COPY: FOI - Chapter 1

The primary purpose of insurance is to provide financial support for future and accidental losses.

Automobile insurance accounts for over 50% of premiums in the Property & Casualty (P&C) insurance sector in Canada.

Private insurers operate with the goal of generating profits, while government insurers prioritize public service and may not focus on profits.

Mutual insurance companies focus on offering insurance at the lowest possible cost to its policyholders, who are also its owners.

Instead of repair or replacement, insurance companies might offer indemnity - financial compensation or other valuable forms to cover losses.

Allowing people to buy insurance after a loss can reduce their motivation to purchase it beforehand. This can lead to unpredictable costs for insurers.

Property & Casualty (P&C) types cover losses related to properties and accidents. Typical P&C coverage excludes health insurance.

Hermann Ebbinghaus, a German psychologist, introduced the concept of the forgetting curve, which demonstrates the gradual loss of information over time.

Stock insurance companies primarily obtain their operating funds through the public sale of their stock and private investments.

To counter the effects of the forgetting curve, students can engage in continuous review and active participation in class activities.

The forgetting curve illustrates that information learned is gradually lost over time, unless it is frequently reviewed and reinforced.

A key expectation for students in the course is active participation in discussions and regular review of course materials.

A significant fire disaster in London led to the enactment of fire insurance, highlighting the societal need for protection against such risks.

Customer Service for Insurance Professionals (CSIP) is a key part of the basic training for new insurance brokers, focusing on client interaction and service standards.

The CAIB designation, signifying a high level of insurance knowledge, is typically associated with experienced brokers who have advanced their expertise.

In ancient China, boat operators used multiple boats to navigate dangerous rapids, demonstrating a risk management strategy similar to insurance.

In the Direct Writing System, producers (insurance salespeople) are directly employed by the insurance company, working within the company structure.

Independent Brokerage Systems dominate the Canadian insurance market, accounting for over 80% of insurance sales through this distribution channel.

Independent brokerages facilitate the insurance distribution process, connecting clients with suitable insurers, but they don't pay salaries to insurers.

Agents in the Agency System primarily earn commission and bonuses based on the amount of insurance business they sell.

Lloyd's of London is a global insurance market, not an insurance company itself. It facilitates the exchange of insurance risks between various members.

Provinces like BC, SK, MB, and Quebec have compulsory auto insurance coverages, meaning all drivers must have car insurance.

A key trait of brokers in the Independent Brokerage System is that they typically own the business they generate.

Independent brokers differ from agents in the Agency System by representing a wide range of insurance companies, offering more options to clients.

Syndicates in marine insurance act as groups of underwriting members who collectively assume risk for maritime ventures.

Underwriting agents in syndicates manage the syndicate's affairs and appoint expert underwriters who assess risks and determine insurance terms.

The 'slip' is a document used in the insurance distribution process that contains vital underwriting information about the risk to be insured.

Membership to Lloyd's is open to individuals and entities who meet specific financial requirements set by the Committee of Lloyd's.

Once 100% of the risk is subscribed by underwriting members, the slip (risk information) is formally submitted to the Policy Signing Office to finalize insurance arrangements.

Insurance serves the vital function of allowing individuals to share financial losses among a larger group, reducing the impact of individual misfortune.

Insurance acts as a crucial foundation for the credit system by protecting investments and alleviating financial worry, facilitating economic activities.

The insurance industry's functions primarily revolve around managing risk, providing protection, and facilitating financial stability, NOT aiming to offer financial gains through investment.

The principle of indemnity in insurance states that payments are made only for the exact amount of loss, preventing individuals from profiting from insurance claims.

Individuals can manage various risks through insurance, one being the risk of financial loss due to specific perils like fire, theft, or accidents.

The concept of avoidance in insurance refers to completely eliminating the chance of financial loss by not owning property or participating in activities that pose a risk.

The insurance industry employs a diverse group of professionals, including independent brokers who connect clients with insurers, adjusters who assess losses, and actuaries who analyze risk.

Loss prevention in the insurance industry involves educating the public about ways to avoid losses and reduce the severity of potential damages, leading to lower premiums.