8.risk Management and Insurance UNIT 8
8.risk Management and Insurance UNIT 8
INSURANCE
PREETI DEO
UNIT VIII
UNIT 8 : LIFE AND HEALTH INSURANCE
Functions of Insurers
Investment Functions
Miscellaneous Functions
FUNCTIONS OF INSURERS
■ Provides certainty.
■ Provides certainty of payment at the uncertainty of loss.
■ Provides protection.
■ Risk-Sharing.
■ Prevention of loss.
■ It Provides Capital.
■ It Improves Efficiency.
■ It helps Economic Progress.
ON AGGREGATE
■ 1. Ratemaking
■ 2. Production
■ 3. Underwriting
■ 4. Loss Settlement
■ 5. Investment
INSURANCE COMPANY OPERATION:
RATE MAKING, PRODUCTION,
UNDERWRITING, CLAIMS SETTLEMENT
RATE MAKING
■ Rate Price charged per unit of protection Premium Determined by
multiplying rate by units of protection purchased Gross Rate
Composed of two parts, designed to pay losses and expenses Pure
Premium Portion of the Gross Rate designed to pay losses Loading
Portion of Gross Rate designed to cover expenses of operation
PRODUCTION
■ Formulation of Policies (With approval)
■ Using Standard Policies
UNDERWRITING
Basic purpose:
■ avoid adverse selection
■ Relationship of underwriting with adequacy of rates
■ Exposure that is unacceptable at one rate may be acceptable at
another
LOSS SETTLEMENT
Its the core responsibility of Insurers to settle any loss which has been
provided coverage through insurance.