Insurance Industry Overview

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This presentation is part of our continuing series of training modules for the Financial Services Industry. The Insurance Industry Overview module provides a quick look at products offered by insurance companies and how insurance companies are organized. We provide training in a wide range of topics targeted at the business lines of financial services companies. Contact us for a quote or a needs analysis. Please email me at: Floyd.saunders@yahoo.com.

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Insurance Industry Overview

  1. 1. Financial Services Industry Training Insurance Industry OverviewDate July 2012 Saunders Learning Group, LLC Saunders Learning Group, LLC, Andover, KS
  2. 2. Training from Saunders Learning Group Saunders Learning Group provides a variety of training programs, workshops and seminars targeted to the financial services industry. Programs are available in a wide range of topics, and we are specialists in developing custom programs that are targeted to your needs. Contact the founder, Floyd Saunders at 316-680-6482 or at floyd@floydsaunders.com for more information. Saunders Learning Group, LLC, Andover, KS1
  3. 3. Topics1. What is Insurance2. Product Lines offered by Insurance Companies3. Types of Insurance4. Insurance Company Organization 1. Stock company 2. Mutual Company Saunders Learning Group, LLC, Andover, KS Slide 2
  4. 4. Module 1 What is Insurance Saunders Learning Group, LLC Saunders Learning Group, LLC, Andover, KSSlide 3
  5. 5. Overview Any risk that can be quantified can potentially beinsured. There is an exhaustive lists of the many differenttypes of insurance that exist. A single policy may cover risks in one or more of the categories set out below. For example, vehicle insurance would typically cover both the property risk (theft or damage to the vehicle) and the liability risk (legal claims arising from an accident). A home insurance policy in the U.S. typically includes:  coverage for damage to the home and the owners belongings  certain legal claims against the owner  coverage for medical expenses of guests who are injured on the owners property. Saunders Learning Group, LLC, Andover, KS
  6. 6. What is Insurance? Insurance is a form of “Risk Sharing”  Everyone pays a little into a insurance fund so that one individual does not have to pay a lot  Insurance is based on statistics gathering and probability of an event occurring  The more likely an event is to occur and cause damage, the higher the cost of insurance  Insurance is based on the idea that you should only risk what you can afford to lose  The more you have to lose, the more you have a need for the protection that insurance provides. Saunders Learning Group, LLC, Andover, KS
  7. 7. “Insurance is the One Thingthat You Buy, that You Hope Never to Use” ~ anonymous Saunders Learning Group, LLC, Andover, KS
  8. 8. Useful Definitions 1. Policy – Insurance Contract 2. Premium – Cost of Having an Insurance Policy 3. Deductible – Cost of Using an Insurance Policy 4. Claim – Act of Using an Insurance Policy 5. Lapsed – A Policy Terminated by Non-payment of Premium 6. Dropped – Disallowed to Renew a Policy 7. Declaration Page – Summary of Policy Terms Saunders Learning Group, LLC, Andover, KS
  9. 9. Module 2 Product Lines Offered by Insurance CompaniesSaunders Learning Group, LLCSaunders Learning Group, LLC, Andover, KS
  10. 10. Consumer Insurance lines Home Insurance Life Insurance Property Insurance Auto Insurance Health Insurance Saunders Learning Group, LLC, Andover, KS
  11. 11. Business Lines of Insurance  Liability insurance  Errors & Omissions  Casualty Insurance  Fire, Theft, Natural Disasters, terrorist  Employee benefits  Health  Dental  Disability  Life Saunders Learning Group, LLC, Andover, KS Slide 10
  12. 12. Module 3 Types of InsuranceSaunders Learning Group, LLCSaunders Learning Group, LLC, Andover, KS
  13. 13. Life Insurance Life insurance provides a benefit (typically money) to a descendants family or other designated beneficiary.  It may specifically provide for income to an insured persons family, burial, funeral and other final expenses.  Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity (or stream of payments over the life of the beneficiary. Saunders Learning Group, LLC, Andover, KS
  14. 14. Types Life Insurance  There are several types of life insurance policies provided by insurance companies. Generally these can be defined as either “Term” policies and “Whole Life” or cash value policies.  Term policies remain in effect for only a certain term (generally years), then expire without a cash payout, unless the policy holders dies during the coverage period. Term is generally cheaper to buy than cash value policies.  A whole life policy covers a policy holder for their entire life and generally accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Saunders Learning Group, LLC, Andover, KS
  15. 15. Home InsuranceHome insurance provides coverage for damage or destruction of thepolicyholders home.  In some geographical areas, the policy may exclude certain types of risks, such as flood or earthquake, that require additional coverage.  The policy may include inventory, or this can be bought as a separate policy, especially for people who rent housing.  In some countries, insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the household, including pets Saunders Learning Group, LLC, Andover, KS
  16. 16. Accident, sickness Insurance Under this category there are four type of insurance are there 1. Health insurance 2. Disability insurance  long term disability  Short term disability  Total Permanent disability 3. Disability overhead insurance 4. Workers compensation insurance Saunders Learning Group, LLC, Andover, KS
  17. 17. Health Insurance Health insurance policies issued by private insurers and/or publicly-funded health programs, such as cost of medical treatments. Dental insurance, like medical insurance, is protects policyholders for dental costs. In the U.S. and Canada, dental insurance is often part of an employers benefits package, along with health insurance Saunders Learning Group, LLC, Andover, KS
  18. 18. Disability insurance Disability insurance policies provide financial support in the event of the policyholder becoming unable to work because of disabling illness or injury.  It provides monthly support to help pay such obligations as mortgage loans and credit cards.  Short-term and long-term disability policies are available to individuals  long-term policies are generally cover the cost of replacing part of your income if you are unable to work for a longer period (generally more than six months).  Short-term disability insurance covers a person for a period typically up to six months, paying a stipend each month to cover medical bills and other necessities Saunders Learning Group, LLC, Andover, KS
  19. 19. Property Insurance Property insurance provides protection against risks to property, such as fire, theft or weather damage. This may include specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler(heating) insurance., be used as a broad category of various subtypes of insurance. Saunders Learning Group, LLC, Andover, KS
  20. 20. Fire Insurance Fire insurance is a insurance that cover property, such as home shop or other fixed asset protection against fire, burn Etc.. It also cover destruction of property due to fire Written for personal and business use. Saunders Learning Group, LLC, Andover, KS
  21. 21. Builder’s Risk insurance Builders risk insurance insures against the risk of physical loss or damage to property during construction. Builders risk insurance is typically written on an "all risk" basis covering damage arising from any not otherwise expressly excluded. Builders risk insurance is coverage that protects a persons or organizations insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from an insured peril. Saunders Learning Group, LLC, Andover, KS
  22. 22. Crop Insurance Crop insurance may be purchased by farmers to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease. Saunders Learning Group, LLC, Andover, KS
  23. 23. Earthquake Insurance Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary home insurance policies do not cover earthquake damage. Earthquake insurance policies generally feature a high deductible. Rates depend on location and hence the likelihood of an earthquake, as well as the construction of the home. Saunders Learning Group, LLC, Andover, KS
  24. 24. Flood insurance Flood insurance protects against property loss due to flooding. Many insurers in the U.S. do not provide flood insurance in some parts of the country. In response to this, the federal government created the National Flood Insurance Program which serves as the insurer of last resort. Saunders Learning Group, LLC, Andover, KS
  25. 25. Marine insurance Marine insurance and marine cargo insurance cover theloss or damage of vessels at sea or on inland waterways, and of cargo intransit, regardless of the method of transit. When the owner of the cargoand the carrier are separate corporations, marine cargo insurancetypically compensates the owner of cargo for losses sustained from fire,shipwreck, etc., but excludes losses that can be recovered from thecarrier or the carriers insurance. Many marine insurance underwriterswill include "time element" coverage in such policies, which extends theindemnity to cover loss of profit and other business expenses attributableto the delay caused by a covered loss. Saunders Learning Group, LLC, Andover, KS
  26. 26. natural disaster insurance natural disaster insurance covers specified expenses after a natural disaster renders the policyholders home uninhabitable. Periodic payments are made directly to the insured until the home is rebuilt or a specified time period has elapsed. Volcano insurance Windstorm insurance Saunders Learning Group, LLC, Andover, KS
  27. 27. Terrorism insurance Terrorism insurance provides protection against any loss or damage caused by terrorist activities. In the U.S. in the wake of 9/11, the Terrorism Risk Insurance Act 2002 (TRIA) set up a federal Program providing a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism. The demand for terrorism insurance surged after 9/11 Saunders Learning Group, LLC, Andover, KS
  28. 28. Auto Insurance - Coverage • Liability Insurance – Legal Requirement • Collision Insurance • Comprehensive Insurance • Medical Payments • Uninsured Motorist Coverage • Rental Reimbursement Saunders Learning Group, LLC, Andover, KS
  29. 29. Liability Insurance • Protects Others • Two Types o Bodily Injury o Property Damage • Limits – Each Person/Aggregate Limit • Legal Requirement in Illinois Saunders Learning Group, LLC, Andover, KS
  30. 30. Collision Coverage • Protects Your Vehicle • Two Types o Actual Cash Value o Replacement Cost Saunders Learning Group, LLC, Andover, KS
  31. 31. Comprehensive Coverage • Coverage for Problems Other than Driving • Theft, Fire, Etc. • Two Types o Actual Cash Value o Replacement Cost Saunders Learning Group, LLC, Andover, KS
  32. 32. Medical Payments • Medical Costs for People Involved in an Accident • Each Person Saunders Learning Group, LLC, Andover, KS
  33. 33. Uninsured/Underinsured Motorist Coverage • Protects You From Others • Uninsured vs. Underinsured • Each Person/Aggregate Limit Saunders Learning Group, LLC, Andover, KS
  34. 34. Module 4 Insurance Company OrganizationSaunders Learning Group, LLCSaunders Learning Group, LLC, Andover, KS
  35. 35. Growth and Organizationof Insurance Companies Insurance companies may be organized in two difference ways:  A stock company is owned by shareholders and has a profit motive  A mutual insurance company is owned by the policyholders and attempts to provide the lowest cost insurance Insurance companies grew until 1988, and have since fallen steadily. Most insurance companies are Stock companies. With very few mutual insurance companies remaining. Saunders Learning Group, LLC, Andover, KS
  36. 36. Insurance Agents Insurance companies strong sales force:  Independent agents may sell the insurance products of a number of different insurance companies.  Exclusive agents only sell the products of one company.  An underwriter reviews each policy prior to its acceptance to determine if the risk is acceptable. Saunders Learning Group, LLC, Andover, KS
  37. 37. Growth and Organization of Insurance CompaniesCopyright © 2009 Group, LLC, Andover, KS Hall. All rights Saunders Learning Pearson Prentice 22-36reserved.
  38. 38. Life Insurance:Company Assets and Liabilities Life insurance companies derive funds from two sources:  They receive premiums that must be used to payout future claims when the insured dies  They receive premiums paid into pension funds managed by the life insurance company• The distribution of the typical life insurance company’s assets, as well as assets invested in mortgages. Saunders Learning Group, LLC, Andover, KS
  39. 39. Questions Saunders Learning Group, LLC, Andover, KS
  40. 40. Thank You !Saunders Learning Group, LLCSaunders Learning Group, LLC, Andover, KS

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