covered by an insurance policy. The insurer is the entity (insurance company)that pays to, or on behalf of the insured for a covered loss. That which is covered by the policy is set forth in the insurance policy. Something that’s insured is protected by an insurance policy — in other words, its loss or damage will be compensated by an insurance company. If your laptop is insured, you’ll get enough money to replace it if it’s stolen. If an insured house burns down or is damaged in a storm, an insurance company will pay to repair or replace it. In exchange, the homeowner pays monthly (or annual) fees. If you have a life insurance policy or insurance that covers your health care, you are also insured. Insured, by way of the verb insure, comes from the original ensure, which has the roots en-, “make,” and sure, “safe, strong, or resolute.”

2. Insurer:
An insurer is a party who agrees to compensate people, companies, or other organizations for specific financial losses. This service is typically provided for an exchange of payments called premiums. The exact perils that are covered and the exact cost of the premiums are laid out in the contractual agreement between the insurer and the insured. Insurers are often large companies who insure many different parties. The more premiums that an insurer has come in, the more money it has available to pay out claims if there is a need to do so. Because typically not every policyholder files claims at the same time, insurers are commonly able to meet their claims obligations with the money they receive from premiums. Insurers often use actuaries and other professionals to help them do the mathematical calculations necessary to make sure they price their premiums correctly to cover all of their risks. Insurers commonly cover perils associated with automobiles, homes, health, businesses, liabilities, and more.

3. Insurance Agency:
An insurance agency, sometimes called an insurance brokerage or independent agency, solicits, writes and binds policies through many different insurance companies. They are not directly employed by the anyone insurance carrier. An example would be Smart Move Insurance, this is an independent insurance agency in Scottsdale, AZ that employs insurance agents or brokers to sell products of different insurance companies that they are appointed with. A Smart Move Insurance agent doesn’t work for any individual insurance carrier, unlike a State Farm, Farmers, or American Family agent that is employed by those companies to only offer their products. These agents are often called captive agents. Agencies can decide which insurance carriers they would like to represent and which personal and business products they would like to offer. This allows their clients to find them the best coverage and price that is available.

4. Agent:
An agent is a person who represents an insurance firm and sells insurance policies on its behalf. Generally, there are two types of such agents who reach prospective parties that may be interested in buying insurance. These are independent agents and captive or exclusive agents. Independent agents may represent many insurance firms and receive a commission for their services accordingly. On the other hand, there are captive agents who are exclusively employed by a particular insurance firm and sell policies of the same. Their services can be rewarded in the form of salary or commission.

5. Broker:
An insurance broker is a specialist in insurance and risk management. Brokers act on behalf of their clients and provide advice in the interests of their clients. Sometimes an insurance broker will act as agent of an insurer, but where this occurs the situation should be fully explained to you. A broker will help you identify your individual and/or business risks to help you decide what to insure, and how to manage those risks in other ways. An insurance broker might specialise in one specific type of insurance or industry, or they might deal with many different types. Insurance brokers can give you technical advice that can be very useful if you need to make a claim.

6. Producer:
An insurance producer is someone who has the proper licensing to sell insurance within a particular state. The term “insurance producer” is interchangeable with “insurance agent” and “insurance representative.” Insurance producers sell insurance products on behalf of insurance companies. Because of this, they must possess a significant amount of knowledge in their particular insurance sub-field. To become an insurance producer, a person must complete the necessary training, pass relevant exams, and obtain a license. After they have done all that, they will be authorized to sell insurance products on behalf of insurance companies. Licenses for insurance producers have to be renewed periodically. Insurance producers often are not actual employees of insurance companies. Instead, they work on a commission basis and sell insurance for multiple insurers.

7. MGA:
A managing general agent (MGA) or a managing general underwriter (MGU) is a specialised type of insurance agent or broker that has been granted underwriting authority by an insurer, according to the International Risk Management Institute (IRMA), and can administer programs and negotiate contracts for an insurer. An MGA’s functions can include binding coverage, underwriting and pricing, settling claims, and appointing retail agents in a certain region, all of which are typically carried out by insurers. At its core, the MGA manages all or part of the insurance business of an insurer and acts as an insurance agent or broker for the insurer, while working as the intermediary between insurers and agents, and/or insureds.

Leave a Reply

Your email address will not be published. Required fields are marked *

Share on:
Share this...
Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin
Website security
Contact Us