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Fundamentals of Insurance

Horizontales
An insurance policy is a formal contract between the insured and the insurer. It specifies the terms, conditions, coverage limits, exclusions, and obligations of both parties. The policy outlines the types of risks covered and details the circumstances under which the insurer will pay for a loss
In insurance, risk refers to the possibility of loss or damage that an insurance policy is designed to protect against. It is the uncertainty regarding a potential negative outcome, such as financial loss, injury, or damage to property. Insurers assess and manage risk to determine appropriate premiums and coverage
The insured is the individual, business, or entity covered under an insurance policy. The insured pays a premium to the insurer in exchange for protection against specific risks, such as damage, loss, or liability, as defined in the policy
The policy effective date is the date on which an insurance policy becomes active and begins providing coverage. From this date, the insured is protected against the risks outlined in the policy, and the insurer is obligated to cover any valid claims that arise during the policy period.
An admitted carrier is an insurance company that is licensed and regulated by the state insurance department in the state where it operates. Admitted carriers must comply with state regulations, including financial solvency requirements and participation in state guaranty funds, which protect policyholders if the insurer becomes insolvent
Premiums are the payments made by the insured to the insurer in exchange for coverage under an insurance policy. The amount of the premium is determined based on factors such as the level of risk, coverage limits, and the insured's claims history. Premiums can be paid periodically (e.g., monthly, quarterly, annually) and are necessary to keep the policy in force
A line of business in insurance refers to a specific category or type of insurance coverage, such as auto insurance, health insurance, life insurance, or commercial property insurance. Each line of business focuses on different types of risks and coverage needs.
Verticales
A carrier is another term for an insurance company or insurer. It refers to the entity that assumes the risk and provides insurance coverage to policyholders
A non-admitted carrier is an insurance company that is not licensed by the state where the insurance is being provided but is allowed to offer coverage on a surplus lines basis. These carriers do not participate in state guaranty funds and are subject to different regulatory requirements, allowing them to provide coverage for higher-risk or unusual situations that admitted carriers might decline
Actuarial science is the discipline that applies mathematical, statistical, and financial theory to assess and manage risk in insurance and finance. Actuaries use these principles to calculate premiums, set reserves, and develop models that predict future claims and financial outcomes for insurers
Underwriting is the process by which an insurer evaluates the risk of insuring an individual or entity and determines the terms and premium for coverage. Underwriters assess factors such as the applicant's health, lifestyle, property, or business operations to decide whether to offer coverage and at what price.
The insured is the individual, business, or entity covered under an insurance policy. The insured pays a premium to the insurer in exchange for protection against specific risks, such as damage, loss, or liability, as defined in the policy
A claim is a formal request made by the insured to the insurer for payment or compensation under the terms of the insurance policy. Claims are made when a covered event, such as an accident, damage, or loss, occurs. The insurer reviews the claim, and if it is valid, issues payment to the insured or a third party.
The National Association of Insurance Commissioners is a U.S. organization composed of state insurance regulators. The NAIC develops model laws and regulations, provides guidance, and facilitates collaboration among states to ensure the consistent and effective regulation of the insurance industry. It plays a key role in protecting consumers and maintaining the stability of the insurance market.