ManagementMania AppMania EduMania JobMania BusinessPages


What is Insurance
Insurance is a type of financial services offered by the insurance companies. The basic principle of insurance is distribution of costs to cover a negative event, such as an accident, disaster, theft, loss, etc., for a longer period of time in regular installments.

Insurance is a type of financial services offered by the insurance companies. The basic principle of insurance is distribution of costs to cover a negative event, such as an accident, disaster, theft, loss, etc., for a longer period of time in regular installments. Insurance is thus a form of risk management, which is trying to dampen the impact of certain negative events and spread the financial demands of the negative events over a longer period of time. Insurance allows organizations to protect themselves against unexpected loss or expense and to preclude significant financial difficulties for a reasonably affordable insurance rate.

Enterprises and organizations usually use following types of insurance:

  • Property insurance
    • Natural disaster insurance - covers damages to property caused by natural hazard (e.g. fire, flood, windstorm, lightening, explosion)
    • Technical insurance - the insurance of construction and assembly risks
    • Business interruption insurance - covers consequential damages arising from interruption (called consequential insurance)
    • Insurance against theft - covers property in case of theft or damage to the offender
    • Transportation insurance - covers the risk of damage, destruction, theft or loss of belongings during transport
  • Liability insurance for damage
  • Legal expenses insurance
  • Insurance of financial losses
  • Insurance claims

Insurance company assumes for the fee the obligation, and for payment provides insurance coverage - pays to insured person indemnity if the insured event occurs.

The contractual relationship between the insurer (insurance company) and the insured is established in the insurance contract.

A specific type of insurance is collateral (reinsurance). It is a de facto insurance of insurers. The existence of security is particularly important in cases of large claims such as floods, tsunamis, etc., when payment of damages would exceed the options of insurance companies.

Use of the insurance in practice: Organizations and companies use insurance to cover potential losses from negative events. Insured organization or enterprise must always consider the size and the degree of the risk of unexpected event and regular payments of insurance that must pay off for specified period of time. The organization must always balance these two things. When the risk of negative event is small and the amount of insurance is large, then the insurance is not worth it.

Related terms and methods:

  • Accident
  • Business Assets Insurance
  • Business Insurance
  • Cession
  • Claims handling
  • Disaster
  • Financial Institutions
  • FLEXA insurance
  • Insurance Company
  • Insurance Contract
  • Insurance participation
  • Insured event
  • Insurer
  • Payment protection insurance
  • Policyholder (insured)
  • Professional liability insurance
  • Reinsurance
  • Risks
  • Risk transfer
  • Vehicle insurance

Related industry / sector:

Related management field:

previous next
Did this article help you?
Rating:
Last update: 30.08.2016

Comments

James Patric 10 months

I see a lot of people doing work and they do insurance as well for good purpose. If you ask https://www.australian-writings.org for this work then you come to know they also agree with it.

Was this helpful?
Rating:
Patsy Moore 2 months

I just love your post, thanks for such a nice sharing..Hope to get some info on your blog in future. weapons guild

Was this helpful?
Rating:


To enter the discussion you must be signed in

Sign in


Related consulting companiesmore...
We can do it