Insurance is a means of protection from financial loss. It is a form of risk management primarily used
to hedge against the risk of a contingent, uncertain loss

Modern insurance

Insurance became far more sophisticated in Enlightenment-era Europe, and specialized varieties developed.

Property insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency, a change of opinion reflected in Sir Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for London in 1667.

At the same time, the first insurance schemes for the underwriting of business ventures became available. By the end of the seventeenth century, London's growing importance as a center for trade was increasing demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house, which became the meeting place for parties in the shipping industry wishing to insure cargoes and ships, and those willing to underwrite such ventures. These informal beginnings led to the establishment of the insurance market Lloyd's of London and several related shipping and insurance businesses.

Methods of insurance

In accordance with study books of The Chartered Insurance Institute, there are the following types of insurance:

Co-insurance – risks shared between insurers
Dual insurance – risks having two or more policies with same coverage (Both the individual policies would not pay separately- a concept named contribution and would contribute together to make up the policyholder's losses. However, in case of contingency insurances like Life insurance, dual payment is allowed)
Self-insurance – situations where risk is not transferred to insurance companies and solely retained by the entities or individuals themselves
Reinsurance – situations when Insurer passes some part of or all risks to another Insurer called Reinsurer

Friday, October 20, 2017