Risk of loss is likely for scarce resources. Risk management, appraising and controlling risk practice and its study and practice as a discrete field primarily in four risk management technology developed. This risk rescue, risk prevention, risk maintain, and risk transfer, the second of which also are known as insurance. Thus, law and economics, the possibility of transfer of insurance from a risk management primarily an unexpected, uncertain loss that scarce resources that these individuals or entities interested in insurance may have faced by the intelligence used technology against the risk of a human interest, person, or organization from another loss. Human resources, financial resources, and capital, or tangible resources: scarce resources are down here in three divisions. Regarding insurance, scarce resources to "invest" because of perils, these things, or military, in which destruction or lack of utility, or value of an open resource, path "front" as are is known. Thus human resources such as illness or death perils are brought, a fire, theft, windstorm, and vandalism to name but a few of the legal judgments as physical perils resulting from negligent action Can financial resources, and capital resources. Because of a crisis is a threat. This is a dangerous thing or condition that increases the likelihood. Display similar perils and dangers that are threatened by identity. For example, a stable road vehicle owners from a financial risk, capital risk, or as a humanitarian crisis can be seen, and the Guidance, as a car accident in this case a negative legal decision can result in damage to the car that increases the likelihood, and bodily injury.
In commercial business, insurance equal to the risk of further loss transfer is defined as a company from each other, view payment, for which as a risk premium, . Insurance premium rates on a fixed actuarial develops. Rate this resource a short amount of premium charged for a specific length to, and type of insurance is determined using the factor. Guarantee a more premium, it is said, a relatively small financial loss to the insured the insurance companies paid to be on the insurance company (compensation) Insured Resources (for the case of a loss I saw the insured in exchange for promised compensation,). Insurance has a contract, insurance policy, which details the terms and conditions under which the insured will be indemnified met.
PRINCIPLES
Many insurance companies from insurance funds (known as investment) losses were others who could incur, including payments for pooling. Insurance companies are therefore protected from a threat to charge fees on event frequency and severity is dependent on being with. So I have insurance, insurance against the risk of an insurance risk must meet certain characteristics. A commercial insurance agency and financial services industry is an important part, but the individual himself for the loss of future savings through money - is insurance institutions can.
Risk insurance from private companies who can usually share seven common characteristics:
Insurability:
1. Thus a large number of performance units: Since insurance operates by pooling resources, the majority of insurance policies, individual members of large class, which required a large number of insurance companies for damages like loss of original to take advantage of the law are provided to allow. Exceptions Lloyd London, the actor, sports figures and other famous people's life or health is known for insuring included. However, all differences, especially investment, which for different premium rates will lead can.
2. Sure loss: loss is a known time, in a known place, and a leading reason. Classic example of a life insurance policy is an insured person's death. Fire, automobile accidents, and injured workers can meet the standards are all easily. Other types of damage may be only a few of principle. Occupational disease, for example, include a long investment in harmful situations where no specific time place, or cause is identifiable, it could be. Typically, this time instead of a loss, and the cause is clear enough that adequate information with a reasonable person, objectively verify all three elements should.
3. Accidental loss: The event can be the trigger of a claim from the insurance windfall gain out of control, or at least should be. Good sense of loss that this is an event for which there is only opportunity for investment by the results will be. News that contain speculative elements and a general business risks as buying a lottery ticket, not generally considered insurance.
4. Loss: loss from the perspective of the size of the insurance must be meaningful. Expected cost of both damage insurance premiums, besides issuing policy and management, loss adjusting, and reasonably believe that the insurance company to pay claims will be able to supply capital needs need to cover the cost. The final cost for small loss many times the size of cost of damage can be expected. Is no problem to pay for expenses such protection for a buyer's offer price is not really any point.
5. Affordable premium: If a potential insurance event is too high, or so big party, this resulted in large premium offered relative security value for money, this is more likely that insurance is not purchased will be whether proposals. In addition, the accounting profession formally as financial, accounting standards agree, this is such a big premium for the insurance company is not a major loss can not be opportune. If any damage is such an opportunity, as insurance deal, but females can not. (U.S. Financial Accounting Standards Board standard number 113 meet)
6. Loss account: the possibility of damage, and for maintenance cost: at least two elements that are estimable, if formally measure should not be. Probability of loss is usually an empirical exercise, while cost insurance policy and a copy of proof of loss submitted a claim under the policy associated with ownership of a reasonable person capacity and a reasonably believe to make more with the claim as a result objective assessment of the amount of loss recovery.
7. Limited risk of catastrophically large losses: insurance loss model independent and non-banker, which means that once damage and personal loss for so serious insurance company are not bankrupt just do not do this, insurance companies One of their excess risk of loss may also wish them a capital base of some small part of the ceremony. Capital 'earthquake insurance in storm areas as wind insurance insurance sales capacity constrains. U.S. Federal Government from risk of flood insurance. Commercial fire insurance it is possible that individual characteristics which show the total value of any individual insurer's capital constraint is more good to find. Normally such features are shared between several insurance companies, or an insurance company from which reinsurance syndicates risk insurance market.
Legal:
When a single entity, a company insures, there are basic legal requirements. Many insurance usually cited legal principles include:
1. Compensation - insurance company indemnifies, or compensates, in some form of damage is insured only up to the insurance interest.
2. Insurance interest - typically the insured losses would directly harm. Insurance is the interest that a person's insurance or property insurance should be included. Need to consider life insurance or property insurance loss or damage to the "bottom" is. What the "plot" involved people between insurance type and nature of property ownership or relationship will be determined from.
3. Too much good faith - the insured and insurance company honesty and good faith of justice are bound by the ban. Material facts should be disclosed.
4. Contribution - as insurance companies which insured any compensation responsibility in accordance with law partnership.
5. Supererogation - legal insurance by the insurance company charged forward rights, for example, sue the insurance company, their insurance may be responsible for loss.
6. Cause proximate, or proximate cause - damage that (also) under the policy insuring agreement should be, because usually the reason should not be deleted
7. Loss minimization rule -, asset owners suffer any loss or damage to the case at least, because if the asset was not trying to be insured.
Indemnification:
To "compensation" to make whole again, or to restore his position that one was possible, a special ceremony before going or risk is, means. According to the life insurance generally is not considered compensation insurance, but "Team" insurance (ie, a claim based on a specific incident occurs). Here are generally two types of insurance contracts that compensate an insured want:
1. A "compensation" policy, and
2. Or policy "from" "pay by".
The difference is significant on paper, but in practice is rarely content.
A "compensation" policy does not pay claims until the insured from a third party has paid a pocket will, for example, a visitor in your home that you left the floor wet and 10, sues to win and $ 000 on your slip. A "compensation" under the policy homeowner 10,000 dollars to pay for the coming fall and have brought pocket ($ 10,000) for outside insurance carrier will be by " indemnified "will".
Under this situation, a "played by" policy, insurance carrier claims and the insured (homeowner in the above example played out of pocket for some will not. Most modern liability insurance language "played by" is written on.
A risk (an individual corporation, etc. of any kind, or Association) to move is being spent once risk 'insurance' a party 'insurance company' by a contract insuring party is prescribed by an insurance policy meeting. Generally, including an insurance contract, at least in the following elements: identification of participating parties (the insurance company, the insured, numerous), the premium, coverage period, especially cover the event coverage on the amount of loss (ie, the amount of any loss if the insured or beneficiary to be paid for), and emissions events (did not). Thus this is an insurance policy against loss included "indemnified" be said.
Coverage of a particular risk when insured parties experience a loss, as the amount of loss covered by this policy for specific policyholder entitled to claim against insurance company. Handling fee is also called the risk premium for the insurance company paid by the insured. Insurance premiums from many insureds claims reserved for later payment fund accounts are used - for a relatively few claimants in theory - for overhead expenses. Unless an insurance company estimated damage enough (called safe) has set for the amount, the remaining margin is an insurance company is profitable.
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