Insurance is a risk management tool that allows individuals and organizations to transfer the cost of potential loss in exchange for a premium, providing protection from financial hardships. Its importance includes protection against significant losses, economic growth, and business efficiency. Various types of insurance policies exist, and underwriters play a crucial role in assessing risk and determining premiums.

1. Insurance

2. What is Insurance?
“Insurance is a type of risk management in which the insured
transfers the cost of potential loss to another entity in exchange for
monetary compensation known as the premium”. It allows people,
organizations and other entities to protect themselves against
significant potential losses and financial problems at a reasonably
affordable rate. Insurance is a means of protection from financial
loss.

3. Importance of Insurance
 It protects an individual or organization from extreme loss or
hardships
 It provides relief and security
 It accelerates economic growth of the company
 It reduces inflation
 It increases business efficiency
 It helps in tax saving

4. Functions of Insurance
 Insurance provides certainty of payment at the uncertainty
of loss
 Insurance provides protection against the probable chances
of loss
 Risk-Sharing is one of the main function of insurance
 Insurance prevents losses
 It provides capital to the society
 It improves efficiency
 It helps in economic progress

5. Types of Insurance Policies
 Auto Insurance
 Health Insurance
 Disability Insurance
 Casualty Insurance
 Life Insurance
 Property Insurance
 Liability Insurance
 Credit Insurance

6. Insurance Company
The Insurance Company provides compensation resulting from
loss, damages, injury, treatment or hardship in exchange for
premium payments. Insurance company calculates the risk of
occurrence then determines the amount payable for the loss to
determine the premium amount.

7. Underwriting Company
Insurance underwriters are employed by insurance companies
to help value life insurance, health insurance, commercial
liability insurance and homeowners insurance, among others.
Underwriters use computer programs and actuarial data to
decide the probability and size of a claims payout over the life
of the policy. Assessing a policyholder’s risk prior to the policy
period and at renewal is an important function of an
underwriter.

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