Many insurance consumers will never need to deal with the concept of retail brokers versus wholesale insurance brokers. An insurance broker is the agent of the insured and can submit applications for coverage to insurers for which the broker does not have an agency appointment. Some insurers will only accept applications from a broker with which they have an agency relationship. In addition, coverages can be placed with non-admitted insurers only through an excess or surplus lines broker. (more…)

Insurers also face risk in their investments. They may earn more or less than expected on any particular asset and even on their entire portfolio. Insurers with relatively risky insurance portfolios tend to earn higher returns in compensation, but by definition are subject to greater inter-period fluctuations in losses. If investment earnings fall too far below the expectations used to set premiums, the insurer may go bankrupt. One way to decrease the probability of bankruptcy is to hold more equity (or retained surplus) that can be used to cover an unanticipated increase in underwriting loss (or fall in investment return). (more…)

All businesses are risky. But risk is the essence of insurance. It is the nature risk of insurance products that make it such an interesting business. Investors and managers must decide in advance what goods or services to produce, and how, in light of expected sales even further in the future. Insurers, however, have to make such projections not only on production and sales, but also about developments even beyond the point of sale. Any insurance product is unusual in that, even at the point of sale, the cost of production is not known. Product development, sales, and certain administrative expenses are incurred up front. However, the major expense is not such “loading,” but rather future payments to policyholders on claims plus the associated cost of resolving those claims. (more…)

Because senior people are better risks, several big insurance companies make premium discounts available to people smart enough and aggressive enough to ask for them. More and more insurance companies are offering senior insurance discounts like auto insurance discounts, car insurance discounts, health insurance discounts, homeowners insurance discounts, etc. (more…)

Profitability in the insurance industry is determined by combining both underwriting results and investment results. Despite incurring substantial underwriting losses over the 10-year period 1976 through 1985, the property/casualty insurance industry has more than offset those aggregate losses with investment gains. The underwriting losses resulted, in part, from the industry’s cash flow underwriting pricing strategy in which companies sacrificed underwriting gains in an attempt to attract more business and thereby enhance investment gains. We estimate that the industry had about $81 billion in after-tax income over this period. Because of the cyclical character of the industry’s underwriting experience, we believe that data covering longer periods, rather than concentrating on the last few years, provide better perspective on the industry’s profitability. (more…)

People over 50 have a growing need for asset protection because they have more assets worth protecting. But professionals who work in the field say that insurance coverage spreads unevenly along income insurances lines. More affluent seniors tend to be heavily-insured; less affluent ones tend to be under-insured. This discrepancy reflects the insurance market at large. It may have special meaning to people planning their lives around fixed family incomes. (more…)

Insurance riders are valuable options that you can choose as additional to basic insurance contract you have. By having insurance riders, you as the insurance holder will get more benefits as extra to you basic policy. Some of insurance riders are so common that they are naturally inserted as part of the policy. Additional premium are quoted as component of the whole insurance policy premium. This give the policy holder less total premium compare of buying a separate stand alone insurance policy. Below are some several insurance riders that can be found on most insurance providers to give additional benefits for you: (more…)

Surety Association of America determine bonds’ rate. Fire insurance company offered fire insurance rates which actually decided and regulated by regional, state-wide inspection rating bureaus. Rating bureau company determines the rate by first gathering statistics then formulate rates to be implemented in an approved policy forms. This organization is not only responsible for setting insurance rate, but also involved in standardization of insurance policies. This is one of main function of rating bureaus which make it easier for insurance companies to measure rate and contracts with market condition. (more…)