Different types of private insurers Introduction: Insurer can be defined as a company or a person that underwrites the risk associated with the insurance. In other words, it is a company or person that enters into a contract to provide cover in case of damage or loss. The different types of private insurers are as follows: 1. Stock Insurers- It can be defined as an insurance company that funds its operation from money obtained by shares sold to different shareholders. The financial goal of this type of private insurer is to provide maximum return to shareholder in the form of dividend. 2. Mutual insurers- It can be defined as insurance company which is owned mutually by its policyholders. The money is provided by policyholders for the operation of the company. The profit earned by the company is either retained or distributed amongst the policyholder in the form of dividend. 3. Reciprocal insurance exchanges- It can be defined as insurance exchange which comprises of different stakeholders viz. firms, corporation and individuals which are also known as subscribers. Under this arrangement, exchange of insurance contracts takes place amongst the subscribers in the presence of an attorney, which is responsible for managing the affair of the insurance exchange. 4. Captive insurers- It can be defined as an alternative arrangement to the self insurance wherein a licensed insurance company is established by a group of people for providing care to them. The main reason behind creating such company is to avoid taking coverage from traditional insurance companies that usually possesses volatile pricing. 5. Reinsurance companies- It is the insurance company that buys coverage from another company so as to protect itself against the risk associated with events that attracts major claims. In other words, under this arrangement some part of the insurance liability is being transferred to another insurance company. It can be concluded that the different type of private insurers are reinsurance companies, captive insurers, reciprocal insurance exchanges, mutual insurers and stock insurers.

6th Edition

ISBN: 9781567937428

Author: Gapenski

Publisher: YUZU

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Solution Summary: The author enumerates the different types of private insurers, including stock insurers, mutual insurance exchanges and reinsurance companies.