What is the expense ratio in the insurance industry?

July 7, 2024 No Comments

A: The expense ratio in the insurance industry is a measure of profitability calculated by dividing the expenses associated with acquiring, underwriting and servicing premiums by the net premiums earned by the insurance company. The expenses can include advertising, employee wages and commissions for the

What is the main business model for insurance companies?

July 7, 2024 No Comments

A: Insurance companies base their business models around assuming and diversifying risk. The essential insurance model involves pooling risk from individual payers and redistributing it across a larger portfolio. Most insurance companies generate revenue in two ways: Charging premiums in exchange for insurance coverage, then reinvesting

What effect did the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 have on debtors?

July 7, 2024 No Comments

A: Credit card companies and banks hate deadbeats who take from their bottom lines. They especially dislike the Chapter 7 bankruptcy that discharges a debtor and, if he or she has no saleable assets, eliminates their chances of reclaiming even a portion of the debt.

What impact have terrorist attacks had on the insurance industry?

July 7, 2024 No Comments

A: Terrorism has led to massive losses for the insurance industry. The attacks on Sept. 11, 2001 totaled $31.6 billion in costs for the insurance industry when taking all claims into account. Stemming from this incident, the Terrorism Risk Insurance Act was passed to share

What is a “force majeure”?

July 7, 2024 No Comments

A: A force majeure is derived from the French term meaning “greater force” and refers to any natural and unavoidable catastrophe. A force majeure clause is included in contracts to remove liability when such events restrict participants from fulfilling their obligations. When negotiating these clauses,

What is a gatekeeper?

July 7, 2024 No Comments

A: There are two definitions of the term “gatekeeper,” one used in relation to health insurance and one regarding long-term care plans. When used in relation to health insurance, gatekeeper describes the person in charge of a patient’s treatment. Anyone who receives health insurance coverage in the form

What is an elimination period?

July 7, 2024 No Comments

A: Elimination period is a term used in insurance to refer to the time period between an injury and the receipt of benefit payments. In other words, it is the length of time between the beginning of an injury or illness and receiving benefit payments

What is authorized stock?

July 7, 2024 No Comments

Authorized stock represents the maximum number of common shares that can be issued legally by the company as stated in the company’s charter. The number of authorized shares that is identified in the company’s charter often greatly exceeds the number of shares that is issued

What is disability-income insurance?

July 7, 2024 No Comments

Disability-income insurance is insurance that provides financial benefits to a policyholder in the event of sickness or injury that inhibits the ability to work. Disability-income insurance is meant as a substitute of no more than 80% of income on a tax-free basis should illness keep

What is happening during a risk repricing?

July 7, 2024 No Comments

During a strong bull market, the market’s overall sense of optimism can often lead to poor estimates about the level of risk that an investment may possess. Unfortunately, once a market correction occurs, investors will often realize that they have been exposed to more risk

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