Insurance reaches customers through several distribution channels. An insurance agent legally represents one or more insurers and can bind coverage on their behalf, typically earning commission from the insurer. A broker represents the policyholder and shops the market on the client's behalf, generally paid by the insured. A direct writer sells policies directly to consumers without independent agents, often through salaried employees, mail, phone, or online channels. Other participants include the Medical Information Bureau, a nonprofit data-sharing organization whose coded records help underwriters detect omissions and verify applicant information, and the certificate of insurance, a document summarizing key policy information to demonstrate that coverage is in force without amending the underlying contract.
Specialized market structures include mutual insurance companies, which are owned by their policyholders rather than outside shareholders, with surplus and profits often returned through policyholder dividends, lower premiums, or improved coverage. Reciprocal insurance exchanges are unincorporated groups of subscribers who exchange insurance contracts through an attorney-in-fact, sharing profits and losses proportionally. Lloyd's of London is a specialized market where multiple syndicates underwrite risks individually through a central platform, famous for unusual or large exposures. Social insurance, in contrast, is government-run and compulsory, funded through taxes and based on social solidarity rather than individual risk assessment.
Different product lines address distinct financial risks. Term life insurance provides coverage for a specified period with no cash value. Whole life is permanent coverage that builds cash value over time and pays the face amount upon death with fixed premiums. Universal life is a flexible permanent policy that separates death protection from a cash value account earning interest. An annuity converts a lump sum or series of payments into a stream of income over time, functioning as the inverse of life insurance. Health insurance covers medical expenses for illness or injury, while disability insurance replaces a portion of lost income when the insured cannot work. Liability insurance protects against claims arising from bodily injury or property damage to others, while umbrella insurance provides excess liability coverage above underlying policies. Long-term care insurance covers custodial care when an insured can no longer perform activities of daily living. Workers compensation provides medical benefits, wage replacement, and rehabilitation to employees injured on the job regardless of fault, with premiums adjusted by the experience modification factor. A no-claims discount reduces premiums for claim-free policyholders. Catastrophe insurance covers low-probability, high-severity events such as hurricanes and earthquakes, with pricing that relies on catastrophe modeling and reinsurance. A surety bond is a three-party agreement guaranteeing that a surety will fulfill the obligations of a principal to an obligee if the principal fails to perform. In property coverage, the coinsurance clause requires the insured to maintain coverage equal to a specified percentage of replacement value, and underinsurance reduces recovery proportionally as \((insurance\ carried\ /\ insurance\ required) \times loss\).