Other Types of Insurers
Lloyd's of London Contrary to a commonly held belief, Lloyd's of London is not an insurance company. It is an association of underwriters. This association includes both individuals and corporations that individually underwrite unusual risks that do not fit the traditional insurance company's requirements, such as large numbers and random selection for accurate predictability.
Reinsurers Reinsurers are insurance specialists who share risks with the traditional retail insurers. Most larger policies will often be only partially insured by the writing company to avoid adverse selection. A reinsurer will pick up the balance. This is similar to the laying off of bets in the gambling industry.
Reciprocal Insurers Reciprocal Insurers are not common. Each policy holder shares part of the risk of all others and is managed by an attorney-in-fact. Most insurers function on the basis of legal reserve which is explained later.
Assessment Mutual Insurers They collect premium as needed when losses occur or some collect an estimated premium in advance, and then either send refunds or assessments based on actual losses incurred. Assessment Mutual Insurers are considered to be "not in the public interest" and are therefore, not legal in Florida, which like most other states requires the "legal reserve" method of operation with no assessments.
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Is Lloyd's of London an Insurance Company?
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Ans. No it is not. Lloyd's is an association of underwriters who cover risks individually, often on unusual types of risks.
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