LAW - Powerpoint Risk and Insurance

Artevelde Hogeschool

• Member of the Associatie Universiteit Gent

• Focus on Risk - Insurance

A. Concepts

Definition of Risk

• Risk:

  • Uncertain occurrence, timing; possible future event.

  • Impossible to determine if and/or when a risk may happen.

  • Characterized by randomness.

  • Not intentionally caused by the insurance taker.

  • Insurance taker benefits if the risk does not occur; incurs a loss if it does materialize.

1. Types of Insurance

a. General Insurance

• Covers events like:

  • Accidents

  • Illness

  • Healthcare

  • Automobiles

  • Fire & force incidents

  • Civil liability motoring

b. Life Insurance

• Examples include:

  • Branch 21 policies

  • Pension funds

2. Insurance Policy = Contract

Mutual Contract

• Involves rights and obligations for both parties:

  • Insurer:

    • Bears the risk

    • Fulfills financial commitments (payments)

  • Insured (Policyholder):

    • Must pay premium

    • Must provide all relevant information related to the insured risk.

3. Premium

Definition and Factors Influencing Premiums

• Premium: Payment made by the insured to the insurer.

• Can be fixed or floating, determined by:

  • Previous damage occurrences (risk history)

  • Type of risk involved.

  • Deductible: Amount of loss the insured will bear (e.g., 2.5%).

4. Content of the Contract

Key Components

• General agreements and conditions

• Definitions

• Detailed description of the cover provided by the contract

• Exclusions:

  • Risky activities (e.g., scuba diving, parachuting)

  • Intentional damage

• Special Conditions:

  • Insurer details

  • Insured object or event

  • Insured amount

  • Premium details

  • Contract term / maturity date

5. Cover Types

General Types of Coverage

• Asset Protection: Protection for real estate or other assets (e.g., cars)

• Personal Protection: Financial protection against physical damage.

• Liability Protection: Coverage for third-party liability.

B. Insurances for Individuals

a. Basic Insurances

• Home Insurance: Covers fire, burglary, water damage, natural forces.

• Family insurance: Liability cover for family members (children, pets).

• Civil Liability for Cars: Mandatory cover that typically only includes 3rd party liability.

• Additional coverage needed for driver.

b. Other Insurances for Individuals

• Outstanding Loan Balance Insurance: Covers mortgage or loans in the event of unforeseen circumstances.

• Hospital Insurance: Supplemental healthcare coverage.

• Travel Insurance: Covers cancellation, assistance, luggage loss, theft of valuables.

• Life Insurance: Various types including savings insurance and comprehensive car insurance (covering own damage).

C. Insurances for Companies/Businesses

1. What Should a Company Insure?

• Risk Clusters:

  • Pure (Object) Risks: Transport, fire, machinery breakdown, business interruption, credit insurance.

  • Personal Risks: Work-related accidents, etc.

  • Liability Risks: Product liability, Director and Officer Liability.

2. Practical Examples of Insurance

• Property Insurance:

  • Coverage for fire, explosion, burglary, machinery breakdown, electronic risk.

  • Business interruption due to damage to assets requires separate covers.

• Liability Insurance:

  • Covers damage to third parties, personal injuries.

3. Personal Insurance for Companies

• Guarantees: Protection against loss of income due to health problems or accidents.

• Tailored insurance policies addressing specific functional needs.

4. Liability Insurance Overview

• Covers damages to third parties:

  • Characteristics: Fault leads to damage (physical or psychological).

  • Includes corporate liability insurance options for various professions.

5. Product Liability

• Manufacturers and distributors' legal responsibility for injuries caused by their products.

• Typically limited to tangible personal property.

6. Insurance Needs Analysis

• Conduct a Risk Inventory:

  • Assess all potential risk areas related to industry, real estate, customer liabilities, and workforce.

  • Establish a checklist for relevant insurance types.

7. Recent Developments

• Long Tail Risks:

  • Increasing prevalence of long tail risks in:

    • Product liability.

    • Environmental damage.

    • Occupational diseases.