Loan Protection Insurance Refunds By Vincent Rogers

Over the past few years if there one thing that has dominated the personal finance headlines it has to be the misselling of payment protection insurance (PPI)
In fact the whole issue has become so widespread that now nearly half the cases dealt with by the Financial Ombudsman Service are to do with PPI. The service dealt with 50,378 new consumer complaints in the three months to December 2010 and 24,955 were related to PPI.
The idea of PPI actually isn't a bad one it is designed to cover debt repayments when a person loses their job or falls ill. However, a lot of customers were sold the product when it wasn't right for them. This means that the insurance was essentially invalid so if people had to make a claim they wouldn't be entitled to any money back.
Often consumers were told that PPI was compulsory when they were being sold loans or credit cards when it is an entirely voluntary product. While, a lot of people who were self-employed or who had existing medical conditions were also sold the insurance which meant they weren't covered in the event of unemployment or illness.
Now after investigations by the Office of Fair Trading, Competition Commission and the Financial Service Authority the way financial service providers sell PPI is far more regulated. This also means that if you think you have been missold PPI you can claim back the cost of the insurance.
If the firm who sold you the PPI or the Financial Ombudsman Service decide that you have been missold the policy then you should get back all the premiums you have paid, with interest added at eight per cent.
The first thing to do if you think you have been missold PPI is to cancel the policy. Then the next step is to complain to the company who missold you the policy - there are lots of companies and sites who can help you with this.
However, don't be put off if the firm rejects your claim by saying you weren't missold PPI. At first many firms swear blind that the policy was correctly sold, however, when asked to produce evidence of this they later back down. This is often a tactic employed by banks and building societies who rely on the fact that a lot of customers will take their word for it and leave it there.
However, when the case is taken to the Financial Ombudsman Service the claim is often upheld in the customers favour. Even the Ombudsman has complained that some financial service providers have been deliberately rejecting claims when the Ombudsman upholds 90-100 per cent of them.
There is potentially a lot of money to be made from claiming back PPI and on loan insurance it could even run into thousands of pounds. Therefore, it is definitely worth investigating whether you have been missold a policy and if you think you have been to start the claims procedure. You'll certainly be no worse off than if you hadn't put in a claim.
The usual process for this involves enlisting a refund company. Once it is established that there is a case for compensation, a legal team working on behalf of the customer will try to reclaim the capital spent on the PPI, interest and any 'secret commissions' received by the seller of the PPI. Success rates tend to be very high, as are the potential sums of money which can be reclaimed from missold Payment Protection Insurance policies.

Vincent Rogers is a freelance writer who writes for a number of UK businesses. For help with Reclaiming Loan Protection Insurance, he recommends Randall and Vickers. Article Source: http://EzineArticles.com/?expert=Vincent_Rogers

movie monster insurance

funny....haha

source : www.youtube.com

Writing for the Money | Insurance Articles

Blogging for the money is normal and that’s include monetising your blog and so on, but writing for the insurance association (aka Persatuam Insurance Am [PIAM] or Life Insurance Association of Malaysia [LIAM]) for money is something else. During my early years in this industry it is a norm for people to write articles for the association and doing it for free, or perhaps just to have their name tagged as the author. You don’t find such willingness nowadays. No, not even from those Baby Boomers and the old guys of the Gen-Xer’s….. for they have said, “I am retired from writing for I reap no benefit!”

The Gen-Yer’s are never interested in writing or maybe I should say, they can’t even string a proper sentence of English, so how to write! Even if they are able, the answer is still a “no-go” for they have too much at hand – spending their time from social networking as it is in facebook or hanging out with friends at some watering holes or even twittering whole day long….

An invitation from PIAM to write for the money

For the benefit of everyone, we have inserted their circular for easy reference here – we had converted the original PDF file to text file so that we can clean out some of those sensitive information. We had used PDFTiger to do just that – “As easy as ABC!” and why don’t you try it? It can convert PDF to image, text, word…. and it’s FREE! Just click on the image and download the file into your Notebook…. it’s COOL…

Try PDF Tiger Free

Before we drift any further, let’s come back to this PIAM’s offer to staff of member companies of WRITING FOR THE MONEY.

MEMBERS’ CIRCULAR NO: 11 OF 2011 dated 14th January 2011 PUBLIC INSURANCE EDUCATION PROGRAMME – INSURANCE ARTICLES FOR PUBLICATION IN THE MEDIA

We refer to the above matter and are pleased to advise that the PIAM Public Relations/CSR Sub-committee has planned to introduce a public insurance education programme which involves the publication of articles on insurance matters of interest to the public. In this regard, the Management Committee has agreed that staff of member companies be invited to contribute to these articles. There will be two articles on each of the topics listed below to be published in two newspapers. The Association will select the best two articles (with differing angles) per topic for publication. As an incentive to contributors, each published article will receive a cash award of RM500.00. The details of the topics to be covered are as follows:- A. Topics 1) Health Insurance 2) Travel Insurance 3) Insurance Covers for SMEs 4) Motor Insurance extension of covers e.g. windscreen damage, flood, Passenger Personal Accident, etc. B. Content 1) Basic Information of the insurance and applicability 2) Scope of Cover 3) Extensions/warranties/exclusions 4) Submissions of claims and important information required when submitting claims 5) Other important information that insureds/public should know C. Language English (preference will be given to articles using simple layman terms for ease of understanding by the public) D. Length 500 – 700 words on A4 size paper with Font size #12 and double line spacing E. Eligibility Employees of member companies of PIAM are eligible to contribute articles for this purpose. F. Indemnity The Public Relations/CSR Sub-committee reserves the right to select the articles for publication and the award of the incentives. No further correspondence on these matters will be entertained. All articles submitted shall become the property of the Association and the Association also reserves the right to use the submitted articles for publication in the media or for any other purposes deemed necessary. Please do note that the deadline for submission of your articles is Tuesday, 15th February, 2011 and the articles are to be submitted in Microsoft Word format to:mkaur@piam.org.my Each article submitted is to be accompanied with full details of the author including name, company, designation, address and contact details. Thank you. Yours faithfully, BY ORDER OF THE MANAGEMENT COMMITTEE

We would like to sum up what’s this PIAM’s incentive offer is all about:

1.       Offer is only for staff of member insurance companies under PIAM – wonder why they did not want to include the agency fraternity? Can’t they allow registered agents to be part of this exercise….

2.       Do not write more than 700 words… start with a minimum of 500 words and inserting diagrams and tables would be strategic since such manner of presentation is not part of the word count.

3.       Incentive is RM500 if you are successful, meaning they select and publish your article in the news paper.

4.       There are 4 main topics, which are not too difficult but generally with 500 to 700 words write-up, this is indeed going to be tough. Thus it makes sense if you work on a focus area, ie. insuring against H1N1 in Health Insurance or what to look out for when purchasing a Traveller’s Personal Accident for your overseas trip.

5.       The contents of your write-up must necessarily dwell into areas concerning coverage including the what’s and the why’s, and of course those claims procedures that the buying public may want to know.

6.       Unfortunate when you submit your articles to PIAM, those articles would then become the property of PIAM even if none were selected for publication, meaning working for free! Anyway if your articles are NOT picked for publication, then do send Malaysia Insurance Online a copy, what we would do is to do an ARTICLE SPIN on your write-up and have it posted to our blog. And that would include your name as the author, thus creating branding to you in the process.

Find cheap car insurance in 8 easy steps

Everybody wants cheap car insurance, but how do you actually find it? Fortunately, there are several things you can do to lower your insurance costs.  

Before you start searching for a bargain-basement policy, remember that sometimes focusing solely on the lowest insurance rates is a mistake. Cutting costs does not make sense if you're also shortchanging quality.

However, with a little research, you should be able to find cheaper auto insurance without sacrificing important coverage amounts. Here are ways to improve your odds of lowering your insurance rates:

1. Comparison shop

Sometimes, you'll get the best deal with your current car insurance company. But in many other cases, the road to the cheapest car insurance policy will take you elsewhere.

Comparison shopping can help you uncover cheap car insurance companies. How often should you search for lower premiums? Experts generally suggest looking around at least once a year. Insurance.com offers a rate-search tool that can help you find the best insurance rate.

2. Bundle your policies

Your insurance company may offer more affordable car insurance rates if you purchase both your home insurance and auto insurance policies from the same provider.

It's not unusual to save 10 percent or more off your premium when you receive a multiline discount.

3. Raise your deductible

Simply raising your deductible from $200 to $500 can lower your car insurance premium by about 20 percent, according to the Insurance Information Institute.

Remember, though, that a higher deductible means more money out of your pocket in the event of a claim. Cheap insurance can become expensive fast if you have to pay your deductible with a high-interest credit card.

4. Ask about discounts for which you qualify

Is your daughter a straight-A student? You may qualify for cheaper car insurance. Park your car in a garage? Your insurer may give you a price break because the car is less vulnerable to theft and weather damage.

Talk to your agent about all discounts that are available and find out if you qualify for any of them.

5. Buy the right type of car

If you're shopping for new wheels, your choice of automobile can play a big role in getting lower insurance rates. Cars that cost less to repair or replace generally receive lower premiums.

You'll also get better rates if your car has certain safety features. Insurance companies often give discounts for features such as anti-lock brakes, side air bags and automatic safety belts. Anti-theft devices also may help in your quest for cheap vehicle insurance.

There are also a few things you should avoid doing that will reduce your car insurance rates. They include:

1. Avoid tickets and accidents

A poor driving history can easily disqualify you from getting the cheapest car insurance. Insurers will check your record to see if you present a high level of risk. Speeding tickets, accidents, drunk driving citations – all can drive your insurance rates higher.

Drive sensibly and cautiously and you'll be on the way to cheap car insurance in no time.

2. Don't carry unnecessary insurance coverage

If you have an old beater, reduce your car insurance costs by dropping comprehensive and collision coverage. When should you make this move toward cheaper auto insurance? Many experts say it's time to drop these coverages when when the actual cash value you’d receive for your vehicle doesn’t justify the insurance expense.

Also, don't pay extra for personal injury protection or medical payment insurance if your family already has a good health insurance plan.

3. Don't ignore your car insurance agent

Experts generally recommend you sit down with your agent annually to discuss any changes in your life that might impact your auto rates. For example, your insurer may offer cheaper car insurance if you've dropped your daily commute in favor of working from home.

Has your teen recently flown the nest and landed car-free at a university or college? If so, let your agent know that the teen does not drive your car for the majority of the year.

source : By Insurance.com

Controversies

Insurance insulates too much

By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer), a concept known as moral hazard. To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in behavior that grossly magnifies their risk of loss or liability.

For example, life insurance companies may require higher premiums or deny coverage altogether to people who work in hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by or at the direction of the insured. Even if a provider were so irrational as to want to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal.

Complexity of insurance policy contracts

Insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. As a result, people may buy policies on unfavorable terms. In response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertised and sold.

For example, most insurance policies in the English language today have been carefully drafted in plain English; the industry learned the hard way that many courts will not enforce policies against insureds when the judges themselves cannot understand what the policies are saying. Typically, courts construe ambiguities in insurance policies against the insurance company and in favor of coverage under the policy.

Many institutional insurance purchasers buy insurance through an insurance broker. While on the surface it appears the broker represents the buyer (not the insurance company), and typically counsels the buyer on appropriate coverage and policy limitations, it should be noted that in the vast majority of cases a broker's compensation comes in the form of a commission as a percentage of the insurance premium, creating a conflict of interest in that the broker's financial interest is tilted towards encouraging an insured to purchase more insurance than might be necessary at a higher price. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible.

Insurance may also be purchased through an agent. Unlike a broker, who represents the policyholder, an agent represents the insurance company from whom the policyholder buys. Just as there is a potential conflict of interest with a broker, an agent has a different type of conflict. Because agents work directly for the insurance company, if there is a claim the agent may advise the client to the benefit of the insurance company. It should also be noted that agents generally can not offer as broad a range of selection compared to an insurance broker.

An independent insurance consultant advises insureds on a fee-for-service retainer, similar to an attorney, and thus offers completely independent advice, free of the financial conflict of interest of brokers and/or agents. However, such a consultant must still work through brokers and/or agents in order to secure coverage for their clients.

9/11 was a major insurance loss, but there were disputes over the World Trade Center's insurance policy

Limited consumer benefits

Economists and consumer advocates generally consider insurance to be worthwhile for low-probability, catastrophic losses, but not for high-probability, small losses. Because of this, consumers are advised to select high deductibles and to not insure losses which would not cause a disruption in their life. However, consumers have shown a tendency to prefer low deductibles and to prefer to insure relatively high-probability, small losses over low-probability, perhaps due to not understanding or ignoring the low-probability risk.This is associated with reduced purchasing of insurance against low-probability losses, and may result in increased inefficiencies from moral hazard.

Redlining

Redlining is the practice of denying insurance coverage in specific geographic areas, supposedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial profiling or redlining has a long history in the property insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.

In July, 2007, The Federal Trade Commission (FTC) released a report presenting the results of a study concerning credit-based insurance scores in automobile insurance. The study found that these scores are effective predictors of risk. It also showed that African-Americans and Hispanics are substantially overrepresented in the lowest credit scores, and substantially underrepresented in the highest, while Caucasians and Asians are more evenly spread across the scores. The credit scores were also found to predict risk within each of the ethnic groups, leading the FTC to conclude that the scoring models are not solely proxies for redlining. The FTC indicated little data was available to evaluate benefit of insurance scores to consumers. The report was disputed by representatives of the Consumer Federation of America, the National Fair Housing Alliance, the National Consumer Law Center, and the Center for Economic Justice, for relying on data provided by the insurance industry.

All states have provisions in their rate regulation laws or in their fair trade practice acts that prohibit unfair discrimination, often called redlining, in setting rates and making insurance available.

In determining premiums and premium rate structures, insurers consider quantifiable factors, including location, credit scores, gender, occupation, marital status, and education level. However, the use of such factors is often considered to be unfair or unlawfully discriminatory, and the reaction against this practice has in some instances led to political disputes about the ways in which insurers determine premiums and regulatory intervention to limit the factors used.

An insurance underwriter's job is to evaluate a given risk as to the likelihood that a loss will occur. Any factor that causes a greater likelihood of loss should theoretically be charged a higher rate. This basic principle of insurance must be followed if insurance companies are to remain solvent. Thus, "discrimination" against (i.e., negative differential treatment of) potential insureds in the risk evaluation and premium-setting process is a necessary by-product of the fundamentals of insurance underwriting. For instance, insurers charge older people significantly higher premiums than they charge younger people for term life insurance. Older people are thus treated differently than younger people (i.e., a distinction is made, discrimination occurs). The rationale for the differential treatment goes to the heart of the risk a life insurer takes: Old people are likely to die sooner than young people, so the risk of loss (the insured's death) is greater in any given period of time and therefore the risk premium must be higher to cover the greater risk. However, treating insureds differently when there is no actuarially sound reason for doing so is unlawful discrimination.

What is often missing from the debate is that prohibiting the use of legitimate, actuarially sound factors means that an insufficient amount is being charged for a given risk, and there is thus a deficit in the system. The failure to address the deficit may mean insolvency and hardship for all of a company's insureds. The options for addressing the deficit seem to be the following: Charge the deficit to the other policyholders or charge it to the government (i.e., externalize outside of the company to society at large).

Insurance patents

New assurance products can now be protected from copying with a business method patent in the United States.

A recent example of a new insurance product that is patented is Usage Based auto insurance. Early versions were independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance (U.S. Patent 5,797,134) and a Spanish independent inventor, Salvador Minguijon Perez (EP 0700009 ).

Many independent inventors are in favor of patenting new insurance products since it gives them protection from big companies when they bring their new insurance products to market. Independent inventors account for 70% of the new U.S. patent applications in this area.

Many insurance executives are opposed to patenting insurance products because it creates a new risk for them. The Hartford insurance company, for example, recently had to pay $80 million to an independent inventor, Bancorp Services, in order to settle a patent infringement and theft of trade secret lawsuit for a type of corporate owned life insurance product invented and patented by Bancorp.

There are currently about 150 new patent applications on insurance inventions filed per year in the United States. The rate at which patents have issued has steadily risen from 15 in 2002 to 44 in 2006.

Inventors can now have their insurance U.S. patent applications reviewed by the public in the Peer to Patent program. The first insurance patent application to be posted was US2009005522 “Risk assessment company”. It was posted on March 6, 2009. This patent application describes a method for increasing the ease of changing insurance companies.

 

The insurance industry and rent-seeking

Certain insurance products and practices have been described as rent-seeking by critics. That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of variable annuities and variable life insurance can invest their premium payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are made. Sometimes this tax deferral is the only reason people use these products. Another example is the legal infrastructure which allows life insurance to be held in an irrevocable trust which is used to pay an estate tax while the proceeds themselves are immune from the estate tax.

Religious concerns

Muslim scholars have varying opinions about insurance. Insurance policies that earn interest are generally considered to be a form of riba (usury) and some consider even policies that do not earn interest to be a form of gharar (speculation). Some argue that gharar is not present due to the actuarial science behind the underwriting.

Jewish rabbinical scholars also have expressed reservations regarding insurance as an avoidance of God's will but most find it acceptable in moderation.

Some Christians believe insurance represents a lack of faith and there is a long history of resistance to commercial insurance in Anabaptist communities (Mennonites, Amish, Hutterites, Brethren in Christ) but many participate in community-based self-insurance programs that spread risk within their communities.

source : http://en.wikipedia.org/wiki/Insurance#Controversies

Across the world

Global insurance premiums grew by 3.4% in 2008 to reach $4.3 trillion. For the first time in the past three decades, premium income declined in inflation-adjusted terms, with non-life premiums falling by 0.8% and life premiums falling by 3.5%. The insurance industry is exposed to the global economic downturn on the assets side by the decline in returns on investments and on the liabilities side by a rise in claims. So far the extent of losses on both sides has been limited although investment returns fell sharply following the bankruptcy of Lehman Brothers and bailout of AIG in September 2008. The financial crisis has shown that the insurance sector is sufficiently capitalised. The vast majority of insurance companies had enough capital to absorb losses and only a small number turned to government for support.

Advanced economies account for the bulk of global insurance. With premium income of $1,753bn, Europe was the most important region in 2008, followed by North America $1,346bn and Asia $933bn. The top four countries generated more than a half of premiums. The US and Japan alone accounted for 40% of world insurance, much higher than their 7% share of the global population. Emerging markets accounted for over 85% of the world’s population but generated only around 10% of premiums. Their markets are however growing at a quicker pace.

 

Life insurance premiums written in 2005

Non-life insurance premiums written in 2005

 

Regulatory differences 

In the United States, insurance is regulated by the states under the McCarran-Ferguson Act, with "periodic proposals for federal intervention", and a nonprofit coalition of state insurance agencies called the National Association of Insurance Commissioners works to harmonize the country's different laws and regulations. The National Conference of Insurance Legislators (NCOIL) also works to harmonize the different state laws.

In the European Union, the Third Non-Life Directive and the Third Life Directive, both passed in 1992 and effective 1994, created a single insurance market in Europe and allowed insurance companies to offer insurance anywhere in the EU (subject to permission from authority in the head office) and allowed insurance consumers to purchase insurance from any insurer in the EU.

The insurance industry in China was nationalized in 1949 and thereafter offered by only a single state-owned company, the People's Insurance Company of China, which was eventually suspended as demand declined in a communist environment. In 1978, market reforms led to an increase in the market and by 1995 a comprehensive Insurance Law of the People's Republic of China was passed, followed in 1998 by the formation of China Insurance Regulatory Commission (CIRC), which has broad regulatory authority over the insurance market of China.

source : http://en.wikipedia.org/wiki/Insurance#Across_the_world

Insurance companies

Insurance companies may be classified into two groups:

• Life insurance companies, which sell life insurance, annuities and pensions products.
• Non-life, general, or property/casualty insurance companies, which sell other types of insurance.

General insurance companies can be further divided into these sub categories.

• Standard lines
• Excess lines

In most countries, life and non-life insurers are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between the two types of company is that life, annuity, and pension business is very long-term in nature — coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers a shorter period, such as one year.

In the United States, standard line insurance companies are "mainstream" insurers. These are the companies that typically insure autos, homes or businesses. They use pattern or "cookie-cutter" policies without variation from one person to the next. They usually have lower premiums than excess lines and can sell directly to individuals. They are regulated by state laws that can restrict the amount they can charge for insurance policies.

Excess line insurance companies (also known as Excess and Surplus) typically insure risks not covered by the standard lines market. They are broadly referred as being all insurance placed with non-admitted insurers. Non-admitted insurers are not licensed in the states where the risks are located. These companies have more flexibility and can react faster than standard insurance companies because they are not required to file rates and forms as the "admitted" carriers do. However, they still have substantial regulatory requirements placed upon them. State laws generally require insurance placed with surplus line agents and brokers not to be available through standard licensed insurers.

Insurance companies are generally classified as either mutual or stock companies. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. Demutualization of mutual insurers to form stock companies, as well as the formation of a hybrid known as a mutual holding company, became common in some countries, such as the United States, in the late 20th century.

Other possible forms for an insurance company include reciprocals, in which policyholders reciprocate in sharing risks, and Lloyd's organizations.

Insurance companies are rated by various agencies such as A. M. Best. The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products.

Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well.

Captive insurance companies may be defined as limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house self-insurance vehicle. Captives may take the form of a "pure" entity (which is a 100% subsidiary of the self-insured parent company); of a "mutual" captive (which insures the collective risks of members of an industry); and of an "association" captive (which self-insures individual risks of the members of a professional, commercial or industrial association). Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices.

The types of risk that a captive can underwrite for their parents include property damage, public and product liability, professional indemnity, employee benefits, employers' liability, motor and medical aid expenses. The captive's exposure to such risks may be limited by the use of reinsurance.

Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent. This can be understood against the following background:

• heavy and increasing premium costs in almost every line of coverage;
• difficulties in insuring certain types of fortuitous risk;
• differential coverage standards in various parts of the world;
• rating structures which reflect market trends rather than individual loss experience;
• insufficient credit for deductibles and/or loss control efforts.

There are also companies known as 'insurance consultants'. Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies. Similar to an insurance consultant, an 'insurance broker' also shops around for the best insurance policy amongst many companies. However, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client.

Neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions. Third party administrators are companies that perform underwriting and sometimes claims handling services for insurance companies. These companies often have special expertise that the insurance companies do not have.

The financial stability and strength of an insurance company should be a major consideration when buying an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool or other arrangement with less attractive payouts for losses). A number of independent rating agencies provide information and rate the financial viability of insurance companies.

source : http://en.wikipedia.org/wiki/Insurance#Insurance_companies