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Fundamentals of Risk and Insurance, 11th Edition by Therese M. Vaughan, Emmett J. Vaughan

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CHAPTER OBJECTIVES

When you have finished this chapter, you should be able to

  • Identify the categories of insurers classified by type of product
  • Identify the major categories of insurers classified according to form of ownership
  • Identify and describe the distinguishing characteristics of the different categories of insurers by form of ownership
  • Identify the different distribution systems that are used in property and liability and life and health insurance
  • Describe the major areas in which members of the insurance industry cooperate
  • Identify and describe the major areas in which insurers cooperate
  • Describe the evidences that indicate the extent of competition in the insurance industry

Despite the great benefits that accrue to society through the operation of the insurance mechanism, it is self-evident that such a complicated and intricate device does not come into existence by itself. Someone must estimate the probability of loss, collect the funds necessary to compensate those who suffer loss, make payments for the losses that occur, and provide for the general administration of the program. These are the functions performed by insurers.

A basic distinction may be made between private and government insurers. To a limited extent, historically in this country and to a considerable extent abroad, governmentally organized and managed insurance organizations have offered insurance ...

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