Insurance as we know that today could be traced back to the great fire of London in 1666 devoured replant houses. After this disaster, Nicholas Barbon has opened an Office of buildings. In 1680, establishes 1 fire England, "The Fire Office, insurance company to ensure frame and brick houses. The first fire a insurance United States insurance business was formed in the town of Charles (modern day Charleston), South Carolina in 1732.
In 1752, Benjamin Franklin founded Philadelphia aid for insurance against loss by fire houses. He refused to provide certain buildings in which the risk of fire was too large as 100% wooden buildings.
The principles of insurance:
Exact time or the occurrence of the loss must be uncertain. The value of the loss should be relatively surprising. To determine premiums or in other words to calculate the price levels, insurers should estimate their. Insurers need to know the price it would be called to pay after the insured event occurs. Most insurance types have a maximum level of payments, with several exceptions such as Medicare.
The loss must be important: the de minimis principle (Latin: minimal things) dictates that insignificant issues aren't covered.The payment paid by the insured to the insurer to assume the risk is known as "premium".
Possible causes of chance that can give rise to insurance claims are named "risks". Examples of hazards could be fire, theft, earthquake, hurricanes and number of other risks possible. An insurance policy will outline in detail the perils are covered by the policy and which are not. Damage should not be a catastrophic scale, if the insurer is insolvent, he will be unable to pay the insured person. The United States has funds guarantee to reimburse the insured victims whose insurance companies are in bankruptcy. This program is managed by the National Association of Insurance Commissioners (NAICS).
Compensation (compensation)
Any person wishing to transport risk (a person, company or organization of any type) becomes the "insured" party once the risk is assumed by a "insurer" party to ensure, by means of a contract, defined as an insurance policy. This legal agreement defines the terms specifying the total coverage (reimbursement) to be returned to the insured by the insurer risk assumption in the case of a loss and 100% covered specific risks against (compensation), for the duration of the contract.
When the parties insured loss, of a specified risk cover allows the licensee produce a "claim" against the insurer for the amount of damage when specified by the policy contract.
Financial sustainability of insurance companies
The posture of the insurance and financial stability should be a major factor for the purchase of an insurance contract. Currently paid insurance premium provides coverage for damges that may occur in the future years. Because of this, the financial strength of the carrier insurance is more important. In recent years, some insurance companies became unable to pay, neglecting their subscribers with on coverage (or just cover with a Government supported insurance pool with the its and the history of favourable insurance payments for losses). A number of independent rating as Best agencies provide facts and rates of financial soundness of insurance undertakings.
Risk assessment
The insurer uses actuarial to quantify the risk they are willing to consider. Information gathered for the insurance claims future approximate, usually with reasonable accuracy. Actuarial employs statistics and probability to analyze the risks associated with the range covered risks and scientific principles are used by insurers, in combination with other factors, to decide the composition rates.
Analogy game
Some people falsely assume insurance one type of bet (such as moral hazard associated with) that runs on the period policy. The Paris insurance company that you or your property not incur injury while make you money on the opposite outcome. Assurance of the owner of the House almost all does not cover them floods. Using insurance, you manage risk you can't prevent otherwise, and which does not lend the chance of benefit (pure risk). In other words, the game is an insurable risk.
The "insurance" of social solidarity
Some religious groups among the Amish and Muslims refrain from insurance and rather depend on support provided by the company when disasters strike. This could be regarded as 'social insurance', as the risk of a particular person is assumed collectively by the community to be completely bear the cost of reconstruction. In closed communities mutual assistance where others could actually intervene to reconstruct the total lost assets, this provision might work. The majority of companies could not effectively support this type of models, and it will not work for catastrophic risks.
(Source: http://en.wikipedia.org/wiki/Insurance).
MBA - international trade and finance - University Heriot-Watt. B.sc.. computers and Information Systems - Long Island University - c.w. post campus. Hobby: photography. Married and father of two children.
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