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CSC Confidential.
About Insurance
Insurance is a system that enables a person, family, or business to transfer the costs of losses to an insurance company. The insurance company, in turn, pays for covered loses and, in effect, distributes the costs of losses among all insured (that is, all CSC Confidential. insureds share the cost of a
Insurance : What is it ?
A
contract or device for transferring risk from a person, business or organization to an insurance company that agrees, in exchange for a premium, to pay for losses through an accumulation of premium.
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Insurance : What is it ?
Insurance has three components
insured (a person, a business, or an organization whose property, life, or legal liability is covered by an insurance policy) - transfers the chance of financial loss to another party - the insurance company, or the insurer.
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Insurance : What is it ?
A Business System , which includes various
operations that must be conducted in a way that generates sufficient income to pay claims and provide a reasonable profit for its owners.
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CSC Confidential.
Insurance : What is it ?
A Contract , between the insured and insurer
that states what potential costs of loss is transferred to the insurer and expresses the insurers promise to pay for those losses in consideration for a stated premium.
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Insurance : What is it ?
Insurance as a Transfer System
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Insurance : What is it ?
Insurance as a Transfer System
The law of large numbers is a mathematical principle stating that as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes (losses) based on these exposure units also increases.
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Insurance : What is it ?
An Exposure Unit is a measure of loss
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Insurance : What is it ?
Ideally Insurable Loss Exposures
Large number of similar exposure units Losses that are accidental Losses that are definite and measurable Losses that are not catastrophic Losses that are economically feasible to
insure
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Insurance Jargons
Insured
Who is indemenified from losses.
Insurer
Who does insurance for Insured.
Premium
Amount charged by Insurer from Insured. CSC Confidential. on number of factors Based including kind of Risk involved ,
Jargons Conti
Loss exposure
A loss exposure, or simply an exposure, is any condition or situation that presents the possibility of a loss.
Exposure Unit
Any thing which can be insured, it can be any individual life or personal property.
Insurance Policy
An insurance policy is a contract document that states the rights and duties of both the insured and the insurer regarding the transfer of the costs of losses.
CSC Confidential.
Benefits of Insurance
What Insured gets ? Business drive for Insurer ? What society/ Government gets out of
Insurance ?
CSC Confidential.
uncertainty
Loss control activities of insurance
companies
Efficient use of resources Support for credit Satisfaction of legal requirements Satisfaction of business requirements
CSC Confidential.
system.
CSC Confidential.
to earn money.
By premium we pay. Investments through premium money.
Minus
Claims Infrastructure management
risk of business.
Government Responsibility
Insurance Companies estimate future losses and expenses to determine how much they must collect from insureds in premiums. The Law of Large Numbers. The law of large numbers is a mathematical principle stating that as the number of similar but independent exposure units increases, the relative accuracy of predictions about future outcomes (losses) based on these exposure units also increases. CSC Confidential.
Insurance as a Business
Types of insurers Insurance operations State insurance regulation Costs of insurance
CSC Confidential.
Types of insurers
Private Insurers Stock Insurance Companies, which are
corporations owned by their policy holders inter insurance exchanges), which are unincorporated associations that provide insurance services to their members, often called subscribers.
The National Flood Insurance Program Retirement benefits to the elderly. Workers compensation insurance Fair Access to Insurance Requirements (FAIR)
plans
Disability payments for disabled workers. Unemployment insurance protections Compulsory Auto liability insurance Insurance Guaranty Fund CSC Confidential.
Insurance Operations
Marketing
process of identifying customers and selling and delivering a
product or service. Insurance marketing enables insurers to reach potential customers and retain current ones.
covered loss has occurred and if so the amount to be paid for the loss.
Ratemaking
INSURANCE REGULATION
COMMISSIONERS (NAIC)
The NAIC coordinates insurance regulation activities
through CSC Confidential. which actuaries base rates on actuarially calculated loss experience and place insureds
INSURANCE REGULATION
At Policy Generation Level
Insurance Rating Laws
Prior approval law Flex Rating Law File and use Law Use and File Law Open Competition State Mandated Rates
CSC Confidential.
Solvency Surveillance
Representatives
Approving Policy Forms Examining Market Conduct Investigating Consumer Complaints
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Costs of Insurance
Premiums paid by insureds Operating costs of insurers
Infrastructure Cost Administrative charges Taxes Commissions
Opportunity costs
Insurance : What is it ?
Insurance as Contract Insurance is a contract entered into
between two parties wherein one party viz., the insurer promises to pay the other viz., insured for a loss which is indemnifiable as per the policy terms conditions and exceptions for a return of a consideration viz., premium. (property, liability, life and health) are generally divided into two broad categories:
Property / Liability Insurance Life / health Insurance
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Insurance : What is it ?
Insurance as Contract
Property Insurance
Fire and allied lines Business income Crime Ocean and inland marine Auto physical damage
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Insurance : What is it ?
Insurance as Contract
Liability Insurance
Auto Liability Commercial general Liability Personal Liability Professional Liability
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Insurance : What is it ?
Insurance as Contract
LIFE INSURANCE
Whole life insurance Term Insurance Universal life insurance
HEALTH INSURANCE
Medical Insurance Disability Income Insurance
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