Insurance companies are the major financial sectors throughout the world. These insurance companies primary task is risk management. This risk management in general initiated through premium. Insurance company sells insurance; a policy holder purchases this against the contingent loss. Basing on the insurance coverage chargeable amount for policy on installments will be determined. These companies are the billion dollar industry taken world by storm. In 2008 global insurance business reached to $4.3 trillion globally. The recent financial crisis very well capitalized by these companies. The US and Japan insurance share was 40% in the total business mentioned. Europe is another important region and quite prospective for their business. Markets are booming high at a quicker pace than anyone expected in this field.
Seven characteristics of this insurable risk will govern the working of Insurance companies:
1. A large number of homogenous exposure units.
2. Definite Loss.
3. Accidental Loss.
4. Large Loss.
5. Affordable Premium.
6. Calculable Loss.
7. Limited risk of catastrophically large Losses.
For all the Insurance Company’s world wide got two varieties of agreements. 1. Indemnity policy agreement and 2. Pay on behalf of policy agreement. Indemnity agreement works as third party risk management agreement policy. In the latter, the claimants of the policy holder will be paid the policy amount for the risk or damage happened. Claims can be filed by insured personally and in few cases a broker carries out this part.
There are types of insurances like, Auto, Home, Health, Accident, Sickness and Unemployment, Causality, Life, Property, Liability, credit and few others.
Nowadays insurance is a must for personal security as well as for possessions. This provides security financially. Many instances insurance policies proved to be beneficial for persons or products or properties. Majorly in accidents for coverage and third party damages can be met easily through an insurance policy. This made these Companies is part of everyone’s lives.