- Life insurance companies, who sell life insurance, annuities and pension products, and bear similarities for asset management businesses.
- Non-life or property / accident insurance companies who sell other types of insurance.
- Health insurers, who sometimes sell life insurance or employee benefits too
Division of General Insurance companies
General insurance companies can be divided into these sub categories.
- Standard lines
- Extra lines
In most countries, life and non-life insurers are subject to various regulatory regimes and various tax and accounting rules. The main reason for the difference between two types of company is that life, annuity, and pension business are very long in nature – coverage for life assurance or pension can cover risks for many decades. On the contrary, non-life insurance cover usually involves a short period like one year.
Mutual versus proprietary of Insurance companies
Insurance companies are usually classified as either mutual or proprietary companies. Mutual funds are owned by policyholders, whereas shareholders own the insurance companies owned by them.
Mutual holding Insurance companies
In the second half of the 20th century, the democalisation of mutual insurance to make stock companies, as well as the hybrid known as a mutual holding company, became common in some countries. However, all states do not allow mutual holding companies.
Reinsurance companies of Insurance
Reinsurance companies are insurance companies that sell policies to other insurance companies, thereby reducing their risks and avoiding major losses themselves. Some of the big companies in the reinsurance market are dominated by huge reserves. The reinsurer can also be the direct author of insurance risks.
Captive insurance companies
Captive insurance companies can be defined as limited-purpose insurance companies, which are established for the specific purpose of financial risks emerging from their parent groups or groups. This definition can sometimes be extended to include some risks to the parent company’s customers. In essence, this is an in-house self-insurance vehicle. Captive can take the form of a “pure” entity (which is a 100% subsidiary of the self-insured parent company); A “mutual” detainee (which insures the collective risk of members of an industry); And an “association” (which self-insure the personal risks of members of a professional, commercial or industrial union). The captives represent commercial, economic and tax benefits for their sponsors because of the cost reduction they generate flexibility in ease of insurance risk management and cash flows. In addition, they can provide coverage of risks that are neither available in the traditional insurance market nor available at reasonable prices.
Risks may be limited by using reinsurance
Types of risks that a captive can write for their parents include property damage, public and product liability, professional compensation, employee benefits, employer liability, motor and medical assistance expenses. The risk of captive for such risks may be limited by using reinsurance.
Captive risk management and the risk of your parents are becoming an important component of the financing strategy. It can be understood against the following background:
- Huge and increasing premium costs in almost every line of coverage
- Difficulty insuring certain types of risk risks
- Differential coverage standards in different parts of the world
- Rating structures that show market trends rather than personal loss experience
- Insufficient credit for deductibles or loss control attempts
Some other forms of Insurance companies
Other possible forms for an insurance company include reciprocal, in which the policyholders receive and share Lloyd’s organizations.
Admit vs. Non-Admit Insurance Company
Joint insurance companies are those in the United States who have been admitted or licensed by the State Licensing Agency. The insurance they sell is called recruitment insurance. Non licensed companies have not been approved by the State Licensing Agency, but they are allowed to sell insurance under special circumstances when they meet an insurance requirement that the recruitment companies can get or not.
Insurance Company adviser
There are also companies known as “insurance consultants”. Like a mortgage broker, these companies are paid by the customer to make purchases for the best insurance policy among many companies. Like an insurance consultant, an ‘insurance broker’ also makes a purchase for the best insurance policy among several companies. However, with insurance brokers, the fee is usually paid as a commission from the insurer, which is chosen rather than directly selected from the customer.
Insurance Company transactions
Neither insurance consultant nor insurance broker are insurance companies and no risk is transferred to them in insurance transactions. Third party administrators are those companies who underwriting and sometimes claim to handle services for insurance companies. These companies often have special expertise that do not have insurance companies.
Financial stability and rating of Insurance Company
When buying an insurance contract, the financial firmness and robustness of the insurance company should be a major consideration. Currently an insurance premium paid provides coverage for losses which may arise for many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, many insurance companies have become bankrupt, leaving their policyholders with no coverage (or only from government-supported insurance pool, with less attractive payment for coverage or loss, with other arrangements). Many independent rating agencies provide information and rates of financial viability of insurance companies.
Financial instruments issued by the insurance company
a. M. Insurance companies are evaluated by various agencies like BEST. The rating includes the financial strength of the company, which measures its ability to pay claims. It also rates the financial instruments issued by the insurance company, such as bonds, notes and securitization products.