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


  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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