Question

What is the difference between each of the following?

1. Admitted and nonadmitted insurers
2. Regulated and nonregulated insurers
3. Surplus lines writers and regulated insurers
4. “File and use” and “prior approval” rate regulation
5. “Twisting” and “rebating”

Answer 1

Admitted And Nonadmitted insurers:

Admitted Insurance companies are approved by a state's insurance department whereas non admitted insurance is not backed by the state.

If there is any defalt by admitted insurance company the state will step in to make payments on the claims whereas in case of momadmitted insurance their is no gurantee of claims on defalt.

Regulated and nonregulated insurers:

Regulated insurers are the one which are regulated by the government or laws.The state regulate insurers in developing the policies and sell the insurance.Whereas in case of nonregulated insurers the state do not regulate or effect the policies of the insurers.The insurers can develop the policies and can sell the insurance as they want to.

Surplus line writers and regulated insurers:

Surplus line insurance protects against a financial risk that is very high for a regular insurance company to take on.Whereas in regulated insurance the financial risk is lower as compared to surplus line insurance.Surplus line writers are costly than regulated insurance as it has high risk.

File and Use and Prior Approval rate regulation:

Under Prior Approval,insurance companies must first obtain approval for any rate change ,with approval requiring the insurer to justify why a rate change is necessary. File and use rating laws allow insurance regulators to let market forces determine rates, while still affording regulators the option of stepping in to ensure that the market is orderly and consumers are protected.

Twisting and Rebating:

Twisting is persuading a policy owner to replace an existing policy with a similar policy issued by another company. Rebating is return of part or all of the premium to the buyer of insurance. Both these activities are illegal.