Hospital Corporation of America and Subsidiaries - Page 7

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          admitted companies.  Admitted insurance companies can insure any            
          insurable risk.  Other insurance companies may be licensed to               
          write only on a surplus lines basis; i.e., they are allowed to              
          underwrite only risks that admitted companies in the State do not           
          or will not cover.  Admitted insurance companies are required to            
          file annual reports on a calendar year basis with the appropriate           
          State insurance department in a form specified by the National              
          Association of Insurance Commissioners (NAIC).                              
               A line of business refers to a group of insurance policies             
          involving similar risks.  Some lines of business, such as                   
          workers' compensation, can be written only by admitted carriers.            
          Marketing is the process of selling policies to insureds.                   
          Underwriting is the selection and pricing of risks to be insured.           
          The pricing portion of the underwriting function is the process             
          of setting premiums in amounts that are expected to be sufficient           
          to cover insured losses and the expenses of adjusting claims, and           
          the costs of operating the company and any planned underwriting             
          profit.  State regulatory agencies limit the premiums that may be           
          written by insurance companies to amounts that are prudent in               
          light of the companies' capitalization.  Premiums are usually set           
          by trained underwriters or actuaries, who may be employees or               
          outside consultants.  For certain lines of insurance, such as               
          workers' compensation, rates are set by law on the basis of                 
          statistical information compiled by rating bureaus, with only               





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Last modified: May 25, 2011