In life today, people are willing to pay a little loss for the period now to be facing big losses, which may occur in the future. Insurance is a willingness to establish small losses (few) that surely as a replacement (substitution) large losses is uncertain.
Man may be hit by various forms of loss. To reduce the burden of this loss, he made a pact to cover individuals or members of a group that is also open to similar losses, this agreement is known as an insurance contract.
Insurance is a technical business involving statistical experts, financial analysts, engineers, economists, lawyers, and others. Contracts must be drafted carefully, restrictions on dependents must be drafted carefully, restrictions on dependents must be determined, the rate should be determined by fair and funds should be invested.
Insurance companies have a number of policy holders, whether obtained directly by representatives of insurance companies or through agents.
If the insured suffered a loss that is guaranteed by the policy, it faces risks taken expert. With it faces compensation created a sense of security among the insured. And with a sense of ease, the insured will be more vigorous in its operations or increase its production will be more
In business there must be risks that occur as well as with insurance of industry so often interpreted as the uncertainty of financial loss or the possibility of loss. Risk always involves uncertainty and opportunities financial losses.
Uncertainty and opportunity loss can be distinguished 3 things, among others:
1. economic uncertainty is the uncertainty of economic policies that eventually will affect the price patterns of consumption or the development of technology.
2. Uncertainties related with nature is the uncertainty of the occurrence of storms, floods, fires, or other natural disasters.
3. Uncertainties related to human caused by war, murder, theft, and so forth.
Among the above three types of uncertainty, which can be insured is the natural and human uncertainty, while economic uncertainty could not be insured because it is speculative (economic elements) and difficult to measure the severity.
Among the above three types of uncertainty, which can be insured is the natural and human uncertainty, while economic uncertainty could not be insured because it is speculative (economic elements) and difficult to measure the severity.
And the risks can be classified as follows.
a. Speculative risk is the risk of a speculative nature, which can cause loss or gain.
b. Pure risk is the risk that always cause losses. Insurance companies operate in a pure risk (death, vessel sinking, fire, etc.)
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