Risk Management and insurance is the process of insurance has been evolved to safeguard the interest of people from uncertainty by the providing certainty payment at a given contingency. The important of insurance can be described as follows.
Insurance provides and safety. the insurance provides safety and security against the loss of craning at death or in older age against the loss at fire against the loss at fire, against the loss at damage, destruction or disappearance of property, goods furniture and machines ,etc. For example, security against premature death and old age sufferings are provided by life insurance. Similarly, the property of insured is secured against loss, on a fire in fire insurance. In other insurance, too this security is is provided against the loss at a a giving contingency.
Insurance plays an important role modem business and commerce. It provides indemnification against losses arising from the happening of some uncaring events. It is a providing against impurity. It is a contract where by insurers agrees to compensate for a specific loss to the insured, who in consideration agrees to pay regularly a sum of money called premium. Insurance stimulates expansion of trade operation to a very great extent and provides an opportunity to businessman to develop sense of independence and security, and freedom from anxiety.
Definition of Insurance: The definition of insurance can be made from two viewpoints.
1. Functional
2. Contractual
Functional definition: Insurance is a co-operative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to insure themselves against the risk.
Contractual definition:Insurance has been defined to be that in which a sum of money as a premium is paid in consideration of the insurer’s incurring the risk of paying a large sum upon a given contingency.
Finally we can define insurance as a consisting one part the insurer agrees to pay the other party the insured or this beneficiary a certain sum upon a given contingency the risk against which insurance is sought.
Principles of Insurance: Insurance is a contract between the insured and the insurer. Over and above, the general, features of a contract insurance contract has some additional features. the characteristics or features of insurance contract are as below:
The feature of Insurers of a general contract and insurance contract are:
- Contract
- Insurance
- Utmost Good faith
- Indemnity, which apply to fire and marine insurance but, do not apply to life. Insurance and personal accident insurance.
- Subrogation.
- Cause Proximal or Proximate Cause.
- Contribution.
- Assignment.
- Refund of premium.