Thursday, September 8, 2011

Basic Concepts of Insurance

Basic Concepts of Insurance
 At first, the initial concept of insurance is formed in the UK through a joint responsibility among ship owners to jointly raise funds in a certain amount to replace the losses incurred on the group members.
This concept was later extended to other investors.
In the initial concept, each member collecting a number of funds that will be used to assist members in the affected areas to return to run the business. For that every time a disaster, each member will be asked to put the funds back to restore the association's funds to its original position.

This concept later evolved into the concept of insurance is called the numbers a lot. The concept of numbers many states to provide adequate assurance, insurance companies must have quite a lot of customers who buy a type of insurance coverage.
After all it is met, the insurance companies could sell insurance products and determine the amount of premium to be paid in accordance with high customer low risk to be insured by the client. In setting the amount of premiums, insurance companies should consider the following; reserve funds set up in case of a claim at a later date, operational funds and insurance company profits to shareholders.
In recent years, in line with the high level of competition of insurance companies, some insurance companies determine the amount of premiums by not considering the things mentioned above. Some companies do not reserve sufficient funds to replace in case of claims from customers in the future.
This led to the emergence of a complaint from a customer where the insurance companies do not pay claims in accordance with the agreed payment terms or claims that are inconsistent with previously stated. In addition, these conditions force the government as a regulator (in this case the Insurance Bureau under the Ministry of Finance) to cover the insurance company concerned.
Therefore, be sure to get enough information about the financial condition of an insurance company before deciding to purchase insurance from an insurance company.

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