Insurance

src: financialtribune.com

Insurance is a means of protection from financial loss. This is a form of risk management, primarily used to protect against the risk of contingent or uncertain loss.

The insurer that provides insurance is known as an insurance company, an insurance company, an insurance operator or an underwriter. The person or entity that buys the insurance is known as the insured or the policyholder. Insurance transactions involve the insured with the assumption of a guaranteed and little known loss in the form of payment to the insurer in return for the insurance company's pledge to compensate the insured in the event of a loss. Losses may or may not be financial, but they must be reduced to financial terms, and usually involve something in which the insured has an insurable interest set by prior ownership, ownership, or relationships.

The insured receives a contract, called an insurance policy, detailing the conditions and circumstances in which the insurer will compensate the insured. The amount of money charged by the insurer to the insured for the coverage specified in the insurance policy is called the premium. If the insured suffers losses potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by the claim adjuster. Insurance companies can hedge their own risks by taking reinsurance, in which other insurers agree to bear some risk, especially if the risk is too great to be financed by the primary insurance company.

Video Insurance

Histori

Metode awal

Methods for transferring or distributing risk were practiced by Chinese merchants and Babylonians some time ago as the 3rd and 2nd millennia BC, respectively. Chinese traders who travel river rafting will distribute their goods on many ships to limit losses due to single ship riders. The Babylonians developed a system recorded in the famous Hammurabi Code, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant receives a loan to finance the delivery, he or she will pay additional lenders in lieu of the lender's guarantee to cancel the loan if the item is stolen, or lost at sea.

Around 800 BC, the population of Rhodes created a 'general average'. This allows the merchant group to pay to make sure their goods are shipped together. The collected premiums will be used to replace any trader whose goods are disposed of during transportation, whether to rush or sink.

Separate insurance contracts (ie, insurance policies not bundled with loans or other types of contracts) were found in Genoa in the 14th century, as well as an insurance pool backed by land promises. The date of the first known insurance contract from Genoa was in 1347, and in the following century maritime insurance expanded widely and the premiums intuitively varied with risk. This new insurance contract allows insurance to be separated from investments, the segregation of roles that first proved useful in marine insurance.

Modern insurance

Insurance became much more sophisticated in the era of the European Enlightenment, and special varieties were developed.

Property insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured more than 13,000 homes. The devastating effect of fire changing the development of insurance "from the issue of comfort to be one of urgency, the change of opinion is reflected in Sir Christopher Wren's inclusion of a site for 'Insurance Office' in his new plan for London in 1667". A number of experiments on fire insurance schemes were meaningless, but in 1681, economist Nicholas Barbon and eleven associates set up the first fire insurance company, "Home Insurance Office", behind the Royal Exchange to ensure brick houses and skeletons. Initially, 5,000 homes were insured by the Insurance Office.

At the same time, the first insurance scheme for business guarantees became available. By the end of the seventeenth century, the growing importance of London as a trading center was the increasing demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee shop, which became a meeting place for parties in the shipping industry who wanted to insure cargo and ships, and those willing to bear such a venture. This informal beginning leads to the creation of Lloyd's of London insurance market and some related shipping and insurance companies.

The first life insurance policy was taken in the early 18th century. The first company to offer life insurance was the Amisable Society for the Eternal Security Office, founded in London in 1706 by William Talbot and Sir Thomas Allen. Edward Rowe Mores founded the Society for Equitable Assurances on Lives and Survivorship in 1762.

This is the world's first mutual insurance and pioneered age-based premiums based on mortality rates laying the "framework for the practice and development of scientific insurance" and "the basic assurance of modern life in which all life insurance schemes are then based".

At the end of the 19th century, "accident insurance" became available. The first company to offer accident insurance was the Railway Passenger Company, established in 1848 in the UK to ensure against the growing number of fatalities in the newborn rail system.

At the end of the 19th century, the government began to start a national insurance program against disease and old age. Germany built the tradition of welfare programs in Prussia and Saxony that began as early as the 1840s. In the 1880s Chancellor Otto von Bismarck introduced old-age pensions, accident insurance and medical care that formed the basis for the German welfare state. In the UK, a broader legislation was introduced by the Liberal government in the 1911 National Insurance Act. This gave the British working class the first insurance contribution system to disease and unemployment. The system was highly developed after the Second World War under the influence of Beveridge Report, to form the first modern welfare state.

Maps Insurance

Principles

Insurance involves collecting funds from many insured entities (known as exposures) to pay for losses that may arise. Therefore, the insured entity is protected from risks by cost, at a cost that depends on the frequency and severity of the events occurring. To be an insurable risk, the risks insured must meet certain characteristics. Insurance as a financial intermediary is a commercial company and a major part of the financial services industry, but individual entities can also guarantee themselves through money saving for possible future losses.

Insurability

Risks that can be insured by private companies usually share seven common characteristics:

1. A large number of similar exposure units : Since insurance operates through the collection of resources, the majority of insurance policies are provided for each of the major class members, allowing insurance companies to benefit from large- figures that forecast losses are similar to actual losses. Exceptions include Lloyd's of London, which is famous for insuring the life or health of actors, sports figures, and other notable individuals. However, all exposures will have certain differences, which may cause different premium rates.
2. Default loss : Losses occur at a known time, in known places, and from known causes. The classic example is the death of the insured person in the life insurance policy. Fires, car accidents, and worker injuries can all easily meet these criteria. Other types of losses may only be certain in theory. Occupational disease, for example, may involve prolonged exposure to hazardous conditions in which no identifiable time, place or specific cause can be identified. Ideally, the time, place, and cause of loss must be sufficiently clear that a reasonable person, with sufficient information, can objectively verify all three elements.
3. Unintentional loss : Events that are triggers of a claim must be accidental, or at least outside the control of the insurance beneficiary. The loss must be pure, in the sense that it is the result of an event where there is only opportunity for cost. Events that contain speculative elements such as ordinary business risks or even the purchase of lottery tickets are generally not considered insurable.
4. Big Losses : The size of the loss must mean from the insured's point of view. Insurance premiums should cover both the expected cost of losses, plus the costs of issuing and managing policies, adjusting losses, and supplying the necessary capital to reasonably ensure that the insurer will be able to pay claims. For small losses, this latter cost may be several times greater than the estimated cost of loss. It is virtually useless to pay such fees unless the protection offered has real value to the buyer.
5. Affordable premiums : If the possibility of an insured event is very high, or the cost of the show is so large, that the resulting premium is relatively large compared to the amount of protection offered, then it is unlikely that insurance will be purchased, even if offered. Furthermore, since the accounting profession is formally acknowledged in the financial accounting standards, the premiums can not be so great that there are no reasonable opportunities for significant losses for insurance companies. If there is no possibility of loss, then the transaction may have an insurance form, but not substance (see US Financial Accounting Standards 113: "Accounting and Reporting for Short Term Reinsurance and Long Duration of Contracts").
6. Calculate loss : There are two elements that should be at least predictable, if not formally calculated: possible losses, and attendance costs. The probability of loss is generally an empirical exercise, while the cost is more related to the ability of a reasonable person to have a copy of the insurance policy and evidence of harm related to the claim filed under that policy to make a definite decision and objective evaluation of the amount of recoverable damages as a result of such claims.
7. Large risk of huge loss : Insurable losses are ideally independent and not catastrophic, which means that losses do not occur at once and individual losses are not severe enough to bankrupt the insurance company; insurance companies may prefer to limit their exposure to losses from one event to several small parts of their underlying capital. Capital limits the ability of insurance companies to sell earthquake insurance as well as wind insurance in storm zones. In the United States, the risk of flooding is insured by the federal government. In commercial fire insurance, it is possible to find a single property whose total value of exposure far exceeds the capital limit of individual insurance companies. Such property is generally shared among several insurance companies, or insured by an insurance company that synds the risk into the reinsurance market.

Legal

When a company insures an individual entity, there are basic legal requirements and regulations. Some of the principles of commonly quoted insurance law include:

1. Indemnity - the insurance company compensates, or compensates, the insured in the case of certain losses only to the interests of the insured.
2. Benefit insurance - as stated in the books of The Chartered Insurance Institute study, the insurer has no right of recovery from the injured party and to compensate the Insured despite the fact that the Insured has already sued the negligent party for damages (for example, personal accident)
3. Insurable interest - the insured usually has to suffer a loss directly. Insurable interest should be in place whether property or insurance insurance is involved. The concept requires that the insured has a "share" in the loss or damage to the life or property of the insured. What "bets" will be determined by the type of insurance involved and the nature of the property ownership or the relationship between people. The requirement of an insurable interest is what distinguishes insurance from gambling.
4. The Ultimate Faith - (Uberrima fides) the insured and the insurance company are bound by the bond of good faith from honesty and justice. Material facts should be disclosed.
5. Contributions - an insurer that has the same liability as the insured contributes to compensation, in accordance with several methods.
6. Subrogation - the insurer obtains the legal right to pursue a recovery on behalf of the insured; for example, insurance companies may sue those responsible for the loss of the insured. Insurers may override their subrogation rights by using special clauses.
7. Proxima, or direct cause - causes of harm (harm) must be covered by the policy insuring agreement, and the dominant cause should not be excluded
8. Mitigation - If there is a loss or casualty, the asset owner should attempt to minimize the loss to a minimum, as if the asset is not insured.

Indemnification

To "indemnify" means to make intact again, or to be recovered to an existing position, wherever possible, prior to the occurrence of certain events or hazards. Thus, life insurance is generally not considered as compensation insurance, but rather a "contingent" insurance (ie, claims arise on the occurrence of certain events). In general there are three types of insurance contracts that seek to indemnify the insured:

1. The "replacement" policy
2. A "pay on behalf of" or "on behalf of the policy"
3. "indemnification" policy

From the insured's point of view, the result is usually the same: the insurer pays for the costs of losses and claims.

If the Insured has a "reimbursement" policy, the insured may be required to pay the loss and then be "reimbursed" by the insurance operator for loss and out of pocket expenses including, with the permission of the insurer, the cost of the claim.

Under the "pay-by-name" policy, the insurance operator will maintain and pay claims on behalf of the insured who will not leave the bag for anything. Most modern liability insurance is written on the basis of a "pay-in-name" language that allows insurance operators to manage and control claims.

Under the "indemnity" policy, insurance operators generally can "replace" or "pay on behalf", whichever is more profitable and insured in the claims handling process.

Entities wishing to transfer risk (individuals, corporations, or associations of any kind, etc.) Become an insured party after the risk is assumed by the insurer, the insurer, through a contract, called policy insurance. Generally, the insurance contract includes, at a minimum, the following elements: identification of the participating parties (insurer, insured, beneficiary), premiums, coverage period, certain incidental losses covered, the sum insured (ie, amounts payable to the insured or beneficiaries in the event of a loss), and exceptions (events not covered). An insured is thus said to be "indemnified" against the losses covered by the policy.

When an insured party incurs a loss on a particular risk, the liability gives the policyholder the right to file a claim against the insurance company for the amount of loss covered as determined by the policy. The cost paid by the insured to the insurer to bear the risk is called a premium. Insurance premiums from many insured are used to finance the accounts provided for future claims payments - in theory for multiple claimants - and for overhead. As long as a guarantor retains sufficient funds set aside to anticipate losses (called reserves), the remaining margin is the earnings of the insurance company.

src: guardian.ng

Social effects

Insurance can have various effects on the community through the manner in which the changes bear the costs of loss and damage. On the one hand can increase fraud; on the other hand can help communities and individuals prepare for disasters and reduce the impact of disasters on households and communities.

Insurance can affect possible losses through moral hazard, insurance fraud, and preventive measures by insurance companies. Insurance scholars typically use moral hazard to refer to an increase in losses due to unintentional carelessness and insurance fraud to refer to increased risk due to carelessness or intentional disobedience. Insurers seek to overcome carelessness through inspection, policy provisions requiring certain types of treatment, and possible discounts for mitigation efforts. While in theoretical insurance may encourage investment in reducing losses, some commentators argue that in insurance practices historically do not aggressively pursue loss control measures - especially to prevent catastrophic losses like hurricanes - due to concerns over declining levels and legal battles. However, since about 1996 insurance companies have begun to take a more active role in mitigating losses, such as through building codes.

Insurance method

According to the study books of The Chartered Insurance Institute, there are various insurance methods as follows:

1. Co-insurance - risk is shared between insurance companies
2. Double insurance - has two or more policies with overlapping risk coverage (both individual policies will not pay separately - under a concept named contribution, they will contribute together to cover the policyholder's losses.However, in the case of contingencies insurance such as life insurance, double payment allowed)
3. Personal insurance - a situation in which the risk is not transferred to the insurer and is owned solely by the entity or individual itself
4. Reinsurance - the situation when an insurance company surrenders some or all of the risk to another Insurer, called a reinsurer

src: maisonins.com

Insurance business model

Guarantee and invest

The business model is to collect more premium and investment income than it pays off in losses, and also offers competitive prices that will be accepted by consumers. Benefits can be reduced to a simple equation:

Profit = return on investment premium income - loss incurred - underwriting cost.

Insurers make money in two ways:

• Through a guarantee, a process in which the insurer chooses a risk to ascertain and decide how much premium to pay for accepting the risk
• By investing the premiums they collect from insured parties

The most complicated aspect of the insurance business is the actuarial science of policy making, which uses statistics and the probability to estimate future claims based on the risks. After generating interest rates, the insurer will use the discretion to refuse or accept risk through the guarantee process.

At the most basic level, early decision making involves looking at the frequency and severity of the insured hazard and the expected average payments resulting from this danger. After that the insurer will collect historical loss data, bring the loss data to the present value, and compare the previous loss with the premium collected to assess the adequacy level. Loss and expense expenses are also used. Ratings for different risk characteristics involve at the most basic level comparing losses with "loss of relativity" - a policy with twice as much loss as it will be charged double. A more complex multivariate analysis is sometimes used when some characteristics are involved and univariate analysis can produce confusing results. Other statistical methods can be used in assessing the likelihood of future losses.

Upon termination of certain policies, the amount of premiums collected less the amount paid in the claim is the underwriting insurance income under that policy. Underwriting performance is measured by something called "combined ratio", which is the ratio of cost/loss to premiums. A combined ratio of less than 100% indicates underwriting earnings, while a figure above 100 indicates an underwriting loss. Companies with a combined ratio of more than 100% can still remain profitable due to investment income.

Insurance companies get an investment advantage on "float". Float, or available reserves, is the amount of money that exists at a certain time that has been collected by the insurer in the insurance premium but has not been paid in claims. Insurers begin to invest insurance premiums as soon as they are collected and continue to earn interest or other income on them until the claim is paid. The British Insurers Association (collecting 400 insurance companies and 94% of UK insurance services) owns almost 20% of the investment on the London Stock Exchange.

In the United States, the underwriting loss of property and accident insurance companies was $ 142.3 billion in the five years ended in 2003. But the overall profit for the same period was $ 68.4 billion, as a result of the buoy. Some people in the insurance industry, especially Hank Greenberg, do not believe that it is forever possible to retain earnings from float without underwriting earnings as well, but this opinion is not universally held.

Naturally, the buoy method is difficult to do in a period that is economically depressed. The market bear does cause insurance companies to switch from investments and to strengthen their guarantee standards, so the poor economy generally means high insurance premiums. The tendency to swing between lucrative and unfavorable periods over time is commonly known as underwriting, or insurance, cycles.

Claim

Claims and handling losses are the embodied insurance utilities; this is a "product" that is actually paid for. Claims may be filed by the insured directly with the insurer or through a broker or agent. An insurance company may require that claims be filed on its own ownership form, or may accept claims on standard industrial forms, such as those produced by ACORD.

The insurance claims department employs a large number of claim regulators supported by archives management staff and data entry employees. Incoming claims are classified according to severity and set for adjuster whose authority of completion varies with their knowledge and experience. The recipient conducts an investigation of any claim, usually in close cooperation with the insured, determining whether coverage is available under the terms of the insurance contract, and if so, the reasonable monetary value of the claim, and authorizing the payment.

Policyholders can rent their own public adjuster to negotiate settlement with the insurance company on their behalf. For complicated policies, where claims may be complicated, the insured may take a separate insurance policy add-on, called loss recovery insurance, which covers the cost of the public adjuster in the event of a claim.

Adjusting liability insurance claims is very difficult because there is a third party involved, the plaintiff, who has no contractual obligation to cooperate with the insurance company and may actually consider the insurance company as a deep pocket. The counselor should obtain legal counsel for the insured (either inside the "home" advice or outside the "advice panel"), monitor litigation which may take years to complete, and appear personally or by telephone with the completion authority at the mandatory completion conference asked by a judge.

If the adjuster claims suspect less insurance, the average conditions may come into play to limit the exposure of the insurer.

In managing the claims handling function, the insurer tries to balance the elements of customer satisfaction, administrative handling fees, and claims of payment leakage. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome. Disputes between insurance and insurance companies over the validity of claims or claims handling practices sometimes increase to litigation (see bad faith insurance).

Marketing

Insurers will often use insurance agents to market or bear their initial customers. Agents can be held captive, which means they only write for one company, or independent, which means that they can issue policies from several companies. The existence and success of companies that use insurance agents is likely due to improvements and personal services. The Company also uses Broking, Bank, and other corporate entities (such as Self Assistance Groups, Microfinance Institutions, NGOs, etc.) to market their products.

src: summitagencyllc.com

Type

Any measurable risk can be potentially insured. The specific types of risks that can cause a claim are known as hazards. An insurance policy will be set in detail in which risks are covered by policies and which are not. Below is an incomplete list of different types of insurance available. One policy that may include risks in one or more of the categories set forth below. For example, vehicle insurance will typically cover property risks (vehicle theft or damage) and liability risk (legal claims arising from accidents). A home insurance policy in the United States usually covers coverage for damage to homes and owner's possessions, certain legal claims against owners, and even a small amount of coverage for injured guest medical expenses on the property of the owner.

Business insurance can take a number of different forms, such as various types of professional liability insurance, also called professional compensation (PI), which is discussed below by that name; and business owner policy (BOP), which bundles into a single policy of much of the kind of coverage that business owners need, in the same way as homeowner insurance packages required by homeowners.

Auto insurance

Car insurance protects policyholders against financial losses in case of incidents involving vehicles they own, such as in traffic collisions.

Coverage usually includes:

• Property coverage, for car damage or theft
• Coverage of liability, to legal liability to others for bodily injury or property damage
• Medical coverage, for the cost of treating injuries, rehabilitation and sometimes loss of wages and funeral expenses

Insurance Gap

Gap insurance covers the amount of surplus on your auto loan in an instance where your insurance company does not cover all the loans. Depending on the company's specific policies, it may or may not include deductibles as well. This coverage is marketed to those who make low payments, have high interest rates on their loans, and those with a term of 60 months or longer. Gap insurance is usually offered by finance companies when vehicle owners buy their vehicle, but many car insurance companies also offer this guarantee to the consumer.

Health insurance

Health insurance policies cover the cost of medical care. Dental insurance, such as health insurance, protects policyholders for dental care costs. In most developed countries, all citizens receive some health insurance from their government, paid on taxes. In most countries, health insurance is often part of the employer's profits.

Income protection insurance

• Disability insurance policy provides financial support if the policyholder is unable to work due to disability or injury. It provides monthly support to help pay obligations like mortgage and credit card loans. Short-term and long-term disability policies are available to individuals, but given the costs, long-term policies are generally obtained only by people with at least six-figure incomes, such as doctors, lawyers, etc. Short-term disability insurance covers a person for a period usually up to six months, paying an allowance each month to cover medical bills and other necessities.
• Long-term disability insurance covers long-term personal expenses, until they are permanently deemed permanent and then Insurance companies will often try to encourage the person to return to work on preference and before declaring that they can not work at all and because it is true is disabled.
• Disability overhead insurance allows business owners to cover their business overhead costs while they can not work.
• Total permanent disability insurance provides benefits when someone is permanently disabled and can no longer work in his profession, often taken in addition to life insurance.
• Worker's compensation insurance replaces all or part of lost worker's wages and accompanies medical expenses incurred due to work-related injuries.

Accident Insurance

Accident insurance provides guarantees against accidents, not necessarily tied to a particular property. It is a broad spectrum of insurance that a number of other types of insurance can be classified, such as cars, worker compensation, and some liability insurance.

• Crime insurance is a form of accident insurance covering the policyholder against loss arising from a third party criminal act. For example, a company may obtain criminal insurance to cover losses arising from theft or embezzlement.
• Terrorism insurance provides protection against any loss or damage caused by terrorist activity. In the United States behind 9/11, the 2002 Territory Risk Insurance Act (TRIA) regulates a federal program that provides a transparent system of public and private compensation for losses guaranteed by acts of terrorism. The program is extended until late 2014 by the Terrorism Risk Reinsurance Program 2007 (TRIPRA).
• The abduction and ransom insurance is designed to protect individuals and companies operating in high risk areas around the world against the dangers of kidnapping, extortion, false detention and piracy.
• Political risk insurance is a form of accident insurance that can be taken by companies operating in countries where there is a risk that a revolution or other political conditions may result in a loss.

Life insurance

Life insurance provides monetary benefits to the families of the deceased or other designated beneficiaries, and may specifically provide income to families, funerals, funerals, and other end-of-life costs. Life insurance policies often allow the option to get paid outcomes to beneficiaries whether in cash payments at once or annuities. In most states, one can not buy policies about others without their knowledge.

Annuities provide a flow of payments and are generally classified as insurance because they are issued by an insurance company, regulated as insurance, and require the same actuarial and investment management skills as life insurance is required. Annuities and pensions that pay benefits to life are sometimes considered as insurance against the possibility that the pensioner will outlive his financial resources. In that sense, they are a complement of life insurance and, from an underwriting perspective, are a mirror image of life insurance.

Certain life insurance contracts collect cash value, which can be taken by the insured if the policy is submitted or that may be borrowed. Some policies, such as annuity and waqf policies, are financial instruments to accumulate or liquidate wealth when needed.

In many countries, such as the United States and United Kingdom, the tax law provides that interest on this cash value is not taxed in certain circumstances. This led to widespread use of life insurance as an efficient tax-saving method and protection in the event of an early death.

In the United States, the tax on interest income on life insurance policies and annuities is generally suspended. However, in some cases, the benefits derived from tax deferral may be offset by low returns. It depends on the insurance company, the type of policy and other variables (death, market return, etc.). In addition, other vehicles that save income taxes (eg, IRA, 401 (k) plans, Roth IRA) may be a better alternative to accumulated value.

Funeral Insurance

Funeral insurance is a very long life insurance type paid at the time of death to cover the final cost, such as funeral expenses. The Greeks and Romans introduced the funeral insurance in 600 AD when they organized unions called "kind-hearted people" who took care of the surviving family and paid the funeral costs of the members at the time of death. The Communion of the Middle Ages served the same purpose, as was the sociable society of Victorian times.

Properties

Insurance liability is a very broad superset that covers legal claims against the insured. Many types of insurance include liability insurance aspects. For example, a homeowner's insurance policy will usually include liability coverage that protects the insured in the case of claims brought by a person who slips and falls on the property; Car insurance also covers aspects of liability insurance that compensate for damages that automobile accidents can inflict on the life, health, or property of others. The safeguards offered by the liability insurance policy are twofold: the legal defense in case the lawsuit begins against the policyholder and the indemnity (payment on behalf of the insured) in respect of the settlement or court decision. The liability policy usually covers only the insured's negligence, and will not apply to the outcome of intentional or deliberate action by the insured.

• Public liability insurance or general liability insurance covers the business or organization against claims if its operations hurt members of the public or damage property in a particular way.
• The liability insurance of the Board of Directors and officers (D & amp; O) protects the organization (usually the corporation) from costs associated with litigation resulting from errors made by the board of directors and officers for which it is responsible.
Environmental responsibility or environmental damage insurance protects the insured from bodily injury, property damage and cleaning costs as a result of dispersal, release or release of pollutants.
• Insurance mistakes and omissions (E & amp; O) are business liability insurance for professionals such as insurance agents, agents and property brokers, architects, third-party administrators (TPAs), and other business professionals.
• Indemnity rewards insurance protects the insured from giving big prizes at certain events. Examples include offering rewards to contestants who can make half-field shots at basketball games, or hole-in-one at golf tournaments.
• Professional liability insurance, also called professional indemnity insurance (PI), protects insured professionals such as architectural firms and medical practitioners against potential negligence claims made by patients/clients. Professional liability insurance can use different names depending on the profession. For example, professional liability insurance that refers to the medical profession can be called medical malpractice insurance.

Often commercial insurance liability insurance programs consist of several layers. The first layer of insurance generally consists of the main insurer, which provides the first dollar indemnity for assessment and settlement to the extent of key policy responsibilities. Generally, primary insurance is deductible and requires the insured to defend the insured against a lawsuit, which is usually done by assigning a lawyer to defend the insured. In many instances, a commercial insured may choose to insure oneself. On top of the primary insurance or self-insured retention, the insured may have one or more layers of excess insurance to provide an additional coverage limit of indemnity protection. There are various types of excess insurance, including "stand-alone" policies ("policies that contain terms, conditions and exceptions)," follow the form "of excess insurance (policies that follow the underlying policy provisions except as specifically provided), and" umbrella "insurance policies (excessive insurance which in some circumstances may provide wider coverage than the underlying insurance).

Credit

Some communities prefer to create virtual insurance among themselves in other ways than contractual risk transfers, which provide explicit numerical value to risk. A number of religious groups, including the Amish and some Muslim groups, rely on the support provided by their community when disaster strikes. The risks presented by everyone are assumed collectively by people who all bear the cost of rebuilding the lost property and supporting people whose needs are suddenly greater after such loss. In a supportive community where others can be trusted to follow community leaders, this form of tacit insurance can work. In this way, the community can issue extreme differences in terms of the insurability that exists among its members. Some further justification is also provided by applying a moral hazard of an explicit insurance contract.

In Britain, The Crown (which, for practical purposes, means civil service) does not insure property like government buildings. If the government building is damaged, the cost of repairs will be met from public funds because, in the long run, this is cheaper than paying the insurance premium. Since many British government buildings have been sold to property companies, and hired back, these arrangements are now less common and may have disappeared altogether.

In the United States, the most common form of self-insurance is a collection of government risk management. They are self-funded cooperatives, operating as carriers of coverage for most of today's government entities, such as local governments, municipalities, and school districts. Rather than these bodies independently insuring themselves and the risk of bankruptcy from a major assessment or disaster loss, the government entity forms a risk group. Such pools begin their operations with capitalization through member savings or bond issuance. Coverage (such as general responsibility, auto responsibility, professional responsibility, worker compensation, and property) is offered by the pool to its members, similar to the coverage offered by the insurance company. However, the insured pool itself offers members with lower rates (because it does not require an insurance broker), increased benefits (such as loss prevention services) and subject expertise. Approximately 91,000 different government entities operate in the United States, 75,000 are members of the self-insured pool in various coverage lines, which make up about 500 ponds. Despite the relatively small corner of the insurance market, annual contributions (self-insured premiums) to such pools are estimated at up to 17 billion dollars annually.

src: davinsurance.com

Insurance Company

Insurance companies can be classified into two groups:

• Life insurance companies, which sell life insurance products, annuities and pensions.
• A non-life or property/accident insurance company, which sells other types of insurance.

General insurance companies can be subdivided into these sub categories.

• Standard line
• Overline

In most countries, life and non-life insurance are subject to different regulatory regimes and different tax and accounting rules. The main reason for the difference between the two types of companies is that life, benefits, and pension businesses are long term - life insurance coverage or pensions can cover risks for decades. In contrast, non-life insurance coverage usually covers shorter periods, such as one year.

Insurance companies are generally classified as joint or proprietary companies. Mutual companies are owned by policyholders, while shareholders (who may or may not have a policy) have ownership insurance companies.

Demutualization of mutual insurance companies to form stock companies, as well as the formation of hybrids known as joint holding companies, became common in several countries, such as the United States, at the end of the 20th century. However, not all countries allow joint holding companies.

Other possible forms for an insurance company include reciprocity, in which policyholders reward share risks, and Lloyd's organization.

Insurance companies are assessed by various institutions such as A. M. Best. The rating includes the company's financial strength, which measures its ability to pay claims. It also assesses the financial instruments issued by insurance companies, such as bonds, records, and securitization products.

Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce risks and protect themselves against huge losses. The reinsurance market is dominated by some very large companies, with large reserves. A reinsurer can also be a direct writer of insurance risk as well.

A captive insurance company may be defined as an insurance company with limited objectives established with the specific purpose of financing the risks arising from their parent group or group. This definition can sometimes be extended to include some risks from the parent company's customers. In short, it is a self insurance vehicle at home. The prisoner may take the form of a "pure" entity (which is a 100% subsidiary of the self-insured parent company); from "reciprocal" prisoners (which guarantee the collective risk of members of an industry); and from "prisoner" detainees (who insure their own individual risk from members of professional, commercial or industrial associations). Prisoners represent the commercial, economic, and tax advantages of their sponsors because of the cost reductions they help create and for the ease of insurance risk management and flexibility for the cash flow they generate. In addition, they can provide coverage of risks that are not available or offered in the traditional insurance market at a reasonable price.

The types of risks that can be borne by parents for their parents include property damage, public and product liability, professional compensation, employee benefits, employer liability, motor costs and medical assistance. Breeding exposure to such risks may be limited by reinsurance use.

Prisoners are becoming an increasingly important component of risk management and their parent's risk financing strategy. This can be understood with the following background:

• Weight and premium cost increases on almost every line of coverage
• Difficulty in insuring some kind of chance risk
• Differential coverage standard in different parts of the world
• An assessment structure that reflects market trends rather than individual loss experiences
• Credit is insufficient for deductibles or loss control attempts

There are also companies known as "insurance consultants". Like mortgage brokers, these companies are paid a fee by customers to shop for the best insurance policies among many companies. Similar to insurance consultants, 'insurance brokers' are also traveling around to get the best insurance policies among many companies. However, with an insurance broker, the fee is usually paid in the form of a commission from the insurance company chosen rather than directly from the client.

Neither insurance consultants nor insurance brokers are insurance companies and no risk is transferred to them in insurance transactions. Third party administrators are companies that make guarantees and sometimes claim handling services for insurance companies. These companies often have special skills not owned by insurance companies.

Financial stability and strength of the insurance company should be a major consideration when purchasing an insurance contract. Insurance premiums paid today provide coverage for losses that may arise for many years in the future. Therefore, the survival of insurance operators is very important. In recent years, a number of insurance companies have gone bankrupt, leaving their policyholders unsecured (or coverage only from a collection of government-backed insurance or other arrangements with less disadvantageous payments). A number of independent rating agencies provide information and assess the financial feasibility of insurance companies.

src: pathct.org

Worldwide

The global insurance premium grew by 2.7% in terms adjusted for inflation in 2010 to $ 4.3 trillion, rising above pre-crisis levels. The return of growth and the record premium generated during the year follows a two-year decline in real terms. Life insurance premiums increased 3.2% in 2010 and non-life premiums by 2.1%. While industrialized nations saw a 1.4% increase in premiums, the insurance market in developing countries expanded rapidly with an 11% growth in premium income. The global insurance industry is capitalized enough to withstand the financial crisis of 2008 and 2009 and most insurance companies return their capital to pre-crisis levels by the end of 2010. With the ongoing gradual recovery of the global economy, it is likely that the insurance industry will continue to see premium revenue growth both in the country industries and emerging markets in 2011.

Economic accounts advanced for most of the global insurance. With a premium income of $ 1.62 trillion, Europe was the most important region in 2010, followed by North America $ 1.409 trillion and Asia $ 1.161 trillion. But Europe has seen a decrease in premium income during the year is different from the growth seen in North America and Asia. The top four countries generate more than half the premium. The United States and Japan alone account for 40% of the world's insurance, much higher than their 7% share of the global population. Developing countries account for more than 85% of the world's population but only about 15% of the premium. But their market is growing faster. The country that is expected to have the greatest impact on the distribution of insurance shares worldwide is China. According to Sam Radwan of ENHANCE International LLC, low premium penetration (insurance premiums as% of GDP), aging populations and the largest auto market in terms of new sales, the average premium growth of 15-20% in the last five years, and China is expected to become the largest insurance market in the next decade or two.

Regulatory differences

In the United States, insurance is governed by states based on the McCarran-Ferguson Act, with "periodic proposals for federal intervention", and a non-profit coalition of state insurance agencies called National Association of Insurance Commissioners working to harmonize different laws in the country and regulations. The National Conference of Insurance Legislators (NCOIL) also works to align different country laws.

In the EU, the Third Non-Life Guide and Third Living Guide, both passed in 1992 and effective 1994, created a single insurance market in Europe and allowed insurance companies to offer insurance anywhere in the EU (subject to permission from the authority at the headquarters ) and allows insurance consumers to buy insurance from insurance companies in the EU. As far as insurance in the UK, the Financial Services Authority took over the insurance rules of the General Insurance Standards Board in 2005; legislation passed including the 1973 Insurance Companies Act and others in 1982, and reforms for guarantees and other aspects discussed in 2012.

The insurance industry in China was nationalized in 1949 and subsequently offered by only one state-owned company, China People's Insurance Company, which was eventually suspended due to decreased demand in the communist environment. In 1978, market reforms led to an increase in the market and in 1995 the comprehensive Insurance Law of the People's Republic of China was adopted, followed in 1998 by the establishment of China Insurance Regulatory Commission (CIRC), which has wide regulatory authority over China's insurance market.

In India IRDA is an insurance regulatory authority. Under section 4 of the IRDA Act 1999, the Insurance Regulatory and Development Authority (IRDA), established by parliamentary action. National Insurance Academy, Pune is the top builder capacity insurance institution promoted with support from the Ministry of Finance and by LIC, Life & amp; General Insurance Company.

In 2017, within the framework of a joint project of Bank of Russia and Yandex, a special tick (a green circle with a check mark and a '???????' (List of Insurance Entity Countries) text box) appears in the search system Yandex , informs consumers that the company's financial services are offered on the flagged website, which owns

Source of the article : Wikipedia