Understanding Insurance
Insurance is a system for lowering the financial loss by channeling the risk of losing from a person or entity to another.
Insurance Act No. 2 Year 1992 on business insurance is an agreement between two or more parties, with which the parties committed themselves to the person insured, the insurance premiums received, to provide reimbursement to the insured for loss, damage or loss of expected profit or legal liability to third parties that may be suffered by the insured, arising out of an uncertain event, or provide a payment based on a person dies or lives insured.
Agency risk that channel called "insured", and the body receiving the risk is called "insurer". Agreement between the two entities is called policy: this is a legal contract explain each terms and conditions protected. Fees paid by the "tetanggung" to "insurer" for the risk it took called "premium". This is usually determined by the "guarantor" for funds that can be claimed in the future, administrative costs, and profits.
For example, a couple bought a house for Rp. 100 million. Knowing that the loss of their homes would lead them to financial ruin, they took the insurance protection in the form of home ownership policy. The policy will pay for replacement or repair their homes in case of disaster. Insurance companies on their premiums Rp1 million per year. The risk of losing their homes have been distributed from the company's homeowners insurance.
Insurer uses actuarial science to calculate the risks they expect. Actuarial science uses mathematics, particularly statistics and probability, which can be used to protect the risk to estimate the claims at a later date with reliable accuracy.
For example, many people purchase insurance policies and home ownership then they pay a premium to the insurance company. When you lose a protected place, insurer must pay the claim. For some of the insured, the insurance benefits that they receive far greater than the money they have paid to the insurer. Others may not make a claim. If it is averaged from all policies sold, the total claims paid out lower than the total premium paid to the insured, the difference is the cost and benefits.
Insurance companies also benefit investments. This is obtained from the investment premiums received until they have to pay the claim. This money is called "float". Underwriter can benefit or loss from price changes and also float interest or dividends on the float. In the United States, loss of property and deaths recorded by the insurance company is U.S. $ 142.3 billion in five years ended in 2003. But the total profit in the same period was U.S. $ 68.4 billion, as a result of the float.
Some people consider insurance as a form of betting that apply during the policy period. Insurance companies are betting that property buyers will not be lost when the buyer pays the money. The difference in fees paid to the insurance company against the amount they can receive when the accident happened almost the same as if someone bet on horse racing (eg, 10 to 1). For this reason, several religious groups including the Amish avoid the insurance and depend on the support received by their communities when disasters occur. In communities close and supportive relationships in which people can help each other to rebuild lost property, this plan can work. Most people can not effectively support the system as above and this system will not work for large risks.
Insurance Act No. 2 Year 1992 on business insurance is an agreement between two or more parties, with which the parties committed themselves to the person insured, the insurance premiums received, to provide reimbursement to the insured for loss, damage or loss of expected profit or legal liability to third parties that may be suffered by the insured, arising out of an uncertain event, or provide a payment based on a person dies or lives insured.
Agency risk that channel called "insured", and the body receiving the risk is called "insurer". Agreement between the two entities is called policy: this is a legal contract explain each terms and conditions protected. Fees paid by the "tetanggung" to "insurer" for the risk it took called "premium". This is usually determined by the "guarantor" for funds that can be claimed in the future, administrative costs, and profits.
For example, a couple bought a house for Rp. 100 million. Knowing that the loss of their homes would lead them to financial ruin, they took the insurance protection in the form of home ownership policy. The policy will pay for replacement or repair their homes in case of disaster. Insurance companies on their premiums Rp1 million per year. The risk of losing their homes have been distributed from the company's homeowners insurance.
Insurer uses actuarial science to calculate the risks they expect. Actuarial science uses mathematics, particularly statistics and probability, which can be used to protect the risk to estimate the claims at a later date with reliable accuracy.
For example, many people purchase insurance policies and home ownership then they pay a premium to the insurance company. When you lose a protected place, insurer must pay the claim. For some of the insured, the insurance benefits that they receive far greater than the money they have paid to the insurer. Others may not make a claim. If it is averaged from all policies sold, the total claims paid out lower than the total premium paid to the insured, the difference is the cost and benefits.
Insurance companies also benefit investments. This is obtained from the investment premiums received until they have to pay the claim. This money is called "float". Underwriter can benefit or loss from price changes and also float interest or dividends on the float. In the United States, loss of property and deaths recorded by the insurance company is U.S. $ 142.3 billion in five years ended in 2003. But the total profit in the same period was U.S. $ 68.4 billion, as a result of the float.
Some people consider insurance as a form of betting that apply during the policy period. Insurance companies are betting that property buyers will not be lost when the buyer pays the money. The difference in fees paid to the insurance company against the amount they can receive when the accident happened almost the same as if someone bet on horse racing (eg, 10 to 1). For this reason, several religious groups including the Amish avoid the insurance and depend on the support received by their communities when disasters occur. In communities close and supportive relationships in which people can help each other to rebuild lost property, this plan can work. Most people can not effectively support the system as above and this system will not work for large risks.
