Insurance Definitions
Insurance or coverage is an agreement, by which a person committed themselves to the insured to receive a premium, to provide reimbursement to him for any loss, damage or loss of expected profit, which may be suffered due to a particular event can not.
Based on these definitions, then the insurance contained 4 elements, namely: a. The insured party which promises to pay the premiums to the underwriter, all at once or gradually. b. Party underwriter that promised to pay some money (compensation) to the insured, all at once or gradually if there is something that does not contain certain elements. c. An event is not terntentu.
Based on these definitions, then the insurance contained 4 elements, namely: a. The insured party which promises to pay the premiums to the underwriter, all at once or gradually. b. Party underwriter that promised to pay some money (compensation) to the insured, all at once or gradually if there is something that does not contain certain elements. c. An event is not terntentu.
d. Interest which may be suffered losses due to certain events that do not.
Insurance Functions
* Risk Transfer
Insurance is a risk transfer mechanism, where individuals or enterprises can not transfer anything to the other party must, with a relatively small premium compared with possible losses, uncertainty diahlihkan loss to the insurance.
* Common Pool
At the beginning of the emergence of marine insurance, the traders at that time agreed to contribute to the loss (because of the risk of sea) experienced by a person in between them. This practice is not entirely divert the risk but only reduce the risk.
In its development contribution is set at the beginning before losses occur, so that each can learn certain contributions burden, ie pay what is called a premium. Premiums are received and collected in a fund or pool and developed to overcome the claim that happen.
* Equitable premiums
With the assumption that the transfer of risk has been done through the common pool, the third main function is the contribution payable by each participant must be fair.
The level of risk experienced by each participant may differ, for example for buildings made of wood has a risk level higher than the building of stone. The driver 18-year-old higher risk compared with drivers aged 50 years. Similarly, the insured value of goods is not always the same. Differences on the level of hazard and the value it will bring big consequences contributions (premiums) charged. This sort of thing which is now the basis of the underwriters in setting premium rates.
Insurance is a risk transfer mechanism, where individuals or enterprises can not transfer anything to the other party must, with a relatively small premium compared with possible losses, uncertainty diahlihkan loss to the insurance.
* Common Pool
At the beginning of the emergence of marine insurance, the traders at that time agreed to contribute to the loss (because of the risk of sea) experienced by a person in between them. This practice is not entirely divert the risk but only reduce the risk.
In its development contribution is set at the beginning before losses occur, so that each can learn certain contributions burden, ie pay what is called a premium. Premiums are received and collected in a fund or pool and developed to overcome the claim that happen.
* Equitable premiums
With the assumption that the transfer of risk has been done through the common pool, the third main function is the contribution payable by each participant must be fair.
The level of risk experienced by each participant may differ, for example for buildings made of wood has a risk level higher than the building of stone. The driver 18-year-old higher risk compared with drivers aged 50 years. Similarly, the insured value of goods is not always the same. Differences on the level of hazard and the value it will bring big consequences contributions (premiums) charged. This sort of thing which is now the basis of the underwriters in setting premium rates.
