# What is Insurance?      Insurance is a form of shield against financial losses due to an unexpected event.

Insurance is the process of distributing risks. We can say, a way of risk management. Insurance is a way of transferring the risk of a potential loss, from one entity to another, in return for fixed payments called premium. Insurance is an intangible product. Insurance is the system by which losses suffered by a few are spread over many, exposed to similar risks.

Insurance provides financial protection against some of the uncertainties in life. Basically it’s a contract between (2 parties) Insurer and Insured

Evolution of Insurance
Evidence exists of burial societies as far back as the days of the Roman Empire, where the members contributed to a fund and had their burial costs met by the society. Over a period of time Insurance has grown into a multifaceted industry encompassing all areas of society. The present day Insurance can be broadly classified as Life Insurance, General Insurance and Health Insurance. The scientific basis for conducting life assurance was developed by a mathematics teacher James Dodson, who realized that the premiums paid into the fund rested on the principle of probability, i.e., how likely it was that the person might die. He produced the first mortality table – a table showing the numbers of people who died at each age between the years 1756 and 1759. Using this mortality table, compound interest and probability he calculated a premium for each age which would remain fixed for life and which would yield a guaranteed sum on death.

Insurance and Assurance
Insurance - Normally refers to protection against a loss resulting from an Accident which may or may not happen e.g., Motor insurance Assurance - Refers to protection against the occurrence of something bound to happen, e.g., Life assurance. Life Assurance is a contract which is bound to produce a death benefit, although this is not always the case. Usually, it is a long-term contract for which the premium is fixed and cannot normally be lowered or raised. In comparison, General Insurance contracts are for a term of one year and must be renewed at the end of the term. Short-term contracts are also available for Holiday and Travel. At each renewal the case is reviewed and premiums depend on the Claim history. If there is no claim the insured will get a discount in premium.

Actuaries A professional usually involved in the life insurance industry. Another type of certificate can be issued under a Marine Cargo Open Cover as evidence that Cargo insurance has indeed been arranged. damage to surrounding property is inevitable and you may not be able to claim any insurance. who applies mathematical theories of probabilities and statistical techniques in risk calculation. Co-Insurance In many British-type insurance markets. events that are not deliberately caused by the insured and that are not inevitable. The idea is that the insured cannot profit by his misfortune. where a preagreed lump sum payment is made. Act of God Natural occurrence such as earthquake or typhoon. Certificate of Insurance A piece of paper not to be confused with an insurance policy. insurers may argue that if you carry out a large excavation in soft soil without appropriate bracing. Contingent Liability This is where a liability is incurred by a business for acts other than those of its own employees. then the business may be held liable for the negligent acts of the contractor if the contractor is acting under the direction or control of an employee of the business. Thus. This arrangement is cumbersome to administer and is used only on very large risks. this entails each insurer paying directly to the insured their respective share of the loss. In other words. the damage is not insured. Similarly. Contract of Indemnity Property insurance that restores the insured to his original financial condition after suffering a loss. A certificate is issued to motor vehicle owners and also to employers under Workman’s Compensation laws. These can be specifically included in most insurance policies contrary to popular opinion. Usually.Accidents In insurance terms. . Personal Accident insurance. If an independent contractor is hired to carry out some work. the insured has an insurance contract with more than one insurer. is not a Contract of Indemnity. if you deliberately cause damage by driving your car into a tree. Actuaries are becoming increasingly involved in general insurance in relation to loss reserving and premium calculations. It is issued mainly to comply with certain statutory requirements as evidence of cover. co-insurance means the sharing of one insurance policy between two or more insurers.

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