Insurers & distribution
How insurers are organized, classified, and how their products reach customers. All STABLE.
Types of insurer (by ownership/structure)
Section titled “Types of insurer (by ownership/structure)”| Type | Owned by / structure |
|---|---|
| Stock insurer | Owned by stockholders; issues non-participating policies (no dividends to policyholders); profits go to shareholders. |
| Mutual insurer | Owned by policyholders; issues participating policies (may pay policy dividends, which are a non-taxable return of premium). |
| Fraternal benefit society | Membership organization (often tied to a lodge/affiliation) providing life/health to members. |
| Reciprocal | Unincorporated group of “subscribers” who insure each other, run by an attorney-in-fact. |
| Lloyd’s | A marketplace of syndicates of investors who underwrite risk (not an insurer itself). |
| Risk Retention Group (RRG) | A liability insurer owned by its members (same business/industry). |
| Captive | An insurer formed by a parent to insure the parent’s own risks. |
| Self-insurer | An entity that retains its own risk rather than buying coverage. |
Authorized vs unauthorized; domestic/foreign/alien
Section titled “Authorized vs unauthorized; domestic/foreign/alien”- Authorized (admitted) — the insurer holds a certificate of authority to do business in the state. Unauthorized (non-admitted) — does not. (See 06 Surplus lines for why non-admitted carriers write E&S risk.)
- By domicile: Domestic (formed in this state), Foreign (another US state), Alien (another country).
Don’t confuse the producer’s “foreign qualification” (an out-of-state entity registering with a Secretary of State, see 02 Corporate prerequisites) with an insurer’s domestic/foreign/alien status — different uses of “foreign.”
Admitted vs non-admitted market (recap)
Section titled “Admitted vs non-admitted market (recap)”- Admitted: files rates/forms, backed by the state guaranty fund.
- Non-admitted / E&S: freedom of rate/form, writes hard-to-place risk, not guaranty-fund backed. This is where the Glacis Tech E&O program likely starts — see 06 Surplus lines / E&S.
Financial-strength ratings
Section titled “Financial-strength ratings”Independent agencies (e.g., AM Best, plus S&P/Moody’s/Fitch) rate insurers’ ability to pay claims. Producers should place business with financially sound carriers — a suitability/ethics point. (Concept only; specific ratings change.)
Distribution systems
Section titled “Distribution systems”How insurers reach customers:
- Direct writer — the carrier sells directly (captive/employee sales force or online), no independent intermediary.
- Captive / exclusive agency — agents represent one insurer.
- Independent agency — agents represent multiple insurers; own their book of business.
- Brokerage — brokers shop the market on behalf of the client.
- MGA / MGU — a producer with delegated underwriting authority for a program; the carrier’s “outsourced underwriting.” This is the Glacis path — see 04 What is an MGA.
Reinsurance (preview)
Section titled “Reinsurance (preview)”Insurers themselves buy insurance — reinsurance — to add capacity and stabilize results. It’s the “capacity” behind an MGA program. Full treatment in 04 Reinsurance & capacity.
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