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Encyclopedia > Insurance
The Metropolitan Life Insurance Company is one of the largest New York based life insurance companies
The Metropolitan Life Insurance Company is one of the largest New York based life insurance companies

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. An insurer is a company selling the insurance. The insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. Image File history File links Question_book-3. ... MetLife, Inc. ... This article is about the state. ... Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individuals or individuals death. ... For other uses, see Law (disambiguation). ... Face-to-face trading interactions on the New York Stock Exchange trading floor. ... For non-business risks, see risk or the disambiguation page risk analysis. ... In finance, a hedge is an investment that is taken out specifically to reduce or cancel out the risk in another investment. ... For the Parker Brothers board game, see Risk (game) For other uses, see Risk (disambiguation). ... For non-business risks, see risk or the disambiguation page risk analysis. ...

Contents

Principles of insurance

Financial market
participants

Investors
Hedge funds
Private equity
Venture capital
There are two basic financial market participant catagories, Investor vs. ... Image File history File linksMetadata Size of this preview: 800 × 600 pixelsFull resolution (2816 × 2112 pixel, file size: 2. ... An investor is any party that makes an investment. ... A hedge fund is a private investment fund that charges a performance fee and a management fee. ... Private equity is a broad term that refers to any type of equity investment in an asset in which the equity is not freely tradable on a public stock market. ... Venture capital is a general term to describe financing for startup and early stage businesses as well as businesses in turn around situations. ...

Speculators
speculation
Speculation is the buying, holding, and selling of stocks, commodities, futures, currencies, collectibles, real estate, or any valuable thing to profit from fluctuations in its price as opposed to buying it for use or for income - dividends, rent etc. ... Speculation involves the buying, holding, and selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives or any valuable financial instrument to profit from fluctuations in its price as opposed to buying it for use or for income via methods such as dividends or interest. ...

Institutional investors
Banks
Collective investment schemes
Credit Unions
Insurance companies
Investment banks
Pension funds
Prime Brokers
Trusts
An institutional investor is an investor who is an institution like a bank, insurance fund, retirement fund, or mutual fund manager. ... For other uses, see Bank (disambiguation). ... Funds financial information A collective investment scheme is a way of investing money with a large number of people to participate in a wider range of investments that may not be feasible for an individual investor hence many investors share the costs of doing so. ... A credit union is a cooperative financial institution that is owned and controlled by its members. ... Investment banks help companies and governments (or their agencies) raise money by issuing and selling securities in the capital markets (both equity and debt). ... A pension (also known as superannuation) is a retirement plan intended to provide a person with a secure income for life. ... Prime Brokerage is the generic name for a bundled package of services offered by investment banks to hedge funds. ... A trust company is normally owned by one of three types of structures; an independent partnership, a bank, or a law firm, each of which specialize in being a trustee of various kinds of trusts, and managing estates. ...


Finance series
Financial market
Participants
Corporate finance
Personal finance
Public finance
Banks and Banking
Financial regulation
The field of finance refers to the concepts of time, money and risk and how they are interelated. ... This article does not cite any references or sources. ... There are two basic financial market participant catagories, Investor vs. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ... This article does not cite any references or sources. ... For other uses, see Bank (disambiguation). ... Financial supervision is government supervision of financial institutions by regulators. ...

 v  d  e 

Commercially insurable risks typically share seven common characteristics.[1]

  1. A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004.[2] The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers,” which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. Lloyd's of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable.
  2. Definite Loss. The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.
  3. Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.
  4. Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.
  5. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113)
  6. Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.
  7. Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurers appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer’s capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.

// The law of large numbers (LLN) is any of several theorems in probability. ... It has been suggested that Council of Lloyds be merged into this article or section. ... The Financial Accounting Standards Board (FASB) is a private, non-for-profit organization whose primary purpose is to develop Generally Accepted Accounting Principles in the United States (US GAAP). ... This article is a list of Financial Accounting Standards Board (FASB) pronouncements, including Statements, Concepts Statements, Interpretations, and Technical Bulletins, which are issued to provide rules and guidelines in preparing, presenting, and reporting financial statements within the United States. ... In mathematics, a percentage is a way of expressing a number as a fraction of 100 (per cent meaning per hundred). It is often denoted using the percent sign, %. For example, 45% (read as forty-five percent) is equal to 45 / 100, or 0. ... Reinsurance is a means by which an insurance company can protect itself against the risk of losses with other insurance companies. ...

Indemnification

Main article: Indemnity

The technical definition of "indemnity" means to make whole again. There are two types of insurance contracts; 1) an "indemnity" policy and 2) a "pay on behalf" or "on behalf of"[3] policy. The difference is significant on paper, but rarely material in practice. Look up Indemnity in Wiktionary, the free dictionary. ...


An "indemnity" policy will never pay claims until the insured has paid out of pocket to some third party; i.e. a visitor to your home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitors fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000)[4].


Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner) would not be out of pocket for anything. Most modern liability insurance is written on the basis of "pay on behalf" language[5].


An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance 'policy'. Generally, an insurance contract includes, at a minimum, the following elements: the parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss events covered in the policy. A contract is a legally binding exchange of promises or agreement between parties that the law will enforce. ... Look up Indemnity in Wiktionary, the free dictionary. ...


When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a 'claim' against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the 'premium'. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims—in theory for a relatively few claimants—and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (i.e., reserves), the remaining margin is an insurer's profit. At TSG, overhead, overhead cost or overhead expense refers to an ongoing expense of 8-5 non salary widgets. ... This article or section does not cite any references or sources. ...


Insurer’s business model

Profit = earned premium + investment income - incurred loss - underwriting expenses. This article should belong in one or more categories. ...


Insurers make money in two ways: (1) through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insureds. Underwriting refers to the process that a large financial service provider (bank, insurer, investment house) uses to assess the eligibility of a customer to receive their products like equity capital, insurance, mortgage or credit to a customer. ...


The most difficult aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered, and these scientific principles are used to determine an insurer's overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy. Of course, from the insurer's perspective, some policies are winners (i.e., the insurer pays out less in claims and expenses than it receives in premiums and investment income) and some are losers (i.e., the insurer pays out more in claims and expenses than it receives in premiums and investment income). Underwriting refers to the process that a large financial service provider (bank, insurer, investment house) uses to assess the eligibility of a customer to receive their products like equity capital, insurance, mortgage or credit to a customer. ... 2003 US mortality (life) table, Table 1, Page 1 Actuarial science applies mathematical and statistical methods to finance and insurance, particularly to the assessment of risk. ... This article is about the field of statistics. ... Probability is the likelihood or chance that something is the case or will happen. ... Underwriting profit is a term used in the insurance industry. ...


An insurer's underwriting performance is measured in its combined ratio. The loss ratio (incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. The combined ratio is a reflection of the company's overall underwriting profitability. A combined ratio of less than 100 percent indicates underwriting profitability, while anything over 100 indicates an underwriting loss. Underwriting refers to the process that a large financial service provider (bank, insurer, investment house) uses to assess the eligibility of a customer to receive their products like equity capital, insurance, mortgage or credit to a customer. ...


Insurance companies also earn investment profits on “float”. “Float” or available reserve is the amount of money, at hand at any given moment, that an insurer has collected in insurance premiums but has not been paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out. Invest redirects here. ...


In the United States, the underwriting loss of property and casualty insurance companies was $142.3 billion in the five years ending 2003. But overall profit for the same period was $68.4 billion, as the result of float. Some insurance industry insiders, most notably Hank Greenberg, do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well, but this opinion is not universally held. Naturally, the “float” method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. So a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle. [6] This article or section does not cite any references or sources. ... Casualty insurance is a broad category of insurance that includes almost any coverage that is not related to life, health, or property. ... Maurice R. Hank Greenberg (born May 4, 1925 in New York City) is an American businessman and former chairman and CEO of American International Group (AIG), the worlds largest insurance and financial services corporation. ... “The tendency to swing between profitable and unprofitable periods over time is commonly known as the underwriting or insurance cycle. ...


Property and casualty insurers currently make the most money from their auto insurance line of business. Generally better statistics are available on auto losses and underwriting on this line of business has benefited greatly from advances in computing. Additionally, property losses in the US, due to natural catastrophes, have exacerbated this trend. United States may refer to: Places: United States of America SS United States, the fastest ocean liner ever built. ...


Finally, claims and loss handling is the materialized utility of insurance. In managing the claims-handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome. Insurance fraud or false insurance claims are insurance claims filed with the intent to defraud an insurance company. ...


History of insurance

Main article: History of insurance

In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one's neighbour, the other neighbours must help. Otherwise, neighbours will not receive help in the future. This type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread (for example countries in the territory of the former Soviet Union).


Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. 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 Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen. Babylonia was a state in southern Mesopotamia, in modern Iraq, combining the territories of Sumer and Akkad. ... The 3rd millennium BC spans the Early to Middle Bronze Age. ... The 2nd millennium BC marks the transition from the Middle to the Late Bronze Age. ... A millennium (pl. ... An inscription of the Code of Hammurabi. ... The Mediterranean Sea is an intercontinental sea positioned between Europe to the north, Africa to the south and Asia to the east, covering an approximate area of 2. ... A merchant making up the account by Shiatsus Hokusai Merchants function as professionals who deal with trade, dealing in commodities that they do not produce themselves, in order to produce profit. ...


Achaemenian monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.


The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, 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, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much."[1]


A thousand years later, the inhabitants of Rhodes invented the concept of the 'general average'. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinkage. This article is about the Greek island of Rhodes. ... The law of general average is a legal principle of maritime law according to which all parties in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. ...


The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called "benevolent societies" which cared for the families and paid funeral expenses of members upon death. Guilds in the Middle Ages served a similar purpose. The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies. Ancient Rome was a civilization that grew from a small agricultural community founded on the Italian Peninsula circa the 9th century BC to a massive empire straddling the Mediterranean Sea. ... For other uses, see Family (disambiguation). ... For other uses, see Funeral (disambiguation). ... For other uses, see Death (disambiguation). ... A guild is an association of craftspeople in a particular trade. ... The Middle Ages formed the middle period in a traditional schematic division of European history into three ages: the classical civilization of Antiquity, the Middle Ages, and modern times, beginning with the Renaissance. ... The Talmud (Hebrew: ) is a record of rabbinic discussions pertaining to Jewish law, ethics, customs, and history. ... A good in economics is any physical object (natural or man-made) or service that, upon consumption, increases utility, and therefore can be sold at a price in a market. ...


Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed. For other uses, see Genoa (disambiguation). ... This article is about the European Renaissance of the 14th-17th centuries. ... For other uses, see Europe (disambiguation). ...


Toward the end of the seventeenth century, London's growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Mr. Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of London remains the leading market (note that it is not an insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance. It has been suggested that Council of Lloyds be merged into this article or section. ...


Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings. In 1680, he established England's first fire insurance company, "The Fire Office," to insure brick and frame homes. Detail of painting from 1666 of the Great Fire of London by an unknown artist, depicting the fire as it would have appeared on the evening of Tuesday, 4 September from a boat in the vicinity of Tower Wharf. ... Nicholas Barbon (c. ...


The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system for insurance similar to that which oversees state banks and national banks. Nickname: Motto: Aedes Mores Juraque Curat (She cares for her temples, customs, and rights) Location of Charleston in South Carolina. ... Official language(s) English Capital Columbia Largest city Columbia Largest metro area Columbia Area  Ranked 40th  - Total 34,726 sq mi (82,965 km²)  - Width 200 miles (320 km)  - Length 260 miles (420 km)  - % water 6  - Latitude 32° 2′ N to 35° 13′ N  - Longitude 78° 32′ W to 83... This article is about the American political figure. ... For other uses, see Fire (disambiguation). ... Perpetual insurance is a type of homeowners insurance policy written to have no term, or date, when the policy expires. ... Balkanization is a geopolitical term originally used to describe the process of fragmentation or division of a region into smaller regions that are often hostile or non-cooperative with each other. ... Federal courts Supreme Court Circuit Courts of Appeal District Courts Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Local Government Other countries Atlas  US Government Portal      A U.S. state is any one of the fifty subnational entities of... The National Association of Insurance Commissioners (NAIC) is an IRS 501(c)(3) non-profit organization which seeks to organize the regulatory and supervisory efforts of the state Insurance Commissioners around the United States. ...


Types of insurance

Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as "perils". An insurance policy will set out in detail which perils are covered by the policy and which are not. Below are (non-exhaustive) lists of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set forth below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from causing an accident). A homeowner's insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner's belongings, liability insurance covering certain legal claims against the owner, and even a small amount of health insurance for medical expenses of guests who are injured on the owner's property. Home insurance, also commonly called hazard insurance or homeowners insurance (often abbreviated in the real estate industry as HOI), is the type of property insurance that covers private homes. ...


Business insurance can be any kind of insurance that protects businesses against risks. Some principal subtypes of business insurance are (a) the various kinds of professional liability insurance, also called professional indemnity insurance, which are discussed below under that name; and (b) the business owners policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners insurance bundles the coverages that a homeowner needs.[7] Business Insurance includes a wide variety of options can be used to manage business risks. ...


Health

Main articles: Health insurance and Dental insurance
Almost all developed countries have government-supplied insurance for health
Almost all developed countries have government-supplied insurance for health

Health insurance policies will often cover the cost of private medical treatments if the National Health Service in the United Kingdom (NHS) or other publicly-funded health programs do not pay for them. It will often result in quicker health care where better facilities are available. Dental insurance, like medical insurance, is coverage for individuals to protect them against dental costs. In the U.S., dental insurance is often part of an employer's benefits package, along with health insurance. Most countries rely on public funding to ensure that all citizens have universal access to health care. The term health insurance is generally used to describe a form of insurance that pays for medical expenses. ... Dental insurance is insurance designed to pay the costs associated with dental care. ... Image File history File linksMetadata Download high resolution version (1600x1200, 268 KB) Summary The entrance to Norfolk and Norwich University Hospital taken by en:User:FrancisTyers, 11 January 2006. ... Image File history File linksMetadata Download high resolution version (1600x1200, 268 KB) Summary The entrance to Norfolk and Norwich University Hospital taken by en:User:FrancisTyers, 11 January 2006. ... NHS redirects here. ... Universal health care, or universal healthcare, is health care coverage which is extended to all citizens, and sometimes permanent residents, of a governmental region. ...


Disability

  • Disability insurance policies provide financial support in the event the policyholder is unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgages and credit cards.
  • Total permanent disability insurance 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.
  • Disability overhead insurance allows business owners to cover the overhead expenses of their business while they are unable to work.
  • Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expense incurred because of a job-related injury.

This page is a candidate for speedy deletion. ... Total Permanent Disability (TPD) is a phrase used in the insurance industry. ... Workers compensation (colloquially known as workers comp in North American English or compo in Australia) provides insurance to cover medical care and compensation for employees who are injured in the course of employment, in exchange for mandatory relinquishment of the employees right to sue his or her employer for... A wage is a compensation which workers receive in exchange for their labor. ...

Casualty

Main article: Casualty insurance

Casualty insurance insures against accidents, not necessarily tied to any specific property. Casualty insurance is a broad category of insurance that includes almost any coverage that is not related to life, health, or property. ...

  • Crime insurance is a form of casualty insurance that covers the policyholder against losses arising from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement.
  • 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 will result in a loss.

Political risk insurance can be taken out by businesses, of any size, having operations in countries in which there is a risk that revolution or other political conditions will result in a loss. ... For other uses, see Country (disambiguation). ... For other uses, see Revolution (disambiguation). ... For other uses, see Politics (disambiguation). ...

Life insurance

Main article: Life insurance

Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individuals or individuals death. ... This article needs additional references or sources for verification. ... For other uses, see Funeral (disambiguation). ...


Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. 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. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance. Annuity contracts are offered by organizations and individuals that may accumulate value and take a current value and pay it out over a period of years. ... This article does not cite any references or sources. ... Retirement is the point where a person stops employment completely. ...


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. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed. For other uses, see Cash (disambiguation). ... An endowment policy is a life assurance contract designed to pay a lump sum after a specified term or on earlier death (some policies also include critical illness as condition of payout). ... Winding up redirects here. ... For the business meaning, see Wealth (economics). ...


In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. 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. Tax law is the codified system of laws that describes government levies on economic transactions, commonly called taxes. ... // This article does not cite any references or sources. ...


In U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation. A combination of low-cost term life insurance and a higher-return tax-efficient retirement account may achieve better investment return.


Property

Main article: Property insurance
This tornado damage to an Illinois home would be considered an "Act of God" for insurance purposes
This tornado damage to an Illinois home would be considered an "Act of God" for insurance purposes

Property insurance provides protection against risks to property, such as fire, theft or weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance. Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. ... Image File history File linksMetadata Download high resolution version (1200x800, 1204 KB) Summary April 2006 Tornado Outbreak, OFallon, Illinois, (April 2, 2006). ... Image File history File linksMetadata Download high resolution version (1200x800, 1204 KB) Summary April 2006 Tornado Outbreak, OFallon, Illinois, (April 2, 2006). ... This article is about the weather phenomenon. ... This article is about the U.S. State. ... Act of God is a common legal term for events outside of human control, such as sudden floods or other natural disasters, for which no one can be held responsible. ... A young waif steals a pair of boots Stealing redirects here. ... For the geological process, see Weathering or Erosion. ... Property insurance provides protection against risks to property, such as fire, theft or weather damage. ... National Flood Insurance Program In 1968, Congress created the National Flood Insurance Program (NFIP) in response to the rising cost of taxpayer funded disaster relief for flood victims and the increasing amount of damage caused by floods. ... Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. ... Home insurance, also commonly called hazard insurance or homeowners insurance (often abbreviated in the real estate industry as HOI), is the type of property insurance that covers private homes. ... Boiler insurance is a type of property insurance that pays accidental losses to machinery and equipment. ...

  • Automobile insurance, known in the UK as motor insurance, is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself. Throughout the United States auto insurance policy is required to legally operate a motor vehicle on public roads. In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to a no-fault system, which reduces or eliminates the ability to sue for compensation but provides automatic eligibility for benefits. Credit card companies insure against damage on rented cars.
    • Driving School Insurance insurance provides cover for any authorized driver whilst under going tuition, cover also unlike other motor policies provides cover for instructor liability where both the pupil and driving instructor are both equally liable in the event of a claim.
  • Aviation insurance insures against hull, spares, deductible, hull wear and liability risks.
  • Boiler insurance (also known as boiler and machinery insurance or equipment breakdown insurance) insures against accidental physical damage to equipment or machinery.
  • Builder's risk insurance insures against the risk of physical loss or damage to property during construction. Builder's risk insurance is typically written on an "all risk" basis covering damage due to any cause (including the negligence of the insured) not otherwise expressly excluded.
  • Crop insurance "Farmers use crop insurance to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease, for instance."[8]
  • Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary homeowners insurance policies do not cover earthquake damage. Most earthquake insurance policies feature a high deductible. Rates depend on location and the probability of an earthquake, as well as the construction of the home.
  • A fidelity bond is a form of casualty insurance that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.
  • Flood insurance protects against property loss due to flooding. Many insurers in the US do not provide flood insurance in some portions of the country. In response to this, the federal government created the National Flood Insurance Program which serves as the insurer of last resort.
  • Home insurance or homeowners insurance: See "Property insurance".
  • Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or on inland waterways, and of the cargo that may be on them. When the owner of the cargo and the carrier are separate corporations, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance. Many marine insurance underwriters will include "time element" coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss.
  • Surety bond insurance is a three party insurance guaranteeing the performance of the principal.
  • Terrorism insurance provides protection against any loss or damage caused by terrorist activities.
  • Volcano insurance is an insurance that covers volcano damage in Hawaii.
  • Windstorm insurance is an insurance covering the damage that can be caused by hurricanes and tropical cyclones.

To meet Wikipedias quality standards, this article or section may require cleanup. ... In the most general sense, a liability is anything that is a hindrance, or puts individuals at a disadvantage. ... For other uses, see Driving (disambiguation). ... The Trikke is a Human Powered Vehicle (HPV) Automobiles are among the most commonly used engine powered vehicles. ... No-fault insurance is a type of insurance (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident. ... There are very few or no other articles that link to this one. ... // Aviation Insurance was first introduced in the early years of the 20th Century. ... Boiler insurance is a type of property insurance that pays accidental losses to machinery and equipment. ... Builders risk insurance is a special type of property insurance which indemnifies against damage to buildings while they are under construction. ... Crop insurance is purchased by farmers to protect themselves against crop failures due to natural disasters, such as floods, hail, and drought. ... Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. ... This article is about the natural seismic phenomenon. ... Home insurance, or homeowners insurance, is an insurance policy that combines insurance on the home, its contents, and, often, the other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home. ... Look up Deductible in Wiktionary, the free dictionary. ... A fidelity bond is a form of protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. ... National Flood Insurance Program In 1968, Congress created the National Flood Insurance Program (NFIP) in response to the rising cost of taxpayer funded disaster relief for flood victims and the increasing amount of damage caused by floods. ... The National Flood Insurance Program (NFIP) was created by Congress in 1968. ... Marine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or property by which cargo is transferred, acquired, or held between the points of origin and final destination. ... A surety bond is a contract among at least three parties: The principal - the primary party who will be performing a contractual obligation The obligee - the party who is the recipient of the obligation, and The surety - who ensures that the principals obligations will be performed. ... Terrorism insurance is insurance purchased by property owners to cover their potential losses and liabilities that might occur due to terrorist activities. ... This article is becoming very long. ...

Liability

Main article: Liability insurance

Liability insurance is a very broad superset that covers legal claims against the insured. Many types of insurance include an aspect of liability coverage. For example, 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, health, or property. The protection 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. Liability policies typically cover only the negligence of the insured, and will not apply to results of willful or intentional acts by the insured. Liability insurance is a part of the general insurance system of risk transference. ...

  • Environmental liability insurance protects the insured from bodily injury, property damage and cleanup costs as a result of the dispersal, release or escape of pollutants.
  • Errors and omissions insurance: See "Professional liability insurance" under "Liability insurance".
  • Professional liability insurance, also called professional indemnity insurance, protects professional practitioners such as architects, lawyers, doctors, and accountants against potential negligence claims made by their patients/clients. Professional liability insurance may take on different names depending on the profession. For example, professional liability insurance in reference to the medical profession may be called malpractice insurance. Notaries public may take out errors and omissions insurance (E&O). Other potential E&O policyholders include, for example, real estate brokers, home inspectors, appraisers, and website developers.
  • Directors and officers liability insurance protects an organization (usually a corporation) from costs associated with litigation resulting from mistakes incurred by directors and officers for which they are liable. In the industry, it is usually called "D&O" for short.
  • Prize indemnity insurance protects the insured from giving away a large prize at a specific event. Examples would include offering prizes to contestants who can make a half-court shot at a basketball game, or a hole-in-one at a golf tournament.

Professional liability insurance, also called professional indemnity insurance, protects professional practitioners such as architects, lawyers, doctors, and accountants against potential negligence claims made by their patients/clients. ... Directors and officers liability insurance - Wikipedia, the free encyclopedia /**/ @import /skins-1. ... Prize indemnity insurance is indemnification insurance for a promotion in which the participants are offered the chance to win prizes. ...

Credit

Main article: Credit insurance

Credit insurance repays some or all of a loan back when certain things happen to the borrower such as unemployment, disability, or death. Mortgage insurance is a form of credit insurance, although the name credit insurance more often is used to refer to policies that cover other kinds of debt. Credit Insurance is an insurance policy associated with a specific loan or line of credit which pays back some or all of any money owed should certain things happen to the borrower, such as death, disability, or unemployment. ... For other uses, see Loan (disambiguation). ... CIA figures for world unemployment rates, 2006 Unemployment is the state in which a person is without work, available to work, and is currently seeking work. ... Disabled redirects here. ... For other uses, see Death (disambiguation). ...

It has been suggested that this article or section be merged with Mortgage. ...

Other types

  • Collateral protection insurance or CPI, insures property (primarily vehicles) held as collateral for loans made by lending institutions.
  • Defense Base Act Workers' compensation or DBA Insurance insurance provides coverage for civilian workers hired by the government to perform contracts outside the US and Canada. DBA is required for all US citizens, US residents, US Green Card holders, and all employees or subcontractors hired on overseas government contracts. Depending on the country, Foreign Nationals must also be covered under DBA. This coverage typically includes expenses related to medical treatment and loss of wages, as well as disability and death benefits.
  • Expatriate insurance provides individuals and organizations operating outside of their home country with protection for automobiles, property, health, liability and business pursuits.
  • Financial loss insurance protects individuals and companies against various financial risks. For example, a business might purchase cover to protect it from loss of sales if a fire in a factory prevented it from carrying out its business for a time. Insurance might also cover the failure of a creditor to pay money it owes to the insured. This type of insurance is frequently referred to as "business interruption insurance." Fidelity bonds and surety bonds are included in this category, although these products provide a benefit to a third party (the "obligee") in the event the insured party (usually referred to as the "obligor") fails to perform its obligations under a contract with the obligee.
  • Kidnap and ransom insurance
  • Locked funds insurance is a little-known hybrid insurance policy jointly issued by governments and banks. It is used to protect public funds from tamper by unauthorized parties. In special cases, a government may authorize its use in protecting semi-private funds which are liable to tamper. The terms of this type of insurance are usually very strict. Therefore it is used only in extreme cases where maximum security of funds is required.
  • Nuclear incident insurance covers damages resulting from an incident involving radioactive materials and is generally arranged at the national level. (For the United States, see the Price-Anderson Nuclear Industries Indemnity Act.)
  • Pet insurance insures pets against accidents and illnesses - some companies cover routine/wellness care and burial, as well.
  • Pollution Insurance. A first-party coverage for contamination of insured property either by external or on-site sources. Coverage for liability to third parties arising from contamination of air, water, or land due to the sudden and accidental release of hazardous materials from the insured site. The policy usually covers the costs of cleanup and may include coverage for releases from underground storage tanks. Intentional acts are specifically excluded.
  • Purchase insurance is aimed at providing protection on the products people purchase. Purchase insurance can cover individual purchase protection, warranties, guarantees, care plans and even mobile phone insurance. Such insurance is normally very limited in the scope of problems that are covered by the policy.
  • Title insurance provides a guarantee that title to real property is vested in the purchaser and/or mortgagee, free and clear of liens or encumbrances. It is usually issued in conjunction with a search of the public records performed at the time of a real estate transaction.
  • Travel insurance is an insurance cover taken by those who travel abroad, which covers certain losses such as medical expenses, lost of personal belongings, travel delay, personal liabilities, etc.

Expatriate Insurance Expatriate Insurance policies are designed to cover financial and other losses incurred while living and working in a country other than ones own. ... In economics, a business (also called firm or enterprise) is a legally recognized organizational entity designed to provide goods and/or services to consumers or corporate entities such as governments, charities or other businesses. ... Sales are the activities involved in providing products or services in return for money or other compensation. ... This article or section does not cite any references or sources. ... A creditor is a party (e. ... For other uses, see Money (disambiguation). ... A fidelity bond is a form of protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. ... A surety bond is a contract among at least three parties: The principal - the primary party who will be performing a contractual obligation The obligee - the party who is the recipient of the obligation, and The surety - who ensures that the principals obligations will be performed. ... This article does not cite any references or sources. ... Locked Funds Insurance is a little known hybrid insurance policy jointly issued by governments and banks. ... The Price-Anderson Nuclear Industries Indemnity Act (commonly called the Price-Anderson Act) is an act of the Congress of the United States. ... Pet Insurance pays the veterinary costs if ones pet is ill or is injured in an accident. ... Title insurance is insurance against loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. ... This article does not cite any references or sources. ... This article is about the legal mechanism used to secure property in favor of a creditor. ... In law, lien is the broadest term for any sort of charge or encumbrance against an item of property that secures the payment of a debt or performance of some other obligation. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ... Travel insurance is insurance that is intended to cover medical expenses, financial and other losses incurred while traveling, either within ones own country, or internationally. ...

Insurance financing vehicles

  • Protected Self-Insurance is an alternative risk financing mechanism in which an organization retains the 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. A properly designed and underwritten Protected Self-Insurance Program reduces and stabilizes the cost of insurance and provides valuable risk management information.
  • Retrospectively Rated Insurance is a method of establishing a premium on large commercial accounts. The final premium is based on the insured's actual loss experience during the policy term, sometimes subject to a minimum and maximum premium, with the final premium determined by a formula. Under this plan, the current year's premium is based partially (or wholly) on the current year's losses, although the premium adjustments may take months or years beyond the current year's expiration date. The rating formula is guaranteed in the insurance contract. Formula: retrospective premium = converted loss + basic premium × tax multiplier. Numerous variations of this formula have been developed and are in use.
  • Fraternal insurance is provided on a cooperative basis by fraternal benefit societies or other social organizations.[9]
  • Formal self insurance is the deliberate decision to pay for otherwise insurable losses out of one's own money. This can be done on a formal basis by establishing a separate fund into which funds are deposited on a periodic basis, or by simply forgoing the purchase of available insurance and paying out-of-pocket. Self insurance is usually used to pay for high-frequency, low-severity losses. Such losses, if covered by conventional insurance, mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies. While this is true for all insurance, for small, frequent losses the transaction costs may exceed the benefit of volatility reduction that insurance otherwise affords.
  • 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.
  • Reinsurance is a type of insurance purchased by insurance companies or self-insured employers to protect against unexpected losses. Financial reinsurance is a form of reinsurance that is primary used for capital management rather than to transfer insurance risk.
  • Stop-loss insurance provides protection against catastrophic or unpredictable losses. It is purchased by organizations who do not want to assume 100% of the liability for losses arising from the plans. Under a stop-loss policy, the insurance company becomes liable for losses that exceed certain limits called deductibles.
  • Social insurance can be many things to many people in many countries. But a summary of its essence is that it is a collection of insurance coverages (including components of life insurance, disability income insurance, unemployment insurance, health insurance, and others), plus retirement savings, that mandates participation by all citizens. By forcing everyone in society to be a policyholder and pay premiums, it ensures that everyone can become a claimant when or if he/she needs to. Along the way this inevitably becomes related to other concepts such as the justice system and the welfare state. This is a large, complicated topic that engenders tremendous debate, which can be further studied in the following articles (and others):

A type of insurance that uses retrospective rating: a method of establishing a premium on large commercial accounts. ... A benefit society is an organization or voluntary association formed for mutual aid, benefit or insurance to provide for mutual relief. ... Self insurance is a risk management method whereby an eligible risk is retained, but a calculated amount of money is set aside to compensate for the potential future loss. ... No-fault insurance is a type of insurance (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident. ... Reinsurance is a means by which an insurance company can protect itself against the risk of losses with other insurance companies. ... Financial Reinsurance, also known as fin re, is a form of reinsurance which is focused more on capital management than on risk transfer. ... For specific national programs, see Social Security (United States), National insurance (UK), Social Security (Sweden) Social security refers to a variety of government programs providing for social welfare and social protection and the alleviation of poverty among senior citizens and the disabled. ... There are three main interpretations of the idea of a welfare state: the provision of welfare services by the state. ... Social welfare redirects here. ... Social security primarily refers to social welfare service concerned with social protection, or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. ... The social safety net is a term used to describe a collection of services provided by the state (such as welfare, universal healthcare, homeless shelters, and perhaps various subsidized services such as transit), which prevent any individual from falling into poverty beyond a certain level. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series        UK Income Tax and National Insurance (2005–2006) UK Income Tax and National Insurance as a % of Salary (2005–2006) National Insurance (NI) is a system of taxes and related social security benefits in the... Social Security, in the United States, currently refers to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program. ... This article concerns proposals to change the Social Security system in the United States. ...

Insurance companies

Insurance companies may be classified into two groups:

  • Life insurance companies, which sell life insurance, annuities and pensions products.
  • Non-life, General, 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. Taxes redirects here. ... It has been suggested that Accounting scholarship be merged into this article or section. ... For other senses of this word, see decade (disambiguation). ...


In the United States, standard line insurance companies are your "main stream" insurers. These are the companies that typically insure your auto, home or business. They use pattern or "cookie-cutter" policies without variation from one person to the next. They usually have lower premiums than excess lines and can sell directly to individuals. They are regulated by state laws that can restrict the amount they can charge for insurance policies.


Excess line insurance companies (aka Excess and Surplus) typically insure risks not covered by the standard lines market. They are broadly referred as being all insurance placed with non-admitted insurers. Non-admitted insurers are not licensed in the states where the risks are located. These companies have more flexibility and can react faster than standard insurance companies because they are not required to file rates and forms as do the "admitted" carriers do. However, they still have substantial regulatory requirements placed upon them. State laws generally require insurance placed with surplus line agents and brokers to not be available through standard licensed insurers.


Insurance companies are generally classified as either mutual or stock companies. This is more of a traditional distinction as true mutual companies are becoming rare. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. Other possible forms for an insurance company include reciprocals, in which policyholders 'reciprocate' in sharing risks, and Lloyds organizations. Mutual insurance is a type of insurance where those protected by the insurance (policyholders) also own the organization. ...


Insurance companies are rated by various agencies such as A. M. Best. The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products. A.M. Best is a NRSRO (Nationally Recognized Statistical Rating Organization) by the U.S. Securities and Exchange Commission. ...


Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well. Reinsurance is a means by which an insurance company can protect itself against the risk of losses with other insurance companies. ...


Captive insurance companies may be defined as limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house self-insurance vehicle. Captives may take the form of a "pure" entity (which is a 100 percent subsidiary of the self-insured parent company); of a "mutual" captive (which insures the collective risks of members of an industry); and of an "association" captive (which self-insures individual risks of the members of a professional, commercial or industrial association). Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices. Captive insurance companies are limited purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups, although they sometimes also insure some of the risks of the parent companys customers. ...


The types of risk that a captive can underwrite for their parents include property damage, public and products liability, professional indemnity, employee benefits, employers liability, motor and medical aid expenses. The captive's exposure to such risks may be limited by the use of reinsurance.


Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent. This can be understood against the following background:

  • heavy and increasing premium costs in almost every line of coverage;
  • difficulties in insuring certain types of fortuitous risk;
  • differential coverage standards in various parts of the world;
  • rating structures which reflect market trends rather than individual loss experience;
  • insufficient credit for deductibles and/or loss control efforts.

There are also companies known as 'insurance consultants'. Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies. Similar to an insurance consultant, an 'insurance broker' also shops around for the best insurance policy amongst many companies. However, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client.


Neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions. Third party administrators are companies that perform underwriting and sometimes claims handling services for insurance companies. These companies often have special expertise that the insurance companies do not have.


The financial stability and strength of an insurance company should be a major consideration when purchasing an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool or other arrangement with less attractive payouts for losses). A number of independent rating agencies, such as Best's, Fitch, Standard & Poor's, and Moody's Investors Service, provide information and rate the financial viability of insurance companies.


Global insurance industry

Life insurance premia written in 2005
Life insurance premia written in 2005
Non-life insurance premia written in 2005
Non-life insurance premia written in 2005

Global insurance premiums grew by 8.0% in 2006 (or 5% in real terms) to reach $3.7 trillion due to improved profitability and a benign economic environment characterised by solid economic growth, moderate inflation and strong equity markets. Profitability improved in both life and non-life insurance in 2006 compared to the previous year. Life insurance premiums grew by 10.2% in 2006 as demand for annuity and pension products rose. Non-life insurance premiums grew by 5.0% due to growth in premium rates. Over the past decade, global insurance premiums rose by more than a half as annual growth fluctuated between 2% and 11%. Image File history File links Size of this preview: 800 × 351 pixelsFull resolution (1425 × 625 pixel, file size: 60 KB, MIME type: image/png)This bubble map shows the global distribution of life insurance premia written in 2005 as a percentage of the top producer (USA - $517,074,000,000). ... Image File history File links Size of this preview: 800 × 351 pixelsFull resolution (1425 × 625 pixel, file size: 60 KB, MIME type: image/png)This bubble map shows the global distribution of life insurance premia written in 2005 as a percentage of the top producer (USA - $517,074,000,000). ... Image File history File links Size of this preview: 800 × 351 pixelsFull resolution (1425 × 625 pixel, file size: 58 KB, MIME type: image/png)This bubble map shows the global distribution of non-life insurance premia written in 2005 as a percentage of the top producer (USA - $625,838,000... Image File history File links Size of this preview: 800 × 351 pixelsFull resolution (1425 × 625 pixel, file size: 58 KB, MIME type: image/png)This bubble map shows the global distribution of non-life insurance premia written in 2005 as a percentage of the top producer (USA - $625,838,000...


Advanced economies account for the bulk of global insurance. With premium income of $1,485bn, Europe was the most important region, followed by North America ($1,258bn) and Asia ($801bn). The top four countries accounted for nearly two-thirds of premiums in 2006. The US and Japan alone accounted for 43% of world insurance, much higher than their 7% share of the global population. Emerging markets accounted for over 85% of the world’s population but generated only around 10% of premiums. The volume of UK insurance business totalled $418bn in 2006 or 11.2% of global premiums. [10]


Controversies

Insurance insulates too much

By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer). This problem is known to the insurance industry as moral hazard. To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in behavior that grossly magnifies their risk of loss or liability. Moral hazard refers to the prospect that a party insulated from risk (such as through insurance) will not fully account for the negative consequences of the risk when deciding to act. ...


For example, life insurance companies may require higher premiums or deny coverage altogether to people who work in hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by the insured. Even if a provider were so irrational as to desire to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal. An intentional tort is a category of torts that describes a civil wrong resulting from an intentional act on the part of the tortfeasor. ...


Closed community self-insurance

Some communities prefer to create virtual insurance amongst themselves by other means than contractual risk transfer, which assigns explicit numerical values to risk. A number of religious groups, including the Amish and some Muslim groups, depend on support provided by their communities when disasters strike. The risk presented by any given person is assumed collectively by the community who all bear the cost of rebuilding lost property and supporting people whose needs are suddenly greater after a loss of some kind. In supportive communities where others can be trusted to follow community leaders, this tacit form of insurance can work. In this manner the community can even out the extreme differences in insurability that exist among its members. Some further justification is also provided by invoking the moral hazard of explicit insurance contracts. Various Religious symbols, including (first row) Christian, Jewish, Hindu, Bahai, (second row) Islamic, tribal, Taoist, Shinto (third row) Buddhist, Sikh, Hindu, Jain, (fourth row) Ayyavazhi, Triple Goddess, Maltese cross, pre-Christian Slavonic Religion is the adherence to codified beliefs and rituals that generally involve a faith in a spiritual... This article is about Old Order Amish, but also refers to other Amish sects. ... For other uses, see Community (disambiguation). ... Moral hazard refers to the prospect that a party insulated from risk (such as through insurance) will not fully account for the negative consequences of the risk when deciding to act. ...


In the United Kingdom The Crown (which, for practical purposes, meant the Civil service) did not insure property such as government buildings. If a government building was damaged, the cost of repair would be met from public funds because, in the long run, this was cheaper than paying insurance premiums. Since many UK government buildings have been sold to property companies, and rented back, this arrangement is now less common and may have disappeared altogether. This article refers to the Commonwealths concept of the monarchys legal authority. ... The Roman civil service in action. ...


Complexity of insurance policy contracts

Insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. As a result, people may buy policies on unfavorable terms. In response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertised and sold. // Advert redirects here. ...


Many institutional insurance purchasers buy insurance through an insurance broker. Brokers represent the buyer (not the insurance company), and typically counsel the buyer on appropriate coverages, policy limitations. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible. Look up Market in Wiktionary, the free dictionary. ...


Insurance may also be purchased through an agent. Unlike a broker, who represents the policyholder, an agent represents the insurance company from whom the policyholder buys. An agent can represent more than one company.


Redlining

Redlining is the practice of denying insurance coverage in specific geographic areas, purportedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial profiling or redlining has a long history in the property insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.[11] For the automotive term, see redline. ... Manifestations Slavery Racial profiling Lynching Hate speech Hate crime Genocide (examples) Ethnocide Ethnic cleansing Pogrom Race war Religious persecution Blood libel Paternalism Police brutality Movements Policies Discriminatory Race / Religion / Sex segregation Apartheid Redlining Internment Ethnocracy Anti-discriminatory Affirmative action in the United States Emancipation Civil rights Desegregation Integration Equal opportunity... For the automotive term, see redline. ...


In determining premiums and premium rate structures, insurers consider quantifiable factors, including location, credit scores, gender, occupation, marital status, and education level. However, the use of such factors is often considered to be unfair or unlawfully discriminatory, and the reaction against this practice has in some instances led to political disputes about the ways in which insurers determine premiums and regulatory intervention to limit the factors used. A credit score is a numerical expression based on a statistical analysis of a persons credit files, to represent the creditworthiness of that person, which is the likelihood that the person will pay his or her debts in a timely manner. ... Gender in common usage refers to the sexual distinction between male and female. ... A profession is an occupation, vocation or career where specialized knowledge of a subject, field, or science is applied. ... A persons marital status describes their relationship with a significant other. ... To discriminate is to make a distinction. ...


An insurance underwriter's job is to evaluate a given risk as to the likelihood that a loss will occur. Any factor that causes a greater likelihood of loss should theoretically be charged a higher rate. This basic principle of insurance must be followed if insurance companies are to remain solvent. Thus, "discrimination" against (i.e., differential treatment of) potential insureds in the risk evaluation and premium-setting process is a necessary by-product of the fundamentals of insurance underwriting. For instance, insurers charge older people significantly higher premiums than they charge younger people for term life insurance. Older people are thus treated differently than younger people (i.e., a distinction is made, discrimination occurs). The rationale for the differential treatment goes to the heart of the risk a life insurer takes: Old people are likely to die sooner than young people, so the risk of loss (the insured's death) is greater in any given period of time and therefore the risk premium must be higher to cover the greater risk. However, treating insureds differently when there is no actuarially sound reason for doing so is unlawful discrimination.


What is often missing from the debate is that prohibiting the use of legitimate, actuarially sound factors means that an insufficient amount is being charged for a given risk, and there is thus a deficit in the system. The failure to address the deficit may mean insolvency and hardship for all of a company's insureds. The options for addressing the deficit seem to be the following: Charge the deficit to the other policyholders or charge it to the government (i.e., externalize outside of the company to society at large).


Insurance patents

Further information: Insurance patent

New insurance products can now be protected from copying with a business method patent in the United States. Under some patent laws, patents may be obtained for insurance-related inventions. ... Business method patents are a class of patents and one of many legal aspects of business. ...


A recent example of a new insurance product that is patented is telematic auto insurance. It was independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance (U.S. Patent 5,797,134 ) and a Spanish independent inventor, Salvador Minguijon Perez (EP patent 0700009). To meet Wikipedias quality standards, this article or section may require cleanup. ... The Progressive Corporation (PGR), Progressive Casualty Insurance Company, through its subsidiaries, provides personal automobile insurance, and other specialty property-casualty insurance and related services in the United States. ...


The basic idea of telematic auto insurance is that a driver's behavior is monitored directly while he or she drives and the information is transmitted to the insurance company. The insurance company uses the information to assess the likelihood that a driver will have an accident and adjusts premiums accordingly. A driver who drives great distances at high speeds, for example, might be charged a different rate than a driver who drives short distances at low speeds. The precise effect on charges is not known as it is not clear that a high speed long distance driver incurs greater risk to an insurance pool than the slow around-town driver.[citation needed]


A British auto insurance company, Norwich Union, has obtained a license to both the Progressive patent and Perez patent. They have made investments in infrastructure and developed a commercial offering called "Pay As You Drive" or PAYD. Norwich Union is an insurance company in the UK. It is the biggest life-insurer in the UK, and has a strong position in motor insurance. ...


Recent theoretical economic research on the social welfare effects of Progressive's telematics technology business process patents have questioned whether the business process patents are pareto efficient for society. Preliminary results suggest that they are not, but more work is needed. [12] [13]


Many independent inventors are in favor of patenting new insurance products since it gives them protection from big companies when they bring their new insurance products to market. Independent inventors account for 70 percent of the new U.S. patent applications in this area.


Many insurance executives are opposed to patenting insurance products because it creates a new risk for them. The Hartford insurance company, for example, recently had to pay $80 million to an independent inventor, Bancorp Services, in order to settle a patent infringement and theft of trade secret lawsuit for a type of corporate owned life insurance product invented and patented by Bancorp. The Hartford Financial Services Group, Inc. ...


There are currently about 150 new patent applications on insurance inventions filed per year in the United States. The rate at which patents have issued has steadily risen from 15 in 2002 to 44 in 2006. [14]


The insurance industry and rent seeking

Certain insurance products and practices have been described as rent seeking by critics. That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of variable annuities and variable life insurance can invest their premium payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are made. Sometimes this tax deferral is the only reason people use these products. Another example is the legal infrastructure which allows life insurance to be held in an irrevocable trust which is used to pay an estate tax while the proceeds themselves are immune from the estate tax. The phenomenon of rent-seeking was first identified in connection with monopolies by Gordon Tullock, in a paper in 1967. ... An annuity is an insurance contract. ... It has been suggested that Variable universal life Insurance be merged into this article or section. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ...


Criticism of insurance companies

Some people believe that modern insurance companies are money-making businesses which have little interest in insurance. They argue that the purpose of insurance is to spread risk so the reluctance of insurance companies to take on high-risk cases (e.g. houses in areas subject to flooding, or young drivers) runs counter to the principle of insurance.


Other criticisms include:

  • Insurance policies contain too many exclusion clauses. For example, some house insurance policies do not cover damage to garden walls.
  • Most insurance companies now use call centres and staff attempt to answer questions by reading from a script. It is difficult to speak to anybody with expert knowledge.

An exclusion clause is a term in a contract that seeks to restrict the rights of the parties to the contract. ... A very large collections call centre in Lakeland, FL. A call centre or call center (see spelling differences) is a centralised office used for the purpose of receiving and transmitting a large volume of requests by telephone. ...

Glossary

  • 'Combined ratio' = loss ratio + expense ratio. Loss ratio is calculated by dividing the amount of losses (sometimes including loss adjustment expenses) by the amount of earned premium. Expense ratio is calculated by dividing the amount of operational expenses by the amount of earned premium. A lower number indicates a better return on the amount of capital placed at risk by an insurer.
  • 'URIE' = unincorporated reciprocal inter-insurance exchange.
  • 'SSA' = subscriber savings account.
  • 'AIF' = attorney in fact.

See also

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  • ACORD
  • Compulsory insurance This page links here and is a redirect with possibilities. You can help by eliminating the redirect command in the redirecting page and expanding it.

Country Specific Articles Wikipedia does not have an article with this exact name. ... Image File history File links Wikibooks-logo. ... Image File history File links Wikiquote-logo. ... Image File history File links Wikisource-logo. ... Image File history File links Commons-logo. ... Image File history File links WikiNews-Logo. ... Image File history File links Wikiversity-logo-Snorky. ... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... This is a list of insurance companies in the United States. ... ACORD develops and maintains various electronic standards for the insurance, reinsurance and related financial services industries. ... Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. ... Image File history File links Redirect_arrow_without_text. ... URL redirection, also called URL forwarding, domain redirection and domain forwarding, is a technique on the World Wide Web for making a web page available under many URLs. ... Expansion can have several meanings, including: In physics: Expansion of space, thermal expansion In computer hardware: an Expansion card In computer programming: In-line expansion In computer gaming: an expansion pack In mathematics: polynomial expansion or the expansion of a graph An expansion team in sports. ... Financial services is a term used to refer to the services provided by the finance industry. ... Five for one is a reference in William Shakespeares The Tempest to a travellers insurance practice conducted in medieval England. ... The International Association for the Study of Insurance Economics, also known by its short name The Geneva Association, is a unique world organisation formed by a maximum of 80 CEOs (Chief Executive Officers) from the most prominent insurance companies around the world. ... Insurance law is the name given to practices of law surrounding insurance, including insurance policies and claims. ... Intergovernmental risk pools are organizations made up of public entities joined together to provide alternative risk financing/transfer mechanisms to themselves and other public entities through which particular types of risk are underwritten with contributions (premiums), losses and expenses shared in agreed rations. ... The Insurance Hall of Fame is an international list of business leaders in the field. ... Subrogation is the legal technique under the common law by which one party, commonly an insurer (I-X) of another party (X), steps into Xs shoes, so as to have the benefit of Xs rights and remedies against a third party such as a defendant (D). ... This article or section is in need of attention from an expert on the subject. ... Social security primarily refers to social welfare service concerned with social protection, or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. ... Universal health care, or universal healthcare, is health care coverage which is extended to all citizens, and sometimes permanent residents, of a governmental region. ... There are three main interpretations of the idea of a welfare state: the provision of welfare services by the state. ...

Australia has a sophisticated and well developed insurance market considering the small size of its population. ... Insurance is a federal subject in India and has a history dating back to 1818. ...

Notes

  1. ^ This discussion is adapted from Mehr and Camack “Principles of Insurance”, 6th edition, 1976, pp 34 – 37.
  2. ^ Insured cars by state. Insurance Information Institute.
  3. ^ C. Kulp & J. Hall, Casualty Insurance, Fourth Edition, 1968, page 35
  4. ^ However, bankruptcy of the insured does not relieve the insurer. Certain types of insurance, e.g., workers's compensation and personal automobile, are subject to statutory requirements that injured parties have direct access to coverage. Ibid, page 35
  5. ^ Ibid, page 35
  6. ^ Fitzpatrick, Sean, Fear is the Key: A Behavioral Guide to Underwriting Cycles, 10 Conn. Ins. L.J. 255 (2004).
  7. ^ Insurance Information Institute. Business insurance information. What does a business owners policy cover?. Retrieved on 2007-05-09.
  8. ^ U.S. Patent Application 20060287896  “Method for providing crop insurance for a crop associated with a defined attribute”
  9. ^ Margaret E. Lynch, Editor, "Health Insurance Terminology," Health Insurance Association of America, 1992, ISBN 1-879143-13-5
  10. ^ http://www.ifsl.org.uk/uploads/CBS_Insurance_2007.pdfPDF (365 KB) page 16
  11. ^ Gregory D. Squires (2003) Racial Profiling, Insurance Style: Insurance Redlining and the Uneven Development of Metropolitan Areas Journal of Urban Affairs Volume 25 Issue 4 Page 391-410, November 2003
  12. ^ Strauss and Hollis, 2007, Insurance Markets When Firms are Asymmetrically Informed: A Note (HTML).
  13. ^ Hollis and Strauss, 2007, Privacy, Driving Data and Automobile Insurance: An Economic Analysis (HTML).
  14. ^ (Source: Insurance IP Bulletin, December 15, 2006)

The Insurance Information Institute (i. ... Year 2007 (MMVII) was a common year starting on Monday of the Gregorian calendar in the 21st century. ... is the 129th day of the year (130th in leap years) in the Gregorian calendar. ... “PDF” redirects here. ...

External links

Look up Insurance in
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