CONTENTS
SECTION ONE RISK, INSURANCE, AND RISK MANAGEMENT
Uncertainty and Its Relationship to Risk
Risk Distinguished from Peril and Hazard
The Growing Number and Variety of Pure Risks
Important Concepts to Remember
Chapter 2 Introduction to Risk Management
The History of Modern Risk Management
Risk Management as a Business Function
Risk Management's Contribution to the Organization
Misconceptions About Risk Management
Risk Management and the Individual
Consideration of Alternatives and Selection of the Risk Treatment Device
Implementation of the Decision
Chapter 3 The Insurance Device
The Nature and Functions of Insurance
Risk Sharing and Risk Transfer
Insurance Defined from the Viewpoint of the Individual
Risk Reduction Through Pooling
Insurance Defined from the Viewpoint of Society
Insurance: Transfer or Pooling?
The Economic Contribution of Insurance
Public Guarantee Insurance Programs
Similarities in the Various Fields of Insurance
Chapter 4 Risk Management Applications
Utility Theory and Risk Management Decisions
Decision Theory and Risk Management Decisions
Risk Characteristics as Determinants of the Tool
The Special Case of Risk Reduction
Common Errors in Buying Insurance
Other Considerations in the Choice Between Insurance and Retention
Selecting the Agent and the Company
Alternatives to Commercial Insurance
Chapter 5 The Private Insurance Industry
A Brief History of Private Insurance
Origins of the Modern Insurance Business
Insurance in the United States
Classification of Private Insurers
Classification by Type of Product
Classification by Place of Incorporation and Licensing
Insurers Classification by Legal Form of Ownership
Life Insurance Distribution System
Property and Liability Distribution Systems
Insurance Marketing and the Internet
Cooperation In the Insurance Industry
Distressed and Residual-Risk Pools
Competition In the Insurance Industry
Is the Insurance Industry Really Competitive?
Chapter 6 Regulation of the Insurance Industry
The Why of Government Regulation of Insurance
The Why of Regulation Generally
Approaches to Government Control of Business
Rationale for Regulation of the Insurance Industry
A Brief History of Insurance Regulation
The Current Regulatory Structure
National Association of Insurance Commissioners
State Versus Federal Regulation
Pressure for Repeal of the McCarran-Ferguson Act
Arguments Favoring Federal Regulation
Arguments Favoring State Regulation
Consequences of the Repeal of the McCarran-Ferguson Act
Repeal of the McCarran-Ferguson Act as a States-Rights Issue
The NAIC's Efforts to Modernize State Insurance Regulation
State versus Federal Regulation and Public Choice
Global Influences On Insurance Regulation
Appendix: The Availability/Affordability Debate
Existing Subsidies in the Insurance Market
Income Redistribution Effects of Subsidies in Insurance
Causes of Availability Problems
Causes of Affordability Problems
Availability and Affordability and Public Choice
Chapter 7 FUNCTIONS OF INSURERS
The Agent's Role in Underwriting
Courses of Action in Claim Settlement
Difficulties in Loss Settlement
Appendix: Retrospective Rating Plans
Chapter 8 Financial Aspects of Insurer Operations
Statutory Accounting Requirements
Differences Between Statutory Accounting and GAAP
Property and Liability Insurers
Life Insurers' Policyholders' Surplus
Life Insurer Summary of Operations
Surplus Drain in Life Insurance
Reinsurance in Property and Liability Insurance
Risk-Financing Alternatives to Reinsurance
Taxation of Insurance Companies
Insurance and the Law of Contracts
General Requirements of an Enforceable Contract
Special Legal Characteristics of Insurance Contracts
Insurance Is a Contract of Indemnity
Insurance Is a Personal Contract
Insurance Is a Unilateral Contract
Insurance Is a Conditional Contract
Insurance Is a Contract of Adhesion
Insurance Is an Aleatory Contract
Insurance Is a Contract of Utmost Good Faith
The Insurance Contract as a Contract
SECTION TWO LIFE AND HEALTH INSURANCE
Chapter 10 Managing Personal Risks
Objectives In Managing Personal Risks
Other Steps In Managing Personal Risks
Managing Risks Associated With Premature Death
Identifying Risks Associated with Premature Death
Measuring Risks Associated with Premature Death
The Risk of Outliving the Retirement Accumulation
Estimating the Accumulation Need
The Risks Associated With Disability
Needs Analysis for the Disability Risk
Resources Available to Meet the Disability Risk
Addressing Unmet Disability Income Needs
Evaluating the Medical Expense Exposure
Managing the Risk of Unemployment
State Unemployment Insurance Programs
Chapter 11 Social Insurance Programs
Old-Age, Survivors, Disability, and Health Insurance
Eligibility and Qualification Requirements
Summary of Qualification Requirements
Loss of Benefits—the OASDHI Program
Rationale of Workers Compensation Laws
Principles of Workers Compensation
An Overview of State Workers Compensation Laws
Chapter 12 Introduction to Life Insurance
Some Unique Characteristics of Life Insurance
Life Insurance Is Not a Contract of Indemnity
Types of Life Insurance Contracts
Reasons for Difference in Term and Cash Value Insurance
Tax Treatment of Life Insurance
Code Definition of Life Insurance
Current Life Insurance Products
Participating and Nonparticipating Life Insurance
General Classifications of Life Insurance
Total Life Insurance in Force in the United States
Chapter 13 The Actuarial Basis of Life Insurance
Life Insurance Premium Computation
Reserves On Life Insurance Policies
Benefit-Certain and Benefit-Uncertain Contracts
Chapter 14 The Life Insurance Contract—General Provisions
Inception of the Life Insurance Contract
General Provisions of Life Insurance Contracts
Installments for a Fixed Period
Installments of a Fixed Amount
Taxation of Policy Proceeds under Various Settlement Options
Chapter 15 The Life Insurance Contract—Other Provisions
Disability Waiver of Premium Provision
Guaranteed Insurability Option
Rights of Creditors to Life Insurance Proceeds
Universal Life Policy Provisions
Premium and Cost of Insurance Provision
Changes in the Amount of Insurance
Universal Life Insurance with Secondary Guarantees
Index Universal Life Insurance
Chapter 16 Special Life Insurance Forms
Joint Mortgage Protection Policy
Return-of-Premium and Return-of-Cash-Value Policy
Indeterminate Premium Policies
Low-Load and No-Load Life Insurance
Advantages and Disadvantages of Special Forms
Chapter 17 Buying Life Insurance
Decisions In Buying Life Insurance
Buy Term and Invest the Difference?
Life Insurance as an Investment
The NAIC Life Insurance Illustrations Model Regulation
NAIC Model Replacement Regulation
Shopping for Universal and Variable Life
Some Additional Tax Considerations
Section 1035 Exchanges (“Rollovers”)
Life Insurance and Divorce Agreements
Chapter 18 Annuities and Pension Benefits
Income Tax Treatment of Annuities
Annuities and the Federal Estate Tax
Annuities as Investments for Retirement
A General Overview of Qualified Plans
Basic Types of Qualified Plans
Significance of the Nature of the Employer's Promise
Other Types of Qualified Plans
Other Requirements for Qualified Retirement Plans
Required Joint-and-Survivor Option
Individual Retirement Accounts
Chapter 19 Managing the Retirement Risk
An Overview of the Retirement Risk
Two Risks Associated with Retirement
An Overview of the Retirement Planning Process
Countering the Urgency Deficit
Constructing a Retirement Plan
Planning the Retirement Accumulation
Planning the Retirement Distribution
Chapter 20 Health Insurance: Disability Income Insurance
General Nature of Disability Income Insurance
Need for Disability Income Insurance
Short-Term versus Long-Term Disability Coverage
Disability Income Underwriting and Pricing
Limitations on Amount of Coverage
Definitions of Disability Income Policies
Exclusions in Disability Income Contracts
Payments for Other Than Total Disability
Individual Health Insurance Policy Provisions
Individual Health Insurance Continuance Provisions
Programming and Buying Disability Income Insurance
Determining Disability Income Coverage Needs
Evaluating Existing Sources of Protection
Cost of Disability Income Insurance
Chapter 21 Health Insurance: Coverage for Medical Expenses
Background On the Current Health Insurance Market
Historical Development of Health Insurance in the United States
Employer-Provided Health Insurance
Exclusions under Health Insurance Policies
Other Medical Expense Coverages
Limited Health Insurance Policies
Limited Policies—Prescription Drugs
Deficiencies In the System and Prior Reform Efforts
The Patient Protection and Affordable Care Act of 2010 (The Aca)
Chapter 22 Health Insurance for the Elderly
Traditional Program Medicare Supplement Policies
Part D—Prescription Drug Coverage
The Financial Condition of Medicare
Nature of the Long-Term Care Exposure
Inadequacy of Medicare for Long-Term Care Needs
The Life Insurance Accelerated Benefits Alternative to LTC
Spousal Impoverishment Provisions
Long-Term Care Partnership Programs
Chapter 23 Employee Benefits and Other Business Uses of Life and Health Insurance
Group Life and Health Insurance as Employee Benefits
Survivor Income Benefit Insurance
Funding through a 501(c)(9) Trust
Legislation Affecting Pension Plans
Trusts and Insurance Companies
Erisa Pension Plan Termination Insurance
Accounting For Defined Benefit Plans
Plan De-Risking and Longevity Risk Transfer
Cafeteria Employee Benefit Plans
Some Specialized Uses of Life Insurance in Business
Business Continuation Insurance
Corporate-Owned Life Insurance
SECTION THREE PROPERTY AND LIABILITY INSURANCE
Chapter 24 The Homeowners Policy—General Provisions
General Nature of the Homeowners Program
Section I Coverages: An Overview
Dwelling and Other Structures Coverage
General Conditions Applicable to Sections I and II
Chapter 25 The Homeowners Policy Forms
Differences Among Homeowners Forms
Homeowners 4 Contents Broad Form
Homeowners 5 Comprehensive Form
Homeowners 6 Condominium Unit-Owners Form
Homeowners 8 Modified Coverage Form
Homeowners Section I Optional Coverages
Chapter 26 Other Personal Forms of Property Insurance
Monoline Fire Dwelling Program
Coverages under the Dwelling Program
Endorsements to the Dwelling Program Forms
Inland Marine Coverage For the Individual
Personal Inland Marine Floaters
Scheduled Personal Property Endorsement
Buying Property Insurance For the Individual
Pricing and Cost Considerations
Tailoring the Coverage under the Homeowners Policy
Chapter 27 Negligence and Legal Liability
Criminal and Tortious Behavior
Negligence and Legal Liability
Negligence Must Be the Proximate Cause of the Damage
Possible Changes In the Tort System
Chapter 28 General Liability Insurance for the Individual
Liability Insurance In General
Comprehensive Personal Liability Coverage
General Nature of the Coverage
Cost of Personal Liability Insurance
Optional Personal Liability Endorsements
Professional Liability Insurance
Errors and Omissions Insurance
Exclusions under the Umbrella Liability Policy
Chapter 29 The Automobile and its Legal Environment
A Brief Overview of Automobile Coverages
Automobile Liability Insurance
Legal Liability and the Automobile
Vicarious Liability and the Automobile
Automobile Liability Insurance and the Law
Insurance for High-Risk Drivers
The Automobile Insurance Problem and Changes in the Tort System
Criticisms of the Traditional System
The Shifting View of Auto Insurance
Chapter 30 The Personal Auto Policy
General Nature of the Personal Auto Policy
Other Liability Coverage Provisions
Medical Payments Insurance Agreement
Limitations Applicable to Medical Payment Recoveries
Uninsured Motorist Insuring Agreement
Underinsured Motorist Coverage
Physical Damage Insuring Agreement
Other Physical Damage Provisions
Part E—Duties after an Accident or Loss
Miscellaneous Type Vehicle Endorsement
Cost Differences among Companies
Chapter 31 COMMERCIAL PROPERTY INSURANCE
Commercial Property Direct Loss Coverages
Commercial Property Coverage Policies
Building and Personal Property Coverage Form
Condominium Association Coverage Form
Condominium Commercial Unit-Owner's Coverage Form
Commercial Property Coverage For Indirect Loss
Business Interruption Insurance
Contingent Business Interruption and Extra Expenses
Boiler and Machinery Insurance
The ISO Breakdown Protection Coverage Form
Direct Damage Equipment Coverages
Indirect Loss Boiler and Machinery Coverages
The National Flood Insurance Program
The General Property Form Flood Insurance Policy
Dishonesty Insurance Coverage Triggers
The ISO Crime Insurance Program
Package Policies For Business Firms
Chapter 32 Commercial Liability Insurance
Employers Liability and Workers Compensation
Commercial General Liability Coverage
Occurrence-First-Reported Coverage
Other Portfolio Liability Coverages
Miscellaneous General Liability Coverages
Commercial Automobile Insurance
Excess Liability and Umbrella Liability Coverage
Excess Liability Distinguished from Umbrella Liability Contracts
Chapter 33 Surety Bonds, Trade Credit, and Financial Guaranty Insurance
Suretyship Distinguished from Insurance
Specific-Account versus Whole-Turnover Coverage
Proportional versus Excess-of-Loss Coverage
Credit Insurance in Securitization of Accounts Receivable