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Insurance - definition of insurance, the origin of insurance, its types and importance

what is insurance:

Insurance is a social system that aims to create a reserve to face the uncertain losses that individuals and institutions are exposed to by transferring the burden of risk from one person to several people or a group of people.
Insurance - definition of insurance, the origin of insurance, its types and importance

Insurance is a contract whereby the insurer is obligated to pay to the insured or the beneficiary in whose favor the insurance stipulated an amount, a arranged revenue, or any other financial compensation in the event of the accident or the realization of the danger stated in the contract, in return for a premium or any financial payment made by the insured to the insured.”

The benefit of the insurance:

Achieving the principle of cooperation between a group of individuals exposed to the same risk and securing their future by participating in bearing the risks to which they are exposed
Preserving the wealth of the establishments by compensating them for the outcomes of the dangers to which these resources may be exposed, such as fire and theft. Preserving production capacity

Creation and expansion of credit through loans secured by documents, which contributes to achieving economic growth for projects.
  • Insurance contract and its parties
An insurance contract is a contract of agreement between two parties, one of whom is the insurer (the insurance company) and the other is the customer

(The Insured) by obligating the second insured party to pay a premium called the insurance premium to the first party, provided that the first party undertakes to pay the appropriate compensation to the insured or his beneficiaries in the event that the insured risk is realized.

(Insurance is a means of compensating the individual for the financial loss that befalls him as a result of the occurrence of a certain risk, by distributing this loss to a large group of individuals, all of whom are exposed to this risk, according to a previous agreement)
  • insurance fee:
The premium is the main source of revenue, and it is the amount owed by the insured under the insurance contract concluded between the two parties, and he is obligated to pay it to the insured in return for his obtaining or for the beneficiaries to obtain the appropriate compensation when the insured risk occurs.
  • The origin and development of insurance
The observer of the origin and development of insurance finds that insurance began as a cooperative system that included individuals exposed to the same risk in order to reduce the value of this loss from the shoulders of the person who incurred it, by distributing this loss to all individuals participating in this cooperative system, and these individuals are often known to each other Some live in the same area and have a common interest.

Historians mention that the ancient Australia were the first to practice insurance in this cooperative manner through the burial societies that were widespread at that time. Those sums were provided by the burial associations that existed at that time.

Marine insurance is considered the oldest of all types of insurance. It is known that merchants practiced this insurance more than seven hundred years ago through ship loan operations, which were widespread at that time. The borrower must return this loan plus 20% to 30% of its value in the event that the ship arrives safely at the port of destination, but if the ship sank, the owner is not obligated to return anything.

As for life insurance, historians mention that the first document was issued in London in 83 AH. It is worth noting that life insurance existed in the presence of marine insurance. Some marine insurance documents on the ship also included life insurance for the captain and navigators. It is well known that the benefits offered by the burial societies of the ancient Australia are only a form of best life insurance

As for fire insurance, it received great attention after the famous London fire that occurred on Friday, September 2, 1666 AD, which lasted for four days and nights and led to the destruction of about 8% of the city’s buildings at that time, and the losses resulting from this fire were estimated at about ten Millions of pounds sterling.

Types of insurance:

auto insurance quotes can be divided into several ways, each of which differs according to the main purpose of the research and the researcher's view of insurance operations. We review the following are the most important divisions that an individual can encounter in the field of insurance:
  • private insurance:
This type of insurance includes all areas of insurance that are not practiced by the government, but by authorities or companies. This type of insurance includes the following types:
  • property insurances:
These are the types of insurance that cover risks in which the subject of insurance is human property, including: Marine insurance - fire insurance - insurance against theft - livestock insurance - insurance against broken glass - property insurance from earthquakes, volcanoes, disturbances, revolutions and wars - agricultural crops insurance against rain and natural phenomena.
  • Civil Liability Insurance:
These are the types of insurance that cover the risks of civil liability, and the most important of these types are:
  1. Insurance of civil liability for owners of public stores such as cinemas, theaters, restaurants and hotels.
  2. Insurance for work injuries and occupational diseases.
  3. Insurance of civil liability for owners of buildings, warehouses and garages.
  4. Civil liability insurance for contractors.
  5. Insurance of civil liability for food producers and distributors.
  6. Insurance of civil liability for owners of liberal professions such as engineers, accountants, doctors, owners of beauty institutes, pharmacists and others.
  7. Securing the civil liability of the owner before the neighbors for the damage he causes as a result of a fire that broke out in his building and spread to the neighbors' buildings and properties.
  8. Securing the civil liability of the lessee before the owner for the damage caused by a fire that broke out in the place leased to him.

Importance of Insurance:

  • Increasing production efficiency:
  • Insurance brings safety and reassurance to the insured’s souls, both for the owners of projects or for the workers of these projects. The insurance authority bears the losses resulting from the realization of the pure risks transferred to it helps the owners of projects and those in charge of managing them to pay attention to the development of production and to innovate the means that increase production and improve its quality, which Leads to lower production cost.
  • As for the project workers, the existence of an insurance program that guarantees their coverage from the various dangers they are exposed to, will create and develop a feeling of reassurance about their future and the future of their dependents, and this will be reflected in increasing their productivity, which leads them to increase their production and focus on their work.
  • Ensuring the continuity of economic projects:
  • The insurance protection provided by the insurance contract to the insured, which is to ensure that he is compensated for the possible losses that affect the thing subject of the insurance as a result of the realization of a certain risk is the best guarantee for the continuity of the project and not to stop it from working because of the loss incurred by it.
  • Preventing violent fluctuations in the output of economic projects:
  • Insurance enables projects to know the losses they will bear in advance, which are the premiums they pay in exchange for transferring the risks to the insured, and this leads to stabilizing losses for a period after another and thus fixing the production expense. This eventually results in the growth of profits or the prevention of violent fluctuations in them.
  • Financing economic development plans:
  • Insurance bodies in general, and whole life insurance quotes bodies in particular, represent an important source of funding that individuals and organizations seek to obtain the necessary loans for them, and their role in this field is exceeded only by commercial banks.
The surplus of life insurance quotes agencies consists of the nature of the life insurance contract, which is characterized by the length of the contract, as well as as a result of using the equal annual premium method to pay the obligations of the insured instead of the increased natural premium, due to the increased risk of death with age, and then the insurance agencies receive premiums Much greater than the normal premium in the first years of the contract and less than the normal premium in the later years. This results in the need to reserve the increase in the premiums of the first years in a special account called the Mathematical Reserve, and invest it in order to help it pay the installment deficit in the last years.