HW_3 genral insurnce

FIN 3610 General Insurance

Chapter 5: Types of Insurers and Marketing Systems

Lecture Overview – Comments from Professor Zietz

 

Let’s examine the different types of Insurers and

Marketing Systems through which Insurance is Available!

           

In this chapter, we will overview the use of private insurance in the financial service industry; give examples of types of private insurers; expand on agents and brokers; see examples of types of marketing systems; and explaining group insurance marketing.

There are a myriad of ways to classify insurance companies, including the type of insurance coverage that it offers, the type of insurance services that it offers, the ownership of the company, and the location in which the company is domiciled.

The types of classifications of private insurers discussed in this chapter include:

· Stock insurers

· Mutual Insurers

· Reciprocal Exchanges

· Lloyd’s associations

· Blue Cross and Blue Shield plans, and

· Health Maintenance Organizations.

These classifications may greatly influence things like how much coverage the company can write and how much the premiums or income is taxed. This chapter provides a great overview of the differences between the corporate structures of the company. Carefully peruse the information in the Exhibits 5.1-5.3 for some interesting details on these classifications.

 

Quick Question:   What is the largest U.S. Property/Casualty Company in Revenues?

How many of you thought it was Berkshire Hathaway? I’m sure you were surprised by that ranking. Note that MetLife is the largest U.S. Life and Health Insurance Company.

The second part of this chapters delves into the types of marketing systems used in the distribution of insurance. If you have had a marketing class, you’ll see some familiar information. However, you will also see that the marketing systems in insurance also use some new terms, including Personal Selling Systems such as Career Agents, Multiple Line Exclusive Agents, Independent agents, Personal Producing General Agents, and Brokers. It is very important to note the difference between these types of systems. The major distribution systems for Property and Casualty (P/C) generally include these types of systems:

· Independent agency system

· Exclusive agency system

· Direct Writers

· Direct response system

· Multiple distribution systems

 

If you find yourself in the insurance industry, perhaps wanting to have your own business or agency, it will be important to note the differences, including the advantages and disadvantages of each of these.

The insurance industry offers a wide array of professional career paths in the area of sales! We’ll talk more about other career choices in the next chapter when we cover Insurance Company Operations.