A large number of private insurers are currently doing business in the United States. in 2010, 1061 life and health insurers were doing business in the United States. These insurers sell a variety of life and health insurance products, annuities, mutual funds, pension plans and related financial products.
In 2010, 2689 property and casualty insurance and related lines, including inland marine coverages and surely and fidelity bonds. There are various ways of classifying insurance companies. In terms of legal ownership and structure, the major types of private insurers can be classified as follows;
- Stock insurers.
- Mutual Insurers.
- Lloyd’s of London.
- Reciprocal exchanges.
- Blue cross and Blue shield Plans.
- Health Maintenance organizations.
- Other types of private insurers.
Stock Insurers; A stock insurer is a corporation owned by stockholders. The objective is to earn profits for the stockholders. The stockholders elect a board of directors who in turn appoint executive offices to manage the corporation. The board of directors has ultimate responsibility for the corporation’s financial success. If the business is profitable, dividends can be declared and paid to the stockholders; the value of the stock may also increase. Like wise the value of the stock may decline if the business is unprofitable.
Mutual Insurers; A mutual insurer is a corporation owned by the policyholders. There are no stockholders. The policyholders elect a board of directors who appoint executives to manage the corporation. Because relatively few policyholders bother to vote the board of directors has effective management control of the company. A mutual insurer may pay dividends to the policyholders or give a rate reduction in advance.
Lloyd’s of London is not an insurer, but is the world’s leading insurance market that provides services and physical facilities for it’s members to write specialized lines of insurance. It is a market where members to join together to form syndicates to insure and pool risks. Members include some of the world’s major insurance groups and companies listed on the London Stock Exchanges, as well as individuals and limited partnerships.
Reciprocal Exchange; A reciprocal exchange is another type of private insurer. A reciprocal exchange can be defined as an unincorporated organization in which insurance is exchanged among the numbers. In it’s basic form, insurance is exchanged among the members; each member of the reciprocal insurers the other members and in turn is insured by them. Thus there is an exchange of insurance promises-hence the name reciprocal exchange.
Blue Cross and Blue Shield Plans; Blue Cross and Blue Shield plans are another type of insurer organizations. In most states, Blue cross plans generally are organized as non profit community oriented prepayment plans that provide coverages primarily for hospital services.
Health Maintenance Organizations; HMO are organized plans of health care that provide comprehensive health care services to their members. HMOs provide broad health care services to a aspecified group for a fixed prepaid fee; however, many HMOs today also have cost sharing provisions such as deductibles and copayments and cost control is heavily emphasized. In addition, the choice of health care providers may be restricted and less costly forms of treatment are often provided.
Other Private Insurers; In addition to the preceding, other types of private insurers merit a brief discussion. These include captive insurers and savings bank life insurance.
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