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insurance company and its functions


is any one know what a insurance company is? or what is its function. or even any one know the types of insurance companies, there are several types with in the companies and different operational regions. even the functions vary accordingly when the type of company changes even though it is a insurance company – PowerPoint PPT presentation

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Title: insurance company and its functions

Insurance company and its functions
Insurance means?
  • Insurance is a means of protection from financial
    loss. It is a form of risk management primarily
    used to hedge against the risk of a contingent,
    uncertain loss.
  • An entity which provides insurance is known as an
    insurer, insurance company, or insurance carrier.
    A person or entity who buys insurance is known as
    an insured or policyholder. The insurance
    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 the insured
    in the event of a covered loss. The loss may or
    may not be financial, but it must be reducible to
    financial terms, and must involve something in
    which the insured has an insurable
    interest established by ownership, possession, or
    preexisting relationship.

Characteristics of insurable risks
  1. Large number of similar exposure units
  2. Definite Loss
  3. Accidental Loss
  4. Large Loss
  5. Affordable Premium
  6. Calculable Loss
  7. Limited risk of catastrophically large losses

  • When a company insures an individual entity,
    there are basic legal requirements and
    regulations. Several commonly cited legal
    principles of insurance include
  • Indemnity
  • Benefit insurance
  • Insurable interest
  • Utmost good faith
  • Contribution
  • Subrogation
  • Causa proxima
  • Mitigation

Types of functions by insurance company
  • Auto insurance
  • Gap insurance
  • Health insurance
  • Income protection insurance
  • Casualty insurance
  • Life insurance
  • Burial insurance

Types of functions by insurance company
  • Property
  • Liability
  • Credit
  • Other types
  • Insurance financing vehicles
  • Closed community and governmental self-insurance

Insurance company
  • Insurance companies may be classified into two
  • Life insurance companies, which sell life
    insurance, annuities and pensions products.
  • Non-life or property/casualty insurance companies,
    which sell other types of insurance.
  • General insurance companies can be further
    divided into these sub categories.
  • Standard lines
  • Excess lines
  • In most countries, life and non-life insurers are
    subject to different regulatory regimes and
    different tax and accounting rules. The main
    reason for the distinction between the two types
    of company is that life, annuity, and pension
    business is very long-term in nature coverage
    for life assurance or a pension can cover risks
    over many decades. By contrast, non-life
    insurance cover usually covers a shorter period,
    such as one year.
  • Insurance companies are generally classified as
    either mutual or proprietary companies.36 Mutual
    companies are owned by the policyholders, while
    shareholders (who may or may not own policies)
    own proprietary insurance companies.