|
|||||
|
|
|
||||
ART INSURANCE SERVICESCAPTIVE/RRG INDUSTRY
DEFINITIONS
Non-Admitted Insurers – Insurance companies not
licensed in a state may engage in business in the state if an admitted,
properly filed company issues the policy and reinsures losses to the
non-admitted reinsurer. Non-Subscriber Workers’
Compensation Plan
– A non-subscriber is an employee who elects, by filing appropriate
notices required by state insurance
authorities, to pay work-related injury loss through some method other than
statutory workers’ compensation. Three
states – Pool – Any joint underwriting
operation of insurance or reinsurance in which the participants assume a
predetermined and fixed interest in all business written. Pure Premium – That portion of the premium
which covers losses and related expenses, i.e. includes no loading for
commissions, taxes, or other expenses. Pure Captive Insurance Company – Any company that insures risks
of its parent and affiliated companies.
Single parent Captive. Reciprocal or Reciprocal Risk
Retention Group –
Some domiciles allow risk retention groups to be formed as reciprocals. A reciprocal risk retention group is an
unincorporated association of individuals or entities that exchange contracts
of insurance through an attorney-in-fact, which acts as an agent or
manager. In a reciprocal, profits
(including investment income) and losses are allocated back to each member’s
subscriber savings account.
Essentially all income (and the related income tax) reverts back to
the members. Thus, the reciprocal
structure may provide a tax advantage to groups whose members are non-profit
entities. An attractive feature of
reciprocals is that new policyholders can join in a way that is fair to both
them and long-standing policyholders because of the way profits and surplus
contributions are accounted for.
Reciprocals can also be more flexible because each one is different,
based on the membership agreements and bylaws. Reciprocals are governed by a few basic
provisions, so management is free to be creative and draft agreements that
fit its particular purpose. |
|||||
|
|
|
BACK – USE ARROW TO PRINT USE PRINT PREVIEW |
|||
