Page 2 - MARKETING & PUBLIC RELATIONS EBOOK IC88

CHAPTER – 1

INTRODUCTION TO INSURANCE

A. CONCEPT OF INSURANCE

1. Protection of values of assets
 The business of insurance is related to the protection of the economic values of
assets.
 Every assests is expected to last a certain perod of time, during which it is expected
to perform
 Insurance is a mechanism that helps to reduce such adverse consequences.

2. Assets are exposed to perils and risks
 Assets are insured, because they are likely to be destroyed or made non-functional,
through an accidental occurrence.

3. Insurance covers only uncertainities
 If there is no uncertainity about the occurrence of an event, it cannot be insured
against.
 What is insured is not the occurrence of the event, but the loss that may be caused
by that occurrence.

4. Uncertainity in the case of life insurance
 In the case of life insurance, the asset in question is a person. This asset is functional
as long as the person lives. It produces goods or services and earns miney.
 Death will certainly happen, but the timing is uncertain. That uncertainly is
insurable.

5. Living too long is a peril
 Living too long can be as much a peril as dying too young.

6. What insurance does not do
 Insurance does not protect the asset. It does not prevent its loss due to the peril.
 Insurance only tries to reduce the impact of the risk on the owner of the aset and
those who depend on that asset.
 Only economic or financial losses can be compensated.

7. Extended application of insurance

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