Index Name : Ketan.U.Jain Std : S.Y.B.B.A Roll No : 34 Sub : Practices of life insurance Teacher name : Pooja.Joshi College : Sydenham College of Commerece & Economics(31211)

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Introduction History of insurance Types of insurance Bibliography

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financial instruments and so on) and non-money or natural economies (using barter and trade without a centraliz ed and/or standardized set of monetary instruments). The insured receives a contract. money. This type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread. the other neighbours must help. Otherwise. called the premium. Should the same thing happen to one's neighbour. The second type is a more ancient form than the first. . from one entity to anoth er. in exchange for payment. neighbours will not receive help in the future. we can see insurance in the form of people helping each other. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage. an insured. is the person or entity buying the insurance policy. has evolved as a discrete field of study and practice. In such an economy and community. HISTORY OF INSURANCE In some sense we can say that insurance appears simultaneously with the appearance of human society. the members of the community help build a new one. insurance is a form of risk management primarily used to hedge against the risk of a contingent.INSURANCE PRODUCT}S INTRODUCTION In law and economics. uncertain loss. called the insurance policy. or policyholder. An insurer is a company selling the insurance. which details the conditions and circumstances under which the insured will be financially compensated. Risk management. the practice of appraising and controlling risk. Insurance is defined as the equitable transfer of the risk of a loss. For example. The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. if a house burns down. We know of two types of economies in human societies: money economies (with markets.

The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year). etc. respectively. have his children married. Then the assessment was registered in special offices. Jahez. This was advantageous to those who presented such special gifts. insurance in a modern money economy. he or she would receive an amount of twice as much. the monarch and the court would help him. For others. early methods of transferring or distributing ri sk were practised by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC. When a gift was worth more than 10. writes in one of his books on ancient Iran: "[W]henever the owner of the present is in trouble or wants to construct a building. a historian and writer.000 Derrik." [14] A thousand years later.. the presents were fairly assessed by the confidants of t he court. If the registered amount exceeded 10. The most important gift was presented during a special ceremony. Achaemenian monarchs of Ancient Persia were the first to insure their people and made it official by registering the insuring process in governmental notary offices. the heads of different ethnic groups as well as others willing to take part. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant .e. in which insurance is part of the financial sphere). and practised by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment.000 Derrik (Achaemenian gold coin) the issue was registered in a special office.[13] Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble. The Babylonians developed a system which was recorded in the famous Code of Hammurabi.INSURANCE PRODUCT}S Turning to insurance in the modern sense (i. he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or l ost at sea. 1750 BC. presented gifts to the monarch. the inhabitants of Rhodes invented the concept of the general average. c. the one in charge of this in the court would check the registration. set up a feast.

Insurance became far more sophisticated in post enaissance Europe. hese new insurance contracts allowed insurance to be separated from investment. Guilds in the goods. Before insurance was established in the late that could be used for emergencies. Ages served a similar purpose. in which people donated amounts of money to a general sum Lloyd's of London. a separation of roles th at first proved useful in marine insurance. is one of the world's leading and most famous insurance markets . 6 A when they organi ed guilds called enevolent societies" which cared fo r the iddle families and aid funeral expenses of members upon death. and speciali ed varieties developed. Separate insurance contracts i. UCT}S whose oods were deli eratel jettisoned in order to li hten the shi and save it from he Greeks and omans introduced the ori ins of health and life insurance c. he almud deals with several aspects of insuring th century. "friendly societies" existed in England..e. as were insurance pools backed by pledges of landed estates. insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the th century. pictured in 99 .INSUR NCE PR total loss.

Not only did his company warn against certain fire hazards. but in 1 8 1 Nicholas Barbon. [15] Toward the end of the seventeenth century. such as all wooden houses . ondon's growing importance as a centre for trade increased demand for marine insurance. [17] The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern -day Charleston). In the United States. Of the value of £100 each. and eleven associates. the 'Insurance Office for Houses'. Insurance as we know it today can be traced to the reat Fire of ondon. and those willing to underwrite such ventures. In the late 1 80s. established England's first fire insurance company. a change of opinion reflected i n Sir Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for ondon in 1 7. Arthur Duck. In 1752.000 homes were insured by Barbon's Insurance Office. The devastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency. it refused to insure certain buildings where the risk of fire was too great. regulation of the insurance industry is highly Balkanized. which in 1 devoured more than 13. and ships' captains. in 1732. It became the meeting place for parties wishing to insure cargoes and ships. Benjamin Franklin helped to popularize and make standard the practice of insurance.INSURANCE PRODUCT}S Some forms of insurance had developed in ondon by the early decades of the 17th century. and thereby a reliable source of the latest shipping news. Hayman's will was signed and sealed on 17 November 1 28 but not proved until 1 33. Initially." [1 ] A number of attempted fire insurance schemes came to nothing. For example. particularly against fire in the form of perpetual insurance. Franklin's company was the first to make contributions towa rd fire prevention. South Carolina.000 houses. loyd's of ondon remains the leading market (note that it is an insurance market rather than a company) for marine and other specialist types of insurance. but it operates rather differently than the more familiar kinds of insurance. at the back of the Royal Exchange. Edward loyd opened a coffee house that became a popular haunt of ship owners. with primary   . Today. he founded the Philadelphia Contributionship for the Insurance of Houses from oss by Fire . the will of the English colonist Robert Hayman mentions two "policies of insurance" taken out with the diocesan Chancellor of ondon. one relates to the safe arrival of Hayman's ship in uyana and the other is in regard to "one hundred pounds assured by the said Doctor Arthur Ducke on my life". merchants. 5.

An insurance policy will set out in det ail which perils are covered by the policy and which are not. In recent years. and even a small amount of coverage for medical expenses of guests who are injured on the owner's property. vehicle insurance would typically cover both the property risk (theft or damage to the vehicle) and the liability risk (legal claims arising from an accident). some have called for a dual state and federal regulatory system (commonly referred to as the Optional federal charter (OFC)) for insurance similar to that which oversees state banks and national banks. For example. certain legal claims against the owner. [18] [edit] Auto insurance Main article: Vehicle insurance . which are discussed below under that name. Business insurance can take a number of different forms. Types of insurance Any risk that can be quantified can potentially be insured. typically includes coverage for damage to the hom e and the owner's belongings.INSURANCE PRODUCT}S responsibility assumed by individual state insurance departments. such as the various kinds of professional liability insurance.S. which packages into one p olicy many of the kinds of coverage that a business owner needs. also called professional indemnity (PI). Below are non -exhaustive lists of the many different types of insurance that exist. in a way analogous to how homeowners' insurance packages the coverages that a homeowner needs. Whereas insurance markets have become centralized nationally and internationally. though at times in concert through a national insurance commissioners' organization . state insurance commissioners operate individually. A home insurance policy in the U. and the business owner's policy (BOP). A single policy may cover risks in one or more of the categories set out below. Specific kinds of risk that may give rise to claims are known as perils.

hen a car is used as collateral for a loan the lender usually ome insurance A home is destroyed by fire in Essex. edical coverage. for the cost of treating injuries. nited Kingdom. rehabilitation and sometimes lost wages and funeral expenses. such as the of these coverages.INSUR NCE PR UCT}S A wrecked vehicle in Auto i openhagen urance protects the policyholder against financial loss in the event of an incident involving a vehicle they own. ost countries. requires specific coverage. for the legal responsibility to others for bodily injury or property damage. . such as in a traffic collision. England ain article: ome insurance . . Liability coverage. require drivers to buy some. but not all. Property coverage. for damage to or theft of the car. overage typically includes: .

In some geographical areas. that require additional coverage. especially for people who rent housing. such as the K's ational ealth Service will cover the cost of medical treatments. such as flood or earthquake. Swindon Health insurance policies issued by publicly-funded health programs. [ 9] Health insurance ain articles: ealth insurance and ental insurance Great estern ospital. along with health insuran ce. In the . Acci ent. dental insurance is often part of an employer's benefits package.S. ental insurance. aintenance -related issues are typically the homeowner's responsibility. or this can be bought as a separate policy. and anada. including pets. like medical insurance.INSUR NCE PR UCT}S Home insurance provides coverage for damage or destruction of the policyholder's home. insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the ¡ household. sickness and unem loyment insurance . he policy may include inventory. is protects policyholders for dental costs. In some countries. the policy may exclude certain types of risks.

ong-term disability insurance covers an individual's expenses for the long term. but considering the expense. workers compensation. Total permanent disability insurance provides benefits when a person is permanently disabled and can no longer work in their profession. often taken as an adjunct to life insurance. up until such time as they are considered permanently disabled and thereafter. Insurance companies will often try to encourage the person back into employment in preference to and before declaring them unable to work at all and therefore totally disabled. Short-term disability insurance covers a person for a period typically up to six months. etc. . It provides monthly support to help pay such obligations as mortgage loans and credit cards. y y y y Casualty Main article: Casualty insurance Casualty insurance insures against accidents.INSURANCE PRODUCT}S Workers' compensation. and some liability insurances. Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expenses incurred because of a job -related injury. long -term policies are generally obtained only by those with at least six -figure incomes. Short-term and long-term disability policies are available to individuals. It is a broad spectrum of insurance that a number of other types of insurance could be classifie d. such as auto. not necessarily tied to any specific property. Disability overhead insurance allows business owners to cover the overhead expenses of their business while they are unable to work. lawyers. or employers' liability insurance. such as doctors. is compulsory in some countries y Disability insurance policies provide financial support in the event of the policyholder becoming unable to work because of disabling illness or injury. paying a stipend each month to cover medical bills and other necessities.

and may specifically provide for income to an insured person's family. In many countries. . y Life Main article: ife insurance Life insurance provides a monetary benefit to a descendant's family or other designated beneficiary. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. from an underwriting perspective. Some policies. ife insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump s um cash payment or an annuity. Certain life insurance contracts accumulate cash values. which may be taken by the insured if the policy is surrendered or which may be borrowed against.INSURANCE PRODUCT}S y Crime insurance is a form of casualty insurance that covers the policyholder against losses arising from the criminal acts of third parties. In that sense. Political risk insurance is a form of casualty insurance that can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions could result in a loss. a company can obtain crime insurance to cover losses arising from theft or embezzlement. funeral and other final expenses. are the mirror image of life insurance. For example. such as annuities and endowment policies. This leads to widespread use of life insurance as a tax -efficient method of saving as well as protection in the event of early death. the tax law provides that the interest on this cash value is not taxable under certain circumstances. are financial instruments to accumulate or liquidate wealth when it is needed. they are the complement of life insurance and. and the UK. are regulated as insurance. Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies. such as the U. and require the same kinds of actuarial and investment management expertise that life insurance requires. burial.S.

some of which are listed below: ¢ S Airways light 9 was written off after ditching into the udson iver .. he term property i surance may. flood insurance. his depends upon the insuring company. I As. other income tax k) plans. such as fire.S. etc. his may include speciali ed forms of insuran ce such as fire insurance. earthquake insurance.).INSUR NCE PR UCT}S In the . market return. inland marine insurance or boiler insurance. owever. be used as a broad category of various subtypes of insurance. the type of policy and other variables mortality.g. theft or weather damage. like casualty insurance. value accumulation. in some cases the benefit derived from tax deferral may be offset by a low return.. oth I As) may be better alternatives for Property Main article: Property insurance his tornado damage to an Illinois home would be considered an "Act of God" for insurance purposes Property insurance provides protection against risks to property. oreover. home insurance. saving vehicles e. the tax on interest income on life insurance policies and annuities is generally deferred.

frost damage. or equipment breakdown insurance) insures against accidental physical damage to boilers. dro ught. . Rates depend on location and hence the likelihood of an earthquake. as well as the construction of the home. including air traffic control and refuelling operations for international airports through to smaller domestic exposures.INSURANCE PRODUCT}S y Aviation insurance protects aircraft hulls and spares. Builder's risk insurance is coverage that protects a person's or organization's insurable interest in materials. y Fidelity bond is a form of casualty insurance that covers policyholders for losses incurred as a result of fraudulent acts by specified individuals. Airports may also appear under this subcategory. fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from an insured peril. Earthquake insurance policies generally feature a high deductible. and associated liability risks. y Boiler insurance (also known as boiler and machinery insurance. hail. [20] y Crop insurance may be purchased by farmers to reduce or manage various risks associated with growing crops. equipment or machinery. such as passenger and third -party liability. or disease. insects. y Builder's risk insurance insures against the risk of physical loss or damage to property during construction. [21] y Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Such risks include crop loss or damage caused by weather. Builder's risk insurance is typically written on an "all risk" basis covering damage arising from any cause (including the negligence of the insured) not otherwise expressly excluded. It usually insures a business for losses caused by the dishonest acts of its employees. Most ordinary home insurance policies do not cover earthquak e damage.

In response to this. as outlined above.. regardless of the method of transit. but excludes . Many insurers in the . shipwreck. marine cargo insurance typic ally compensates the owner of cargo for losses sustained from fire. y Home insurance. etc. and of cargo in transit. also commonly called hazard insurance. or homeowners insurance often abbreviated in the real estate industry as I). hen the owner of the cargo and the carrier are separate corporations. ire aboard MV y yundai ortune Marine insurance and marine cargo insurance cover the loss or damage of vessels at sea or on inland waterways.S. is the type of property insurance that covers private homes. do not provide flood insurance in some pa rts of the country. y Landlord insurance covers residential and commercial properties which are rented to others. Most homeowners' insurance covers only owner-occupied homes. the federal government created the ational lood Insurance Program which serves as the insurer of last resort.INSUR NCE PR UCT}S urricane Katrina caused over $ y bn of storm and flood damage Flood insurance protects against property loss due to flooding.

which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss. . In the . in the wake of 9/ Insurance Act . the errorism isk IA) set up a federal Program providing a transparent by the system of shared public and private compensation for insured losses resulting from acts of terrorism.INSUR NCE PR UCT}S losses that can be recovered from the carrier or the carrier's insurance. y Surety ond insurance is a three-party insurance guaranteeing the performance of the principal. Volcano insurance is a specialized insurance protecting against damage arising specifically from volcanic eruptions. y Supplemental natural disaster insurance covers specified expenses after a natural disaster renders the policyholder's home uninhabitable. Periodic payments are made directly to the insured until the home is rebuilt or a specified time period has elapsed. y Windstorm insurance is an insurance covering the damage that can be caused by wind events such as hurricanes. Many marine insurance underwriters will include "time element" coverage in such policies. he demand for terrorism insurance surged after 9/ y Terrorism insurance provides protection against any loss or damage caused by terrorist activities. he program was extended until the end of errorism isk Insurance Program eauthorization Act y IP A).S.

Directors and officers liability insurance & ) protects an organization y usually a corporation) from costs associated with litigation resulting from errors made by directors and officers for which they are liable. . or example.INSUR NCE PR Liability Main article: Liability insurance UCT}S Liability insurance is a very broad superset that covers legal claims against the insured. Liability policies typ ically cover only the negligence of the insured. Many types of insurance include an aspect of liability coverage. health. release or escape of pollutants. and will not apply to results of wilful or intentional acts by the insured. y Environmental liability insurance protects the insured from bodily injury. or property. he protecti on offered by a liability insurance policy is twofold: a legal defense in the event of a lawsuit commenced against the policyholder and indemnification payment on behalf of the insured) with respect to a settlement or court verdict. a homeowner's insurance policy will normally include liability coverage which protects the insured in the event of a claim brought by someone who slips and falls on the property. automobile insurance also includes an aspect of liability insurance that indemnifies against the harm that a crashing car can cause to others' lives. he subprime mortgage crisis was the source of many liability insurance losses y Public liability insurance covers a business or organization against claims should its operations injure a member of the public or damage their property in some way. property damage and cleanup costs as a result of the dispersal.

professional liability insurance in reference to the medical profession may be called medical malpractice insurance . protects insured professionals such as architectural corporations and medical practictioners against potential negligence claims made by their patients/clients. except those noted in the policy. Mortgage insurance is a form of credit insurance. y Professional liability insurance . or a holein-one at a golf tournament. although the name "credit insurance" more often is used to refe r to policies that cover other kinds of debt. Credit Main article: Credit insurance Credit insurance repays some or all of a loan when certain circumstances arise to the borrower such as unemployment. y Many credit cards offer payment protection plans which are a form of credit insurance. also called professional indemnity insurance (PI). All-risk insurance is different from peril-specific insurance that cover losses from only those perils listed in the . y Prize indemnity insurance protects the insured from giving away a large prize at a specific event. real estate agents and brokers. disability. Professional liability insurance may t ake on different names depending on the profession. Other types y All-risk insurance is an insurance that covers a wide-range of incidents and perils. Examples would include offering prizes to contestants who can make a half -court shot at a basketball game. y Mortgage insurance insures the lender against default by the borrower. For example. or death.INSURANCE PRODUCT}S y Errors and omissions insurance is business liability insurance for professionals such as insurance agents. architects. third-party administrators (TPAs) and other business professionals.

Business interruption insurance covers the loss of income.S. . y E patriate insurance provides individuals and organizations operating outside of their home country with protection for automobiles. all-risk policy includes also the damages caused by igh-value horses may be insured under a bloodstock policy y Bloodstock insurance covers individual horses or a number of horses under common ownership. and prospective foal. in -transit loss. y Defense Base Act BA) insurance provides coverage for civilian workers hired by the government to perform contracts outside the . and all employees or subcontractors hired on o verseas government contracts. extortion. foreign nationals must also be covered under BA. . Kidnap and ransom insurance is designed to protect individuals and corporations operating in high -risk areas around the world against the perils of kidnap. property. y . veterinary fees. his coverage typically includes expenses related to medical treatment and loss of wages. wrongful detention and hijacking. and the expenses incurred. overage is typically for mortality as a result of accident. after a covered peril interrupts normal business operations. citizens.S. ££ ] UCT}S In car insurance.S. BA is required for all . epending on the country. residents. PI) insures property primarily vehicles) y y Collateral protection insurance held as collateral for loans made by lending institutions.[ the own driver.S. as well as disability and death benefits. illness or disease but may extend to include infertility. liability and business pursuits. health.INSUR NCE PR policy. and anada. Green ard holders.

See the nuclear exclusion clause and for the . a government may authorize its use in protecting semi-private funds which are liable to tamper. aquariums. it is known as "the event".S. the Price-Anderson uclear Industries Indemnity Act. It is used to protect public funds from tamper by unauthorized parties. he terms of this type of insurance are usually very strict. Livestock insurance is a specialist policy provided to. some companies cover routine/wellness care and burial. y y Media insurances can protect newspapers against libel claims y Media liability insurance is designed to cover professionals that engage in film and television production and print. In special cas es. y y . which triggers the need for legal action. over is available for mortality or economic sla ughter as a result of accident.) Pet insurance insures pets against accidents and illnesses. Locked funds insurance is a little-known hybrid insurance policy jointly issued by governments and banks. as well. commercial or hobby farms. illness or disease but can extend to include destruction by government order. for example. against risks such as defamation. here are two main types of legal expenses insurance: before the event insurance and after the event insurance. Nuclear incident insurance covers damages resulting from an incident involving radioactive materials and is generally arranged at the national level.INSUR NCE PR y UCT}S hen something happens Legal expenses insurance covers policyholders for the potential costs of legal action against an institution or an individual. herefore it is used only in extreme cases where maximum security of funds is required. fish farms or any other animal holding.

travel delay. and personal liabilities. care plans and even mobile phone insurance. Intentional acts are specifically excluded. Coverage is also afforded for liability to third parties arising from contamination of air. warranties. loss of personal belongings. Purchase insurance can cover individual purchase protection. A properly designed and underwritten Protected Self -Insurance Program reduces and stabilizes the cost of insurance and provides valuable risk management information. y Title insurance provides a guarantee that title to real property is vested in the purchaser and/or mortgagee. water. It is usually issued in conjunction w ith a search of the public records performed at the time of a real estate transaction. Insurance financing vehicles y Fraternal insurance is provided on a cooperative basis by fraternal benefit societies or other social organizations. Protected self-insurance is an alternative risk financing mechanism in which an organization retains th e mathematically calculated cost of risk within the organization and transfers the catastrophic risk with specific and aggregate limits to an insurer so the maximum total cost of the program is known. free and clear of liens or encumbrances. guarantees. or land due to the sudden and accidental release of hazardous materials from the insured site. which covers certain losses such as medical expenses. y Travel insurance is an insurance cover taken by those who travel abroad.INSURANCE PRODUCT}S y Pollution insurance usually takes the form of first-party coverage for contamination of insured property either by external or on -site sources. y Purchase insurance is aimed at providing protection on the products people purchase. [23] No-fault insurance is a type of insurance policy (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident. Such insurance is normally very limited in the scope of problems that are covered by the policy. y y . The policy usually covers the costs of cleanup and may include coverage for releases from underground storage tanks.

plus retirement savings. altho ugh the premium adjustments may take months or years beyond the current year's expiration date. Financial reinsurance is a form of reinsurance that is primarily used for capital management rather than to transfer insurance risk. Social insurance can be many things to many people in many countries. sometimes subject to a minimum and maximum premium. or by simply forgoing the purchase of available insurance and paying out-of-pocket. Under this plan.INSURANCE PRODUCT}S y Retrospectively-rated insurance is a method of establishing a premium on large commercial accounts. Such losses. and others). it ensures that everyone can become a claimant when or if he/she needs to. cost of putting the policy on the books. Formula: retrospective premium = converted loss + basic premium × tax multiplier. mean having to pay a premium that includes loadings for the company's general expenses. By forci ng everyone in society to be a policyholder and pay premiums. and contingencies. Self insurance is usually used to pay for high -frequency. disability income insurance. The final premium is based on the insured's actual loss experience during the policy term. Formal self insurance is the deliberate decision to pay for otherwise insurable losses out of one's own money. for small. unemployment insurance. if covered by conventional insurance. with the final premium determined by a formula. While t his is true for all insurance. Along the way this inevitably becomes related to other concepts such as the justice system y y y . Numerous variations of this formula have been developed and are in use. This can be d one on a formal basis by establishing a separate fund into which funds are deposited on a periodic basis. Reinsurance is a type of insurance purchased by insurance companies or self-insured employers to protect against unexpected losses. health insurance. But a summary of its essence is that it is a collection of insurance coverages (including components of life insurance. frequent losses the transaction costs may exceed the benefit of volatility reduction that insurance otherwise affords. acquisition expenses. The rating formula is guaranteed in the insurance contract. lowseverity losses. premium taxes. the current year's premium is based partially (or wholly) on the current year's losses. that requires participation by all citizens.

P. (1 www. The S n In ¥ ¥ rance Office 1710-1960: The Hi t ry of Two and a half Centurie of Briti h In urance .com . 0).wikipedia. . ondon: Oxford University www.M. pp. PRODUCT}S Bibliography ¦¥ ¤¥ ¥ ¤ y Dickson.