Insurance Meaning Definition – An advertisement for a Norwich Union fire insurance company, showing the value of assets covered and paid out by insurance (1910)
Insurance is a form of protection against financial loss where one party, in exchange for payment, agrees to compensate another party in the event of any loss, damage or injury. It is a method of risk management primarily used to protect against the risk of a possible or uncertain loss.
Insurance Meaning Definition
The company that provides the insurance is known as the insurer, insurance company, insurance company, or underwriter. A person who buys a policy is called a policyholder, while a person or a body covered by the policy is called an insured. An insurance transaction involves the policyholder assuming a guaranteed, known and relatively small loss in the form of a payment to the insurer (a premium) in exchange for the insurer’s promise to pay the insured for any covered loss. The loss may or may not be financial, but it must be reduced to financial terms. Additionally, it is usually a matter in which the insured has an insurable interest established by ownership, possession or pre-existing relationship.
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The insured is given a contract, called a policy, that outlines the terms and circumstances under which the insurer will pay the insured, or their designated beneficiary or assignee. The amount of money the insurer charges the policyholder for the coverage specified in the policy is called the premium. If the insured suffers an injury that may be covered by insurance, the insured submits a claim to the insurer for processing by a claims adjuster. The mandatory deductible required by an insurance policy before an insurer will pay a claim is called a deductible (or if health insurance requires it, a copaymt). The insurer can hedge its own risk by taking out reinsurance, where another insurer agrees to bear part of the risk, especially if the primary insurer considers the risk too great for him.
Traders have looked for ways to reduce risk since time immemorial. Pictured, Governors of the Guild of Wine Merchants by Ferdinand Bol, c. 1680.
Methods of transferring or distributing risk were practiced by Chinese and Indian traders in the 3rd and 2nd millennia BC.
Chinese merchants traveling the river’s treacherous currents would redistribute their goods across multiple ships to limit the loss due to a single ship capsizing.
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Codex Hammurabi Law 238 (c. 1755–1750 BC) stipulated that a sea captain, ship master, or ship charterer who saved a ship from total loss only had to pay half of the ship’s value to ship owner
In the Digesta seu Pandectae (533), the second volume of the codification of laws commissioned by Justinian I (527–565), a legal opinion written by the Roman jurist Paulus in AD 235. on the Lex Rhodia (“law of Rhodian”). It expresses the geralic average principle of marine insurance established on the island of Rhodes about 1000 to 800 BC, probably by the Phoicians during the proposed Doric invasion and the rise of the alleged Sea People during the Greek Dark Ages ( c. 1100-c. 750).
In 1816, an archaeological excavation in Minya, Egypt produced a Nerva-Antonine dynasty tablet from the ruins of the Temple of Antinous in Antinoopolis, Aegyptus. The tablet prescribes the rules and membership fees for a college of funerals founded in Lanuvium, Italy in 133 AD. during the reign of Hadrian (117–138) of the Roman Empire.
In 1851 AD, aspiring lawyer Joseph P. Bradley (1870–1892 AD), formerly working as an actuary for the Mutual Benefit Life Insurance Company, submitted an article to the Journal of the Institute of Actuaries. His article describes a historical account of the life record of the Severan dynasty, compiled by the Roman jurist Ulpian in 220 AD. which is also included in the Digesta.
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Insurance concepts are also found in Hindu scriptures from the 3rd century BC. such as Dharmasastra, Arthashastra and Manusmriti.
The ancient Greeks had sea loans. Money was advanced on a ship or cargo, to be repaid with great interest if the voyage prospered. But the money cannot be paid at all if the ship is lost, making the interest high enough to pay not only for the use of capital but also for the risk of losing it (perfectly illustrated by Demosthes). Loans of this kind have become common in maritime countries under the name of bottomry and respondtia bonds.
Direct insurance of marine risks for a premium paid separately from loans began in Belgium in 1300 AD.
Separate insurance contracts (ie, policies not including loans or other types of contracts) were created in Goa in the 14th century, as were insurance pools backed by land titles. The first known insurance contract is from Goa in 1347. In the following year, marine insurance was widely developed and premiums varied with risks.
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These new insurance contracts allow insurance to be separated from investmt, a division of duties that first proved useful in marine insurance.
The earliest known life insurance policy was taken out at the Royal Exchange, London, on 18 June 1583, for £383, 6s. 8d. for twelve months in the life of William Gibbons.
Property insurance as we know it today can be traced back to the Great Fire of London, which in 1666 destroyed more than 13,000 houses. “
Several attempts at fire insurance came to nothing, but in 1681 the economist Nicholas Barbon and fellow students founded the first fire insurance company, the “Office of Insurance for Houses”, behind the Royal Exchange to insure brick and frame houses. Initially, 5,000 houses were insured by his insurance fund.
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At the same time, the first underwriting insurance system became available for business enterprises. In the seventh period, London’s growth as a trading center increased due to the demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house, which became a meeting place for parties in the shipping industry who wanted to insure cargo and ships, including those who wanted to underwrite such vtures . These informal beginnings led to the establishment of the Lloyd’s of London insurance market and several related shipping and insurance companies.
Life insurance policies were taken out in the early 18th century. The first company to offer life insurance was the Amicable Society for a Perpetual Assurance Office, founded in London in 1706 by William Talbot and Sir Thomas All.
On the same principle, Edward Rowe More founded the Society for Equitable Assurances on Lives and Survivorship in 1762.
It was the world’s first mutual insurance company and pioneered age-based premiums based on mortality, laying “the framework for the practice and development of scientific insurance” and “the foundation of modern life insurance upon which all life insurance systems are subsequently built.”
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The first company to offer casualty insurance was the Railway Passengers Assurance Company, formed in 1848 in the gland to insure against the increasing number of deaths on the NASCT railway system.
The first international insurance rule was the York Antwerp Rules (YAR) for the distribution of costs between ship and cargo on a geral average. In 1873, the “Association for the Reform and Codification of the Law of Nations”, the predecessor of the International Law Association (ILA), was founded in Brussels. It published the first YAR in 1890, before changing to the first title “International Law Association” in 1895.
In the late 19th century, governments began national insurance programs against sickness and old age. Germany built on a tradition of welfare programs in Prussia and Saxony that began as early as the 1840s. In the 1880s, Chancellor Otto von Bismarck introduced old-age pensions, accident insurance and health care that became the basis of Germany’s welfare state.
In Great Britain, more extensive legislation was introduced by the Liberal government in the 1911 National Insurance Act. It provided the British working class with the first contributory system of insurance against sickness and unemployment.
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This system was greatly expanded after the Second World War under the influence of the Beveridge Report, to form the first modern welfare state.
In 2008, the International Network of Insurance Associations (INIA), an informal network, became active, and was succeeded by the Global Federation of Insurance Associations (GFIA), which was formally established in 2012 with the aim of increasing effectiveness. of the insurance industry in providing input to international regulatory bodies and contribute more effectively to international dialogue on issues of common interest. It consists of 40 member associations and one observer association in 67 countries, whose companies account for approximately 89% of total insurance premiums worldwide.
Insurance means collecting funds from multiple insured companies (called exposures) to cover losses
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