Under the alternative funding method used by the Flair Company, Flair assumes financial responsibility for paying claims up to a specified level and deposits the funds necessary to pay these claims into a bank account that belongs to Flair. However, an insurer, which acts as an agent of Flair, makes the actual payment of claims from this account. When claims exceed the specified level, the insurer pays the balance from its own funds. No state premium tax is levied on the amounts that Flair deposits into this bank account. From the following answer choices, choose the name of the alternative funding method described.

Question

Quizplus · Accepted Answer

The described method is a Minimum-premium plan, where the company assumes responsibility for claims up to a certain level, and the insurer covers excess claims, with no state premium tax on the company's deposits.

Under the Alternative Funding Method Used by the Flair Company