This document provides an introduction to insurance concepts. It outlines the learning objectives and outcomes which include understanding risk management, insurance principles, roles of industry players, and claims administration. Key concepts covered include defining risk and insurance, the purpose of insurance as a means of risk management, and how insurance works by transferring risk from individuals to the insurance company in exchange for premiums. The document also discusses characteristics of insurable risks and methods of responding to and managing risk, including buying insurance.

1. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Module 7: Introduction to Insurance

2. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
LEARNING OBJECTIVES
This course aims at helping you the student to,
• Gain a broader understanding of risk and insurance as a
means to manage it.
• Appreciate the role of insurance to our economy and
how it operates
• Have a balanced, systems – oriented view of how the
insurance industry players work together to protect and
meet the needs of consumers.

3. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
LEARNING OUTCOMES
After completion of this study you should be able to:
• Describe the role insurance plays in our economy
• Explain how insurance is used to manage or diversify risk
• Understand the fundamental principles of insurance
• Recognize the various categories of insurance and the
underwriting procedure
• Define the key insurance terms
• Explain the roles of the insurance players in the industry
• Explain how insurance claims are administered

4. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
What is Insurance?
Risk Management and Responding to Risk
The Purpose of insurance
How does Insurance work?
Players in the Insurance Industry
Insurance Underwriting and Categories of Insurance
Fundamental Principles of Insurance
Some commonly used Insurance terminologies
Settlement of Insurance Claims

5. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Risk is the possibility of loss or damage, or a
combination of hazards, the uncertainty of
loss, the dispersion of actual from expected
results, the probability of any outcome
being different from the one expected or a
condition in which losses are possible.
Risk definition, management

6. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Risk can be managed in a number of ways
Avoiding risk: E.g. do not borrow money, do not lend,
do not acquire an ATM card, do not travel, do not
buy expensive assets, do not open up businesses,
do not drive on a busy road etc.
Reducing risk: E.g. do not use an ATM at night, do not
travel with or withdraw huge sums of money, do
not sit in the front seat of a public vehicle, save
money for emergencies etc.
Risk definition, management

7. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Risk management
Retaining the risk: All risks that are not avoided or transferred
are retained. One may not be able to appropriately deal with
the consequences.
Transferring the risk: Through insurance.
Who is the typical insurance client in Uganda?

8. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Characteristics of Insurable risks
• Fortuitous in Nature: The happening of the insured event
must be accidental
• Monetary Value; The risk must lead to a loss capable of
being measured in financial terms.
• Insurable Interest; In order for a person to insure any
property, one must have insurable interest in it.
• Homogeneous Exposure: There must be a large number of
similar exposures to enable insurers to forecast expected
losses.
• Public Policy: The contract of insurance must not be contrary
to what the society considers just and moral.

9. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
How do we respond to risk?
There are two major steps people take in responding to risk; some do
so before (protection steps) and others after (reaction steps);
(i) Protection Steps are actions we take before a crisis or emergency
occurs to help us respond. These may include;
- Buying Insurance
- Employing Security Guards
- Having security Dogs
(ii) Reaction Steps are actions we take in response to something that
happens after the crisis. E.g. Calling the Police to intervene in case
of a problem