Every individual family and business organization needs insurance for the inherent risk
Exposure to which they are exposed. Insurance, of course, requires redress
Economic consequences of exposure to damage in the event of an unforeseen event
Is happening, resulting in loss of property or assets or even income.
Insurance is actually a combination of three elements
A transfer system
A business
A contract
Insurance as a Transfer System
As a transfer system, insurance enables a person, family or business to relocate
The cost of the loss to the insurance company. In return the company pays for the insurance company
Distributes the cost of losses and losses incurred between all insurance companies. Thus, the key elements
Insurance as a transfer system refers to the transfer of risks from the insurance company
An insurance company that is financially sound and has the capacity and the will
To take a risk. The person transfers the consequences of the loss to the company
Exchanging the probability of large losses for a very short period of time
Payment (Premium) For transfer of loss, it is not necessary for loss of loss
Occurs or exists. The only possibility of damage is the contagion of damage that can occur
Insured or transferred
Loss exposure can lead to three types of damage, namely:
Wealth loss (including net income loss),
Loss of liability, and
Loss of human and personnel.
On the other hand, risk sharing refers to the pooling of premiums paid by insurance companies.
In any fund from which losses are paid and when.
Thus, the role of insurance is to protect insurance assets from financial consequences
Damage. But, not all risks are insurable. Insurance covers only net risks. (Discussed
In the chapter of module I).
Insurance as a business
As a business, insurance primarily seeks to cover its costs and expenses
What is earned also creates a premium and a reasonable margin of profit for itself
Durability. As a professional organization, it employs millions of people in life
And non-life insurance companies, agencies, brokerage firms. Various operations
These companies include marketing, underwriting, claim handling, ratemaking and
Information processing. As a business concern, it also needs to satisfy regulators,
Insurance and others of its financial stability. So, to protect consumers, this
Regulator monitors and also monitors rates, policy forms, solvency margins
Complaints and customer complaints. In addition to payment of damages, business
Insurance offers many benefits to individuals and families and society
Such a perfect:
Pay for the cost of covered damage
Reduction in insurer financial uncertainty
Efficient use of resources
Support for credit
Satisfaction of legal requirements
Satisfaction of business requirements
Source of investment funds for infrastructure development
Reduce social burden
Insurance as a contract
As a contract, an insurance policy policy is a legally enforced contract. There is an agreement
Between the insurance company and the insurer. Insurance policies by Lizzie,
The insurance company transfers the cost of the loss to the insurance company. In exchange for a premium
The insurers, paid by the insured, promise to pay for the losses covered under
Policy
The policy includes all the terms and conditions for its implementation, and benefits
Violation of these terms by any party payable by the insurer will result
Invalidation of contract. Thus, by the coverage provided by insurance
Policies, individuals, families and businesses are able to protect their property,
And minimizes the financial impact of the loss. Therefore, the insurance contract
It needs to be interpreted and carefully designed so that all profitable losses are covered
And insurance against.
The four most common types of insurance are (property, liability, life and health)
Generally divided into two broad categories:
1. Property / Liability Insurance
2. Life / health insurance
1. Property insurance provides coverage for loss of property and net income
Exposure. It protects the insured’s property by repairing or replacing the property
Which is lost, lost or destroyed or by replacing lost and excess net income
Expenses incurred as a result of property damage.
Liability insurance covers exposure to a loss of liability. It provides for payment
On behalf of the insured for injuring others or damaging the property of others
Which the insured is legally liable.
2. Life and health insurance covers the human (personal) financial outcome
Damage exposure. Life insurance replaces lost income
Also helps pay for expenses related to death and the death of the insurer. Health insurance
Provides additional income protection by paying for medical expenses. Disability
As popular as income is in most western countries, it replaces insurance income
If the insured is unable to work due to injury or illness.
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