This document provides an overview of business risks and insurance. It defines business as any human activity engaged in to earn a profit. It discusses different types of risks businesses face like pure risk, economic risk, human risk, and natural risk. Insurable risks are those that meet insurance criteria for coverage, while uninsurable risks are too high risk. Controllable risks can be minimized, while uncontrollable risks cannot be prevented or reduced. The document also outlines methods to reduce risk like efficient management, maintaining a cash reserve, and shifting risks to insurance. It defines insurance and discusses principles of insurance like utmost good faith, indemnity, proximate cause, and mitigation of loss. Finally, it discusses factors that influenced
3. DEFINITION OF BUSINESS
According to James
Stephenson,
“Every human activity which is
engaged in for the sake of
earning profit may be called
business”.
4. • Risk – the possibility of loss
or injury
• Business risk – risk of loss that is
naturally incurred by owing and
operating a business
6. Insurable risk
Meets an insurance
company’s criteria for
coverage.
For example,
Property insurance
Vehicle insurance
Uninsurable risk
Unacceptable to
insurance carriers
because the likelihood
of lose is too high.
For example,
Owners of shops in
flood zones might have
difficulty in finding
insurance
7. CONTROLLABLE UNCONTROLLABLE
Occurs when conditions can
be controlled to minimize the
chance of harm.
For example
Environmental damager can
often be prevented.
Cannot be reduced or
prevented.
For example
The risks of doing business
in a global market place
cannot be controlled.
17. There are certain risks that can be
completely prevented by proper
arrangements and management
18. • Refrigeration can eliminate risk of spoilage
• Good labor-management relations can prevent labor
unrest
• Use of electronic cameras can reduce the risk of
shoplifting
• Industrial machines can be so designed as to prevent
accidents
19. Efficient management at all levels
can greatly reduce the hazards of
by:
identify forms of risk
giving solution of risk
Efficient management
20. A RESERVE CASH
Reserve cash is a planning for unexpected
Planning for unexpected can save a business
Reserve cash is maintain to meet emergency
It saves business from financial loss
21. Risk is shifted when another
person undertakes to bear
the loss
• Shifting of risks to other agencies
which specialize in bearing in
bearing that risk
• Insurance is the best method
of handling business risk
24. According to Oxford Dictionary,
“Insurance means undertaking, by a
company, society or the state to
provide safeguard against loss,
provision against sickness, death, etc.
in return for regular payments.”
26. Peace of mind
Aversion of risk
Protects mortgaged properties
Provides self dependency
Tool of savings
Tool of investment
27. • Reduce reserve requirements
• Capital freed for investment
• Reduction of uncertainty
• Loss control activities
• Business and social stability
28. Benefits of insurance to society
Protects wealth of country
Helps in economic growth
Control inflation
29.
30. PRINCIPLES OF INSURANCE
• Utmost good faith
• The principle of indemnity
• Proximate cause
• Mitigation of loss
• Cancellation
31. Contract between insured and insurer
Both parties should disclose all facts to each
other
A false information or non disclosure of material
facts makes the contract invalid
Utmost good faith
32. All insurance contracts, except life
insurance are the contract for
indemnity
The assured shall be
compensated in case of loss only
The insured is not allowed to
receive a higher amount than the
amount of loss
33. An insured person can recover the loss only when
it is caused by any of the risk insured against.
Proximate cause
34. Mitigation of loss
• Insured should take all reasonable
steps to minimize the amount of loss
• He can recover the same from
insurer if he suffer loss in doing so.
• If he does not take care, his claim
might be lost
35. Both parties have right to cancel or
terminate the insurance before its expiry
date
Their relationship come to an end on the
date of cancellation of policy
CANCELLATION
36.
37.
38. Life insurance
We can define life insurance
as a contract in which
insured person pay regular
premium to the insurer i.e.
insurance company
39. On the death of the insured or at the maturity
period, the insurance company pay the
compensation or the matured sum respectively
40.
41. • This insurance is done by businesses for
safety delivery of goods, while
transferring goods from one place to
another by sea way, land way, air way
42. Fire insurance is an
insurance that cover
property such as home,
shop and other fixed asset
protection against fire, burn
etc.
It also cover distraction of
property due to fire
43. Which companies provide insurance in Pakistan
• Adamjee insurance company limited(Karachi)
• Alpha insurance company limited (Karachi)
• Fins insurance company limited
• The united insurance company of Pakistan ltd
• Asia insurance company limited
• Premier insurance company limited
• Reliance insurance company limited
• Universal insurance company limited