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Incontestability Clause

What is an incontestability clause?

Types of Insurance Companies

The structure of an insurance company may affect how it does business. Insurance companies may take the form of regular stock companies, may be mutual insurance companies, or may be "captive" subsidiaries of companies that effectively are self-insured.

Captive Insurers

A captive insurer is captive in the sense that it is owned and operated by the insured. There is a point at which it makes economic sense for a company to establish and operate its own insurer as part of the company's risk management program rather than pay premiums to independent insurers.

The Meaning of Reinsurance

Reinsurance is the process by which an insurance company shares the risk that it assumes when it issues an insurance policy. For example, an insurance company that issues a $1 million life insurance policy may reinsure or have other insurers assume $900,000 of the risk. The insurance company issuing the policy thus "cedes" most of the risk to one or more reinsurers.

Lloyd's of London

While references are made to insurance policies from Lloyd's of London, Lloyd's is not an insurer. Rather, Lloyd's is a market for various syndicates or groups that provide insurance against various risks.