Insurance companies Finances - Coursework Example

The organization will also be able to save the cost of loans which they would have otherwise opted for. The demand of current assets in the organization can be efficiently met by investing the unassigned surplus in the right area. The properties maintained by the business organizations are insured to adhere to the safety standards. The insurance of the properties involve a premium and are known as property insurance premium. The systematic methods of calculating these types of insurance premium fall under different ‘classes’ and these classes have different eligibility criteria.

Properties with risky factors or having disputed issues, and properties specially protected are not generally eligible for the class ratings. For these types of cases, insurance premiums are specially rated. The rates used are specifically for those assets which are determined by physical inspection. The method of class rating is based on the assumption that the future losses to be insured will be determined largely by some sort of factors. The major classification factors in homeowners insurance include construction material, age of the home and protective devices like smoke detectors and fire extinguishers.

One of the major advantages of class ratings is that it is easy to apply. Premium quotations of the ratings can also be quickly obtained. It is also known as Manual Rating. These rating are mainly used in homeowners insurance, private passenger auto insurance, workers compensation, and life & health insurance. Compensation Insurance Fund considers the following items when establishing a merit rating for a policy. They are classification evaluation, management business practices, and management safety practices Classification Evaluation: This category evaluates any changes in the operations of the employer when compared to the other operations normally contemplated within the same classification.

The process of