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All you wanted to know about insurance

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  1. Insurance
    1. Principles of insurance
    2. Indemnification
    3. History of insurance
    4. Types of insurance
  2. Reinsurance
    1. Types of Reinsurance
  3. Role of Reinsurance
    1. Reinsurance is insurance for insurers
    2. Reinsurance stabilizes primary insurers
    3. Reinsurance offers more than just cover
    4. Reinsurance helps primary insurers to reduce their capital costs and raise their underwriting capacity
    5. Little Concentration in the Reinsurance Market
    6. The Reinsurance Industry has Surmounted One of its Gravest Crises
    7. Is the Lack of Reinsurance Cover Damaging to the Economy
    8. Certain Risks are Uninsurable
    9. The Lack of Reinsurance Cover is Generally only Temporary
  4. Reinsurance management Strategy
    1. Basis of Insurance and Need for Reinsurance
    2. Good Reinsurance Management
    3. Reinsurance Cover Capacity
    4. Operating Freedom
    5. Technical Back-up
    6. Proper Retention Policy
    7. Planning the Program
    8. Marketing
    9. Markets
    10. Terms
    11. Lead
    12. Use of Markets and Brokers
    13. Inward Reinsurance
    14. Administration
  5. Standard Provisions in Reinsurance Contracts
    1. The Negotiating Process
    2. Drafting the Contract
    3. Contract Provisions
    4. Reassured Name
    5. Term and Termination
    6. Territory
    7. Exclusions
    8. Limit and Retention
    9. Loss Occurrence Definition
    10. Reinsurance Premium
    11. Premium or Profit Commission Adjustments
    12. Offset
    13. Reports and Remittances
    14. Claims
    15. Errors and Omissions
    16. Arbitration
  6. Future outlook
  7. Conclusion

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of potential financial loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium and duty of care. The rate of losses must be relatively predictable: In order to set premiums (prices) insurers must be able to estimate them accurately. If the coverage is unique, the insured will pay a correspondingly higher premium. Lloyd's of London often accepts unique coverage. (e.g., the insuring of Tina Turner's legs and Jennifer Lopez's butt). The losses must be predictable on a macro level: Insurers need to know how much they would be required to pay when the insured-for event occurs. Most types of insurance have maximum levels of payouts, but not all do, notably health insurance. The loss must be significant: The legal principle of De minimis dictates that trivial matters are not covered. Furthermore, rational insurance uses existing insurance when the transaction costs dictate that filing a claim is not rational.

[...] One must be able to push for better terms but at the same time know when to stop. If pushed too hard, it may result in loss of goodwill which can affect continuity of terms. Where the cover is not very attractive. Even assurance of better cash flow through wavier of reserves can help. When a competing market or broker quotes better than existing terms, no decision should be made without considering the nature and suitability of the alternate market to satisfy the original objectives. [...]


[...] 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. The first insurance company in the United States provided 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. [...]


[...] Ulrich Trumpp, Chief Executive Officer, Greater China &.Southeast Asia, Munich Re, Germany, even went to the extent of chiding cedants, brokers and all involved for talking about hard and soft market cycles, stressing that the main consideration should be risk is priced adequately to its exposure. The 430 delegates from 33 countries at the sell-out 7th SIRC engaged in serious discussion on the state of the market, moving beyond the Conference's theme of the paradox of price and affordability on the premise that the risks assumed had to be technically underwritten at the right price, and that those who wanted the reinsurance cover and access to the capital and capacity of the reinsurers just had to find the resources to pay for the cost of risk. [...]

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