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protection in the Aryan tribes some 3000 years back. - Persian dictionary says that the word “Bima” was derived from the word “Bim” meaning “fear” and “Bima” means “ expense incurred to get rid of this fear”
Definition: - Mac Gill: Insurance is a process in which uncertainties are made certain. - Rock Fell: Insurance is a source of distribution of loss of few persons into more persons. - R.S Sharma: Insurance is co-operative device to spread losss, caused by a particular risk over a number of persons who are exposed to it, who agree to insure themselves against that risk.
Larger number of insured persons reduces cost of insurance. insured. Every year there is a probability of 3 houses getting burnt.An insurance transaction involves the insurer. It is neither charity nor gambling. each having a value of Rs. 8. Claim amount depends on loss occurred. It calculates risk in advance.In a particular colony there are 600 houses. Example. 6.000 and total loss being Rs. Payment/ claim is paid on the occurrence of contingency. 7. 3. 4. 2. 90. Capital formation .000. If all the 600 home owners pool Rs. then the unfortunate people whose houses were burnt can be easily paid. policy and exposure to loss. It helps risk sharing and risk transfer. 5. 30. 150 each. The resultant loss per houseis Rs. 30.000. It is a co-operative device. premium. Features of insurance: 1.
.9. Prevention of losses Protection. 11. Certainty 10.