Global Courant
As we know, one way to avoid risk is to insure a risk with the insurance company. This method is considered the most important method of addressing risk. That is why many people think that risk management is the same as insurance. Although the real conditions are not so.
Insurance means the insurance transaction, involving two parties, the Insured and the Insurer. When the insurer guarantees the insured that he will be compensated for any loss he might suffer as a result of an event which would not necessarily occur or which could not be ascertained when or if it occurred. Since the insured is obligated to pay some money to the insurer, the amount of part of the sum insured is commonly referred to as “premium”.
Viewed from different angles, insurance has different goals and splitting techniques, including:
A. From an economic perspective then:
The target:
Reducing the uncertainty of the results of operations undertaken by an individual or company to meet needs or achieve goals.
Technology:
By transferring the risk to the other party and combining the other party with significant risk, the magnitude of the probability of loss can be estimated more accurately.
B. In terms of the law, then:
The target:
Transferring the risks of an object or business activity to another party.
Technology:
By means of premium payments by the insured to the insurer in the non-life contract (insurance policy), the risk is transferred to the insurer.
C. In terms of trade, then:
The target:
Share the risks faced by all participants in the insurance program.
Technology:
Risk transferred from individuals/companies to financial institutions engaged in risk management (insurance companies), which will share the risk with all participants of the insurance it handles.
D. From a social point of view then:
The target:
Bear the losses collectively among all participants in the insurance program.
Technology:
All group members (group members) of the insurance program contribute (in the form of premiums) to sympathize losses suffered by one/some of its members.
E. In terms of math, then:
The target:
Predict the magnitude of the probability of risk and the outcome of the prediction is used to distribute the risk among all participants (group of participants) insurance program.
Technology:
Calculates the probability based on the probability theory (“Probability Calculus”), performed by both the actuary and the insurer.
What is Insurance?
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