Principles Of Insurance Flashcards
What is insurance?
Insurance is a contract between the insured and the insurer for the insured to provide compensation if the insured suffer a financial loss
Difference between insurance and assurance?
Insurance is when you do not know if it will happen but want to cover it in case and assurance is when you know it’s going to happen
Benefits of insurance?
Risk transfer mechanism Reduction of losses Peace of mind Encouraging enterprise Economic growth and stability Encouraging growth Invisible export
What is a risk?
Uncertainty
Four concepts of risk
Level of risk, uncertainty, peril and hazard
Risk in insurance terms
Uncertainty of a loss
The cause or the peril or event against which insurance is sought
The subject matter that is insured eg the house, car
Types of risks
Pure Financial Particular Speculative Non financial Fundamental
Types of risk that are insurable
Fortuitous event
Insurable interest
Not against public policy
Homogenous exposures
Pooling of risks
Common pool - the contributions of many pay for the losses of the few
Risk sharing
Co insurance
Re insurance
Self insurance
Captive insurance
Industry organisations
The prudential regulation authority The financial conduct authority The central bank of Ireland The ombudsman The association of British insurers The motor insurers bureau The uninsured drivers agreement The untraced drivers agreement
Principles of insurance
Insurable interest Indemnity Contribution Utmost good faith Proximate cause Subrogation
