Types of insurers
- Private Insurers
- Federal Government Insurance Programs
- State Government Insurance Programs
Private Insurers
The three major types of private insurers are as follows :
Ø Stock Insurance Companies, which are corporations owned by stockholders
Ø Mutual insurance companies, which are corporations owned by their policy holders
Ø Reciprocal insurance exchanges (also known as inter insurance exchanges), which are unincorporated associations that provide insurance services to their members, often called subscribers.
Other private providers of insurance include Lloyd’s of London, captive insurance companies and reinsurance companies.
Federal Government Insurance Programs
Some federal government insurance programs exist because of the huge amount of financial resources needed to provide certain types of coverage and because the government has the authority to require mandatory coverage.
Social Security is the best example of such a program. Generally, the number of Social Security beneficiaries and the range of coverages are beyond the scope of private insurers.
Additionally, the federal government provides coverage that only certain segments of the population need.
The National Flood Insurance Program provides insurance for owners of property located in flood-prone areas and for others concerned about the exposure of flooding.
The Federal Crop Insurance Program insures farmers against damage to their crops by drought, insects, hail and other causes.
The federal government also insures depositors against loss resulting from the failure or insolvency of banks (through the Federal Deposit Insurance Corporation) and credit unions (through the National Credit Union Administration).
State Government Insurance Programs
State Governments also offer insurance programs to assure the availability of certain types of coverage considered necessary to protect the public.
All states require that employers be able to meet the financial obligations based on workers compensation laws.
Some states sell workers compensation insurance to employers.
In addition, state governments operate unemployment insurance plans, which ensure at least a minimum level of protection for eligible workers who are unemployed.
Fair Access to Insurance Requirements (FAIR) plans have been implemented in many states to provide basic property insurance to property owners who cannot otherwise obtain needed coverage.
Through automobile insurance plans and other programs, states make auto insurance available to drivers who have difficulty obtaining such insurance from private insurers.
FUNDAMENTALS OF INSURANCE
