Nobody downloaded yet

The Mechanism of Insurance Companies for Insurance of Business - Literature review Example

Comments (1) Cite this document
Summary
This review "The Mechanism of Insurance Companies for Insurance of Business" explains the conceptual framework and theoretical underpinning of Insurance and its basic principles in relation to explaining the mechanism of underwriting and pricing Marine insurance by an insurance company…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.9% of users find it useful
The Mechanism of Insurance Companies for Insurance of Business
Read TextPreview

Extract of sample "The Mechanism of Insurance Companies for Insurance of Business"

Download file to see previous pages Insurance is a contract between an insurer and insured by which the former agrees to undertake to give compensation to the latter for any financial loss or economic risk and contingencies such as damages, accident, etc. Insurance is the business of pooling of risk between individuals or groups. Vaughan and Vaughan (2007, p. 35) found that the very basic underlying function of insurance is the creation of the counterpart of the risk and thus ensures security to the life,  properties or other valuable possessions of general public or businesses.
An insurance company doesn’t guarantee to decrease of the uncertainty for the individual as to whether the financial risk will occur and it doesn’t alter the probability of risk-occurrence, but it reduces the probability of the financial risk that is connected to the specific event-occurrence (Vaughan and Vaughan, 2007, p. 35). For instance, from the business point of view, when the businessman insures his ship against perils at sea, the uncertainty regarding the financial loss in that event will be eliminated. Insurance plays an imperative role in the development of the economy for the following reasons: Insurance helps to pool of the risks and ensures indemnifying the financial loss against risk of life or property, Insurance gives confidence to entrepreneurs that their loss, which may affect their continuity of the business, will be compensated, Ensures greater flow of money as surplus money in various insurance companies are widely used for economic and government-related investments, Risk, loss, and contingencies, if they are not compensated, will cause many companies or businesses to go out of their operation which in turn adversely affects the development of the economy. Risk Management is a wider term as it encompasses a variety of tools including insurance too. Insurance is one of the techniques for risk management. According to ISO Guide 73, risk management is a coordinated, systematic and structured activity that direct and control a business or other organization with regard to the risk it faced (Reuvid, 2010, p. 58). An organization can take any of different forms of risk management tools. The optimum approach to risk management is to seek to attain a balanced position, by protecting the firm from the impacts of any negative effects of the event. Insurance is a more appropriate and effective way for managing the risk because it directly helps the firm balance the financial position and to ensure success and continued effectiveness of the organization (Berwick, 2006, p. 6).
            Insurance has long been used as a tool of risk management by businesses with a view to mitigating the risks associated with a certain event occurring to properties. But, insurance is available only to certain risks called insurable risks. An insurance company doesn’t provide insurance against risks that cannot be estimated or calculated in advance. From the business point of view, only insurable risks such as fire, burglary, motor accident, marine accident, etc can be uninsured (Doherty, 2000, p. 4) but other risks such as risk due to bad management, war or loss due to seasonal variation, etc cannot be insured since they are non-insurable risks.  ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Mechanism that Insurance Companies Use to Underwrite and Price Essay”, n.d.)
Retrieved from https://studentshare.org/business/1394281-insurance-risk-management
(The Mechanism That Insurance Companies Use to Underwrite and Price Essay)
https://studentshare.org/business/1394281-insurance-risk-management.
“The Mechanism That Insurance Companies Use to Underwrite and Price Essay”, n.d. https://studentshare.org/business/1394281-insurance-risk-management.
  • Cited: 0 times
Comments (1)
Click to create a comment or rate a document
re
reillyneoma added comment 1 year ago
Student rated this paper as
I had an issue with a essay types of works. All until I came across this website and this particular document. Even though "The Mechanism that Insurance Companies Use to Underwrite and Price that Class of Business" is far from my interests, the structure is so great that I use it all the time as an example for my own works.

CHECK THESE SAMPLES OF The Mechanism of Insurance Companies for Insurance of Business

Investment Risk and Insurance Companies

.... In 2001 after the 9/11 event the insurance industry lost billions of dollars due to massive losses that occurred due to this man made event. Insurance companies charge its customers a premium for their insurance policies. One of the ways that insurance companies mitigate risk associated with life insurance is by forcing its customers to take a medical exam prior to giving out a policy. Risk behaviors such as being a smoker are taken into considerations. Smokers will pay a higher premium than non-smokers due to the heath risks associated with that behavior. If a person has cancer or HIV prior to signing a policy the...
4 Pages(1000 words)Essay

Insurance Law

...?Introduction In the contemporary environment of fast changing socio-economic and political dynamics, insurance has become of the most important elements of reducing financial risks. It has greatly facilitated in improving the living standard of people across the globe. Insurance products provide people with a safety net against various financial risks in different areas of their life (Clarke, 2005; Thomson, 2001). Hence, insurance products are designed to cater to the widespread need of people that provides them with financial security to cope under crisis situation. Indeed in the current scenario of uncertainties and risks, both within and outside the home, insurance in...
6 Pages(1500 words)Dissertation

Insurance

...(Taylor, 2004). Blue Cross & Blue Shield health organization was initiated as the first private insurance company in 1930. The company was located at the Baylor University Medical Center. The company commenced selling medical insurance to the community around its environs and later spread out to the entire nation. Effects on Costs and Access to Services Evolution of the private health insurance led to various firms and large companies venturing into the business. This made access to health services more affordable to the high and middle income groups. These two groups could access medical care without...
6 Pages(1500 words)Essay

Insurance

...employer with Medical Plans, Dental Plans, Vision Plans, Spending Accounts, Life Insurance, Disability Coverage, Group Medicare and Pharmacy Services plans for which employee are required to enrol online and then they are provided with insurance services according to the plan selected through their account. Assurant Health Assurant Health is an insurance company with its focus on individuals, family and on small businesses (Group, 2013). Assurant Health provide numerous insurance plan designed considering the consumer needs which are affordable and inexpensive. Assurant Health offers insurance plan which are simple and...
4 Pages(1000 words)Assignment

Insurance

...as the insurance business is done on the basis of trust. The applicant should have enough money to buy an insurance policy - the payment of insurance is taken on installment basis - it varies from cases to cases. Insurance is an investment that you make in order to get good returns on it. The chance of profitability is only present if there is mutual faith and believes between the client and the investment company. The insurance contracts have significance important because if the deal doesn't work the case goes into court so the two parties should be aware of their treaty in the case of disclosure. "To point out all...
5 Pages(1250 words)Essay

Insurance

...and there is a likelihood that the Community may proceed to harmonize the law across Europe or perhaps make a European rule of insurance contracts. Several have the opinion that the law does not defend rational prospects of business patrons disheartening confidence in the market place. Bearing in mind the fast evolving of fresh financial centres, if not attended to, endanger the level of London Market as a most important global insurance centre. The intention of this paper is to study the improvement suggestions prepared by the Law Commissions on re-contractual responsibility of utmost good faith when considering various fiscal hypotheses those have been powerful over the years in the...
8 Pages(2000 words)Essay

Insurance and Business Insurance Products

...Proposed Research Question: What are the factors that play important role in the decision making process of small scale business owners of Gold Coastand Brisbane district with respect to personal insurance and business insurance products? Review of Literatures: Insurance is a financial product of hedging against risk and uncertainty. Any kind of business is exposed to certain types of risk, no matter how small or how large the business is. Business activities of any company also involve some uncertainty with respect to the outcomes. Hence, things may go wrong than what are expected....
26 Pages(6500 words)Research Proposal

Insurance

... in the United Kingdom. London: Kluwer Law International Publisher, 2010. Holland, David et al. Taxing insurance companies. Paris: OECD Publishing, 2001. Outreville, Jean. Theory and practice of insurance. NY: Springer Publisher, 1998. Pushparaj, A. Business Studies. Meaning & advantages of insurance & assurance. 2011. 29 October 2011. http://www.publishyourarticles.org/knowledge-hub/business-studies/meaning-a-advantages-of-insurance-a-assurance.html Rosenbloom, Jerry. The handbook of employee benefits: design, funding, and administration. NY: McGraw-Hill Professional Publisher, 2005.... Running head: Insurance Insurance Insert Insert Grade Insert 28 October Insurance has been in existence...
5 Pages(1250 words)Term Paper

Insurance companies Finances

...A Policy Holder’s Surplus= (Total Liabilities and Surplus – Total Liabilities) = (591000000 – 331000000) = $ 260000000 A)2) Policy holder’s surplus = paid in capital + unassigned surplus Paid in capital = 10% 0f policy holder’s surplus = 10% of 260000000 = $ 26000000 Unassigned Surplus = Policy Holder’s Surplus – paid in Capital = 260000000-26000000 = $ 234000000 A) 3) Horizon insurance Corporation is a property and casualty insurance company. The organization should look to invest the unassigned surplus in the...
5 Pages(1250 words)Coursework

Insurance

...disadvantages. Part-A: Advantages of Telematics Insurance: One of the main advantages of telematics insurance is that it can constantly remind the driver of how fast he or she is driving the vehicle. Thus, when a person drives the vehicle beyond the safe speed limit, it works as an automatic check on dangerous habits. Thus, the younger generations who tend to embark on dangerous driving habits will b encouraged to adopt safe driving practices through this system of insurance. Since the insurance company collects the premium based on the driving behaviour of student drivers, telematics will inculcate in them the habit of safe driving. It also offers a no...
6 Pages(1500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Literature review on topic The Mechanism of Insurance Companies for Insurance of Business for FREE!

Contact Us