Introduction to insurance week 1

what is insurance

Insurance is a financial arrangement that protects against financial loss or risk. It involves transferring the risk of a loss from an individual or entity to an insurance company, which agrees to compensate for specified losses in exchange for premium payments.i

importance of studying insurance(5)

• It helps us understand risk management

• It helps with Financial Planning and Security

• It helps us with Informed Decision-Making

• It helps with Social Welfare Support

• It promotes Legal and Regulatory Awarenes

purpose of insurance(4)

• protection against financial loss

• risk transfer

• risk sharing

• support for personal financial planning

• economic contributions

objectives of insurance(4)

• risk transfer

• financial security and stability

• promoting social welfare

• peace of mind

define insurance as a financial intermediary

insurance acts as a financial intermediary by Collecting premiums, pooling and managing risks, Investing funds in financial markets, and paying claims.

define risk and why it matters for insurance

Risk involves measurable probabilities. You can estimate the likelihood of an event happening based on data, statistics, or past experience.

It matters for insurance because risk is measurable, insurers can calculate premiums, pool similar risks, and manage them effectively

define uncertainty and why it matters for insurance

Uncertainty Uncertainty involves unknown or unmeasurable probabilities. There is no reliable data to predict the likelihood of the event

It matters for insurance because uncertainty is harder to insure because insurers cannot accurately estimate the probability or cost of the event.