FIN 3610 Assignment 3 Name_______________________

Chapter 5

Please remember that you must do your own work. Any plagiarism will result in a grade of

zero for all students involved. Please use your own words even if you are using the textbook

for answers. Always provide a citation when a reference is used.

1. Describe the basic characteristics of the following types of insurance:

a. Stock insurers:

b. Mutual insurers:

c. Loyd’s of London:

d. Reciprocal exchange:

2. Explain the legal distinction between an agent and a broker.

3. Briefly describe and explain the key features of the following distribution systems in

the marketing of property and casualty insurance.

a. Independent agency system:

b. Exclusive agency system:

c. Direct writer:

d. Direct response system:

e. Multiple distribution systems:

4. Who owns the policy expirations or the renewal rights to the business under the

independent agency system, and who owns these under the exclusive system?

5. The number of life insurers has declined sharply during the past decade because of the

increase in company mergers and acquisitions, demutualization of insurers, and

formation of mutual holding companies.

a. Why have mergers and acquisitions among insurers increased over time?

b. What is demutualization?

c. Briefly explain the advantages of demutualization of a mutual life insurer.

d. What is a mutual holding company?