Assignment On:

Risk Management and Insurance

Submitted To
Farha Sultana
Assistant Professor
Department of Management
Rangamati Science and Technology University

Submitted By

Md Maksudul Alam
Reg. No- 2018-25-15
2nd Year, 1st Semester
Department of Management
Rangamati Science and Technology University

Date- 21-01-2021
Insurance:
Insurance is a means of protection from financial loss.
It’s arrangement by which a company or the state undertakes to provide a guarantee of
compensation for specified loss, damage, illness or death in return for payment of a specified
premium.

History of Insurance:

The origin of insurance is lost in antiquity. However, there is no evidence that insurance in
its present form was practice prior to the twelfth century. A brief chronological historical
development of the various branches of insurance is given below.

• History of insurance is as old as human society.

• Started in the form of Non-money or natural economy.
• More ancient than money economy.
• Still existing in few parts of the world (former Soviet Union territories)
• Chinese merchants started in 3 B.C by distributing their goods across many vessels.
• Babylonians system (as recorded in code of Hammurabi 1750 BC)- Loan cancellation
in case shipment is stolen.
• Achaemenian monarchs insure people and registration the process in notary offices
on Norouz (Iranian New Year).
• Rhodes invented the concept of ‘general Average’.
 Today's insurance
market is a complx
network of insures
Insurance and reinsurance
extendings the
breadth of the world,
covering complex
and interesting risks
from heidi klum legs
present to satelite, as well s
your house.
day cellphone and life.
wth insurance
stepping to help
society deal with the
financial implications
of catastrophic
events such as 9/11
sand Hurricane
katrina.
Function of Insurance:
The function of insurance can be studied into two parts:

Primary
Function

Function

Secondary
Function

Primary Function:

➢ Insurance provides certainty:

Insurance provides certainty of payment at the uncertainty of loss. The uncertainty
of loss can be reduced by better planning and administration. But the insurance
relieves the person from such difficult task.

➢ Insurance provides protection:

The main function of the insurance is to provide protection against the probable
chance of loss. the time and amount of loss are uncertain and at the happening of
risk, the person will suffer loss in absence of insurance.
 ➢ Risk sharing:
The risk is uncertain and therefore, the loss arising from the risk is also uncertain
when risk takes place, the loss is shared by all the person who are exposed to the
risk.

Secondary function:

➢ Prevention of loss:
The insurance joins hands with those in situation which are engaged in preventing
the losses of the society because the reduction in loss cause id the society the
reduction loss causes lesser payment the assured and so more saving is possible
which will assist in reducing the premium.

➢ It provides Capital:
The insurance provides capital to the society. The accumulated funds are invested
in productive channel. The dearth of capital of the society is minimized to a
greater extent with the help of investment of insurance.

➢ It improves efficiency:
The insurance eliminants worries and miseries of losses of death and destruction
of property. The care free person can devote his body and soul together for better
achievement.

➢ It helps economics:
The insurance by protecting the society from huge losses of damage, destruction
and death, provides an initiative to work hard for the betterment of the masses.
Nature of insurance:

1) Sharing of risk:
Insurance is a device to share the financial losses which might befall on an individual
or his family on the happening of specified event.

2) Co-operative device:
The most important feature of every insurance plan as the co-operation of large
number of persons who in effect, agree to share the financial loss arising due to
particular risk which is insured.

3) Value of risk:
The risk is evaluated before insuring to charge the amount of share of an insured,
herein called consideration or premium. There is expectation od more loss, higher
premium may be charged. So, the probability of loss is calculated at the time of
insurance.

4) Insurance in not a gambling:

The insurance serves indirectly to increase the productivity of the community by
eliminating worry and increasing initiative. The uncertainty is changed into certainty
by insuring property and life because the insurer promises to pay a definite sun at
damage or death.

5) Insurance is not charity:

Charity is given without consideration but insurance is not possible without premium.
It provides security and safety to an individual and to the society although it is a kind
of business in consideration of premium it provides guarantee the payment of loss.

6) Large number of insured persons:

To spread the loss immediately, smoothly and cheaply, large number of persons
should be insured. The cooperation of a small number of persons maty also be
insurance but it will be limited to smaller area.