Business Activity: A Dive into the world of Insurance and Insurance Companies by @swaylee

in Business Activity2 years ago (edited)

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Greetings Everyone
I am Rasheed and today we would be looking at a huge and underrated financial institution in the name of the insurance company. Now from my expertise and research, the concept of insurance companies is too voluminous for just one post and hence this post would definitely have a part 2,3 and maybe even 4 so that I can break down the information into little understandable bits to be easier for human understanding.

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What is Insurance and Insurance Companies


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Insurance is a policy aimed at spreading the risk of one person amongst several people. It is a policy where the insurer/ insurance company is intended to provide compensation to the insured in a situation where the predetermined damages in the contract is fulfilled after paying the insurance premium. When going to get insurance people often make use of brokers to act as an intermediary between insured and the insurance company so as to seek the best terms in the agreement.

Insurance Companies on the other hand are those companies that sell insurance to others either to other insurance companies or businesses or even individuals. They can also be called underwriters or the insurer. They help reduce losses by indirectly having others who aren't filing claims to pay for those filing for claims.

Insurance Companies are sensitive businesses and they incur numerous losses from the to time so they take alot into consideration. There are 7 principles of insurance which insurance companies follow like principle of utmost good faith which states that both parties must be completely honest and straightforward in giving out information related to the insurance policy. Principle of proximate cause, insurable interest, indemnity, subrogation, contribution and loss minimization. The last principle previously stated means that the insured should take good care of the object being insured against.


Do Insurance Companies take advantage of their customers?


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There are people who feel insurance companies rob them and charge way above the required amount but this is not the case as insurance companies suffer countless losses on clients claims. Hence Reinsurance steps in (you would get an in-depth knowledge about the Terminologies in the next edition). They are just trying to maximize profits and some insured clients go to extreme lengths to make sure that the insurance company doesn't eat their premiums. This could be in form of intentionally getting into accidents insured against so they would have to compensate you.

In light of this, they do alot of analysis and speculation as to the probability and the possible causes in the event of an incident occuring. For example, someone doing life assurance would be asked questions like if he has allergies, asthma, if he is a smoker, if he has any life threatening diseases and so on. The more the person has means he/she has a higher likelihood of dying and the higher the chances of the risk being insured against occuring, the higher the insurance premium.


How Insurance Companies Make Most of Their Income


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As seen earlier, Insurance Companies aim to utilize the power of many to solve the problems of a few. If you did a car accident insurance and your car ends up having no accidents during the stipulated period, it doesn't necessarily mean the insurance company would eat the money. There could be another person out there who had an accident in his expensive car and survived then the insurance company would have to use the premiums of you and others who paid premiums to cover up the damages done to the expensive car of the victim. This could even lead to the company running at a loss so no insurance companies bank on the money for premium to make profit.

Instead they utilize premiums to make large interest investments like buying government bonds and stocks and even giving out loans to policy holders (you would learn more about this in the second edition). This is infact similar to what banks do when it comes to using our deposits to give out loans. These investments bring about a large percentage of not all of the insurance company's earnings and that's why sometimes when stocks are low, the insurance companies charge even higher premiums.


Types of Risks which Insurance Companies Undertake to insure


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As there are high risk insurance companies, there are low risk insurance companies and there are both so also are there different types of insurance policies which people can do in insurance companies.

  • Car or Automobile: Damages done to any four wheeled vehicle are covered under this policy. It also covers car parts theft and even the whole car theft.

  • Pet: This is taken to reduce the medical burden one faces on their pet. You can also get it to cover any accident faced by the pet.

  • Home: Shields you from damage to properly around one's home whether it's your own home or you are renting the apartment.

  • Life: This does not necessary stop death but instead in the event that the insured dies while under life assurance, a large amount called a death benefit would be given to the beneficiary/ family. There are 2 types of life insurance which is whole life and term life assurance.

  • Travel: this insurance covers against unforeseen financial losses during domestic travel, foreign travels and even travels with family.

  • Health: this type of insurance covers one's health in the event that one suffers any medical related crisis. They can cover senior citizens, group of people like one's employees, a single person and even one's whole family.

  • Marine & Fire (Property): This are taken to cover losses incurred on sea by the goods being carried, the freight charges and even the damages to the ship. In an event where the ship sinks at sea, or pirates/ thieves attack and steal the goods this insurance helps to insure against those kind of risks. *Fire insurance on the other hand covers the losses incurred in the event of a fire outbreak. Those who suffer from a fire outbreak are compensated as far as they have this kind of insurance.

  • Flood: This is taken to insure against the losses incurred during a flood and the damages it dealt. This kind of insurance is for people who live in riverine areas or areas that have experienced flooding a couple of times in the past.


Conclusion


I hope we have been able to learn a thing or two about insurance and insurance companies which we didn't know previously. I know I learnt alot when composing this post. More editions of this post are on the way where we would be taking deeper looks into some of the terminologies used in this post.

Now due to the vast areas needed to be taught in this lecture, I would like to formally invite @victoh78 to take the 2nd edition of this post and tell us more about insurance, importance, terminologies and for the explanations I couldn't give. @victoh78 happens to be a well versed professional business man and writer so he would do a better job than me.

Thank you for reading.⭐

Post Name:Business Activity: A Dive into the world of Insurance and Insurance Companies by @swaylee
Owner's name :@swaylee
Business AddressBarnawa, Kaduna, Nigeria
About usLink

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 2 years ago 

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Thank you for contributing to #LearnWithSteem theme. This post has been upvoted by @zmoreno using @steemcurator09 account. We encourage you to keep publishing quality and original content in the Steemit ecosystem to earn support for your content.

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 2 years ago 

Thank you very much. I would work as hard to make sure I get top the top 7 spot

 2 years ago 

Hello, thanks for the information where we know that for all the subject of insurance in any indole in which you want to point out is of the utmost importance. Going deeper into this topic is good.

Now a suggestion. A user and another sharing points of view is interesting in this regard.

But what about, if they make a live, invite users, and make it more dynamic, through going deeper in relation to what is exposed. Thus, the points treated in agreement between both and between those interested, may be exposed in a publication.

Greetings.

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 2 years ago 

This is beyond a fantastic idea. I should really start meeting you for advice on like matters. I would definitely give it a thought and see how to advance from there. Thanks for the suggestion and also thanks for reading.

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