The definition of “American way” will determine whether or not a particular type of carrier does business in the American manner. There is no one accepted definition of the term. Some definitions would exclude state funds. Others would exclude mutuals and reciprocals. Other definitions would also exclude Lloyd’s of London. However, other definitions would include all carriers that do business in the United States. You can choose to pay your money or not. According to the authors, there are many Americans who are at the top of all kinds of insurance companies.
The final cost
Representatives of stock companies often argue that individual health insurance is fixed in cost. Their policy does not require assessment. However, the definite-cost argument is not only applicable to stock companies. Many mutuals can issue policies that are not subject to assessment. One example clause in many mutual policies is: “This policy cannot be assessed and the liability of the insured is limited to the amount of the premium prodded.”
Stock insurance agents claim that mutual policies can be assessed regardless of any policy conditions. This contention is disproven by a number of court cases. There is neither a general nor an automatic assessment liability. Stock agents also argue that contracts may be assessed in other states even if they are not subject to assessment in their home state. This claim is also not supported by evidence.
The assessment clause in a contract can be considered an advantage by some buyers. An assessment privilege provides the carrier with additional financial strength. Companies can add a premium to the rate if the initial rate is not sufficient. However, the advantage of the assessment clause is more theoretical than real. It would be very difficult to collect any substantial assessment.
It is dependent on the type and issue of the policy, not the company, whether a predetermined, definite premium is charged to cover insurance for pregnant women. Many mutuals and stock companies only issue non-assessable policies. Some mutuals only issue assessable policies. Some have unlimited assessment, while others have a restricted assessment.
The majority of insurance buyers are happy with a non-assessable policy. However, it is not uncommon for rank-and-file customers to prefer an assessable policy. Factory mutuals do not charge an excessive premium, but they do include an assessment clause in the contracts. These clauses are not mandatory for factory mutuals but they can give extra strength to carriers.
A Definite Agreement
The following clause may be included in mutual insurance contracts: “The company, a perpetual mutual company owned by and operated to the mutual protection of its members in compliance with law and according to the charter and bylaws as currently in force and as may be amended from the time to time.
Representatives of stock companies sometimes interpret this clause as meaning that mutual policy protection can be modified during its lifetime by changing the corporate bylaws. However, they argue that the stock insurance contract’s protection cannot be changed except by a court order.
This argument is a exaggerated critique of the mutual insurance policy. Only changes to bylaws that are reasonable will be binding on policyholders. This applies only after insureds have been notified. They are likely to be deemed unreasonable if the changes have a negative impact on the policyholder’s insurance coverage. If the insured is not satisfied with a reasonable change, he can cancel his homeowner’s insurance policy and look for coverage elsewhere. This action will only result in a penalty due to the use of the short rate cancellation table. The insured does not receive a prorata refund of his premium.
Changes to mutual bylaws that only affect administrative procedures are binding if they do. Stock companies can also change administrative procedures without the consent of policyholders. Policies of advance-premium mutuals have the same rights and obligations as stock carrier policies. Commonly, mutual policies include a clause that states: “This policy contains all agreements between the named insured (or any of its agents) relating to this insurance.”
Companies can, after giving notice, change the terms of their mutual and stock policies at any time. They can either terminate one policy or offer another one that is more liberal.
