Types of Insurers Marketing Systems by GarrettPendergast


									Chapter 5 Outline
I.    Overview of Private Insurance in the Financial Services Industry

II.   Types of Private Insurers
      A. Stock Insurers
         1. Ownership and governance—owned by stockholders
         2. Status of the policyowner—contracts are nonassessable
         3. Dominant in property and casualty insurance
      B. Mutual Insurers
         1. Ownership and governance—owned by policyowners
         2. Changing corporate structure of mutual insurers because of mergers,
            demutualization, and formation of mutual holding companies
      C. Lloyd’s of London
      D. Reciprocal Exchange
      E. Blue Cross and Blue Shield plans
      F.   Health Maintenance Organizations (HMOs)
     G. Other types of private insurers
        1. Captive insurer
        2. Savings bank life insurance
III. Agents and Brokers
      A. Legal Status of an Agent
         1. Authorized agent can legally bind the principal to a contract.
         2. Sources of an agent’s authority are express, implied, and apparent powers.
      B. Brokers
         1. Represent insureds, typically business firms and large corporations
         2. May provide services such as risk management, loss control, and knowledge of
            commercial insurance markets
         3. Are important in the surplus lines market

IV. Types of Marketing Systems
      A. Life Insurance Marketing Systems
         1. Agency building system
         2. Nonagency building system
         3. Direct response system
      B. Property and Liability Insurance Marketing Systems
         1. Independent agency system—local agent represents several insurers.
         2. Exclusive agency system—the agent represents only one company or group of
            companies, does not own expirations, gets lower commissions, and, in exchange,
            receives strong support from the company.
         3. Direct writer—the salesperson is an employee, company absorbs all selling
            expenses, and employees are compensated on a salary/bonus basis.
        4. Direct response system—insurers sell to selected market segments using the
           Internet, television, or other mass media.
        5. Multiple distribution system—many insurers are now using more than one
           marketing system to sell insurance.

V.   Group Insurance Marketing

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