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Chapter 1 - Charts A,B,C General Insurance Principals
A: What is Insurance?
Method of handling PURE RISK;
Spread over a large number of like exposure units;
Predict individual losses with some accuracy.
A traditional definition would say that insurance is a device that provides for the transfer of individual risk to a company which, for consideration, assumes losses suffered by the insured to a predetermined limit.
B: What is the purpose of Insurance?
Indemnify against economic loss
Indemnify = To compensate or reimburse for loss
C: Insurance Is About Risk
Speculative Risk: provides the possibility of both gain or loss!
Pure Risk: involves only the possibility of loss…gain is not possible!
Remember, pure risks are insurable, speculative risks are not!!
A traditional definition would say that insurance is a device that provides for the transfer of individual risk to a company which, for consideration, assumes losses suffered by the insured to a predetermined limit.
Chapter 1 - Charts A,B,C