An Insurance Policy Take maximum risk for their client risk. They work based on in approximately 11 way. We discussed here all 11 ways insurance work for their client.
1. Insurance is risk bearing : The main function of insurance is providing certainty of payment at the uncertainty of loss. The financial loss of the individual entity are equitably distributed over the many. In fire insurance, for example, the policy holders pay premiums into perhaps the most common pool, away from that those that suffer damage are generally.
2. Insurance Provides Saving : The main function of the insurance is to provide to the public on terms attractive enough to encourage them to insure and yet sufficient to offer a reasonable margin of profit.
3. Insurance Provides Protection : Insurance means protection against risk of loss. It covers the risk of loss. The insurance company agrees to give the payment of loss to the insured party against any actual loss or damage involved in business.
4. Insurance Stimulates Business Enterprise : Insurance ha made possible, and helps to maintain, the present day large scale industrial and commercial organization. A trade or businessman wants to carry on his business free from risks whenever possible. Insurance safeguards capital and at the same time it avoids the necessity on the part of industrialist and others of freezing capital to guard against various contingencies. Thus, insurance leads to development of business enterprises.
5. Insurance Encourages Efficiency : The insurance eliminates worries and uncertainty of risks. In personal form of insurance is relieved from hardship and anxiety. Thus, insurance improves not only his efficiency but the inefficiencies of the masses are also advanced.
6. Insurance Promotes Loss Prevention : The community would suffer much greater economic impoverishment through material losses if it were not for the loss prevention measures of insurers. The insurance joins hands with those institutions which are engaged in preventing the loss of the society because the reduction is loss causes lesser payment to the assured and so more saving is possible which will assist in reducing the premium.
7. Insurance Provides Capital : Insurance provides not only protection but also capital to the society. Usually, accumulated funds through savings in the form of insurance premium invested in economic development or productivity plans.
8. Insurance Solves Social Problems : Some of the social problems which beset a modern civilized community are taken care of through insurance. At present, we have insurance against industrial injuries, road accidents, old age, disability or death etc. Thus, insurance act as a good instrument for solving many social problems.
9. Insurance Provides Capital : Insurance provides not only protection but also capital to the society. Usually accumulated funds are invested in economic development plans.
10. Insurance Solves Social Problems : Some of the social problems which beset a modern civilized community are taken care of through insurance. At present, we have insurance against industrial injuries, road accidents, old age, disability or death etc. Thus, insurance act as a good instrument for solving many social problems.
11. Use of Reserve Funds : Because of the investment policy of Insurers, their reserve funds are not static, but are used productively. Thus, results in a reduction of the cost of insurance to the insuring public.
Conclusion:
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