Insurance

What Is Insurance?

We all know that one method to reduce risk is to cover any threat to an insurance company. This is the most crucial method for combating the threat. Many people believe the concept of risk management is just as important as insurance. However, the reality is not as simple.
Insurance refers to the insurance transaction that is a partnership between two parties: the person who is insured and the insurer. The insurer assures the insured they will reimburse him for any loss that might be suffered by the insured due to an event that could not have happened or cannot be identified as to what time or date it occurred. The insured is obligated to pay a certain amount in the direction of the company; the amount of the insured sum is commonly referred to as “premium.”
From a variety of angles, insurance can be seen from many objectives and methods of splitting the risk, such as:
A. From an economic standpoint, If we consider economics, then:
The aim:
The reduction of uncertainty in the outcomes of any operations carried out by an individual or a company to satisfy the requirements or meet objectives.
Technique:
By transferring the risk, the other party and the other party taking on the risk in a significant amount could be calculated with greater precision the potential amount of loss.
B. Based on Law Then:
The aim:
We are transferring the risk of the object or business venture to a different one.
Technique:
Through premiums paid by an insured party to the insurance company under the indemnity policy (insurance policy), The risk of transfer over to the insurer.
C. Concerning trade Then:
The objective:
All participants share the risk in the program.
Technique:
Risk transfer from individuals or corporations to financial institutions involved in risk management (insurance companies) will then share the risk among all the participants in the insurance it manages.
D. D.’s social viewpoint and a societal perspective
The objective:
All bear losses together among the participants in the insurance plan.
Technique:
All members of the group (group participants) who are part of this insurance plan pay (by the way or in form) to compensate for the losses of a specific group of its members.
E. In the context of Mathematics, Then:
The aim:
Estimating the size of the risk and the result from the prediction is utilized to allocate the risk across everyone in the (group comprising participants) Insurance program.
Technique:
Calculates the probability on the basis of the theory of probability (“Probability Theory”), which is performed by an actuary as well as the underwriter.

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