Insurance Definition


Insurance can be understood as a
•Transfer system
–Transfers the chance of loss to another party
–Sharing the loss by pooling the money and sharing the loss among all insured
•Business
–A set of operations that generate sufficient income to pay claims and yield profit to owners
•Contract

–Specifies the potential costs of loss that is being transfer from insured to insurer

Insurance Company prefer to provide Insurance for the Financial consequences of Loss Exposures that possess Characteristics as:
  • Large number of similar Exposure Units.
  • Losses that are Accidental.
  • That aren’t Catastrophic.
  • Definite and Measurable.
  • Economically Feasible to Insure


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