Chance of Loss Opponent Level of Risk
Should
be distinguished between the chance of loss with the level of risk.
Chance of loss (the possibility of losses) most of it is 100%. On these points, a loss that's for sure.
Because the risk is defined as uncertainty about a loss, then if the
losses it would have happened, the risk is equal to zero. Therefore, if
the chance of loss is 100%, then the level of risk is zero. With the
same mind, if the chance of loss is equal to zero, so the level of risk
is also zero.
The
difference between the chance of loss with the level of risk can
perhaps more understandable with the following simple example. Suppose there are two groups who may suffer losses.
Let's say that group Group A and group b. Chance of loss (the
possibility of losses) each of these groups is 10 of 1000 (1%). However,
in Group A for a few years, annual losses ranged from about 3 to 18,
while in Group B is more stable than group a. Accordingly, the
disadvantages more be foreseen in the Group B is due to the low level of
difference. Increasingly be foreseen losses, then the more less risk. So, even though the chance of loss of groups A and B are the same (1%), but a lower level of risk in the Group b.
Peril (Disaster, Accident)
Peril can be defined as the cause of the loss. People can be exposed to loss or damage due to range of peril or disaster. A common disaster was a fire, hurricane, explosion, impact, died young, illness, carelessness, and dishonesty. Disasters that could befall the possessions and earnings must be in learn by the insured and by insurance agents so that the right insurance protection can be set to shut it down.
Hazard (Hazard)
Peril or widespread calamities can be said to be the real stuff-the real cause of losses. However, we need to see the back of this peril or disaster to find the real cause. For example, fires that flared up at the workshop was the peril, but a pile of bad fabrics covered in oil were scattered around the workshop it is the cause of the fire and thus the real cause of the loss is it.
If further investigation will be obtained that an ugly household
maintenance is the cause of the harm that. but for the purpose of
insurance, fire was the cause of the loss, and against fire disasters
this is made a fire insurance policy.
The hazard or danger may be defined as circumstances that cause or increase the Chance of the occurrence of a loss from a disaster. So, things – things like household maintenance, carelessness of the bad, the ugly highway, machines that are not maintained, and the work is dangerous hazard since this is a circumstance that increases the Chance of lost (probability of losses).
Three important hazard for insurance companies: physical, moral hazard and morale.
Physical danger was a feature – the objective characteristics that increase the Chance of loss (the possibility of loss). For example, the production of the machine in a building is the physical danger that increase the Chance of loss due to fire or explosion.
Moral hazard is the hallmark of the subjective characteristics of the insured – which increases the probability of a loss. An example of the dishonesty, the insured will increase the likelihood of losses due to arson (intentionally burning down the House).
Morale hazard is personalized and arising out of neglect against losses. For example, negligence in maintaining the property will increase the Chance of loss due to theft. Moral hazard and the morale is different: moral hazard arises when the insured creates losses to profit based on their insurance policy. Morale hazard arises because the insured does not protect his or he fails because Yes on insure.
Study of the Hazard it is important to be able to understand the world of insurance. The insurance company must review the Hazards when he received the solicitation of insurance. When the Hazard exceeds that obtained from fares, then the company shall refuse the request, limit closure, or increase the rate. Because the company – insurance companies interested in activities – activities of prevention of loss, then they learn the hazards – hazards (Hazard) to get the methods – methods reduce or eliminate it.
Knowledge of the Hazard is also important for insurance buyers. He should investigate the Hazard (danger – danger) that might befall her and then determine whether it is necessary or not to seek insurance to close it. Careful study is merely against the odds – the possibility of danger can someone solve a problem scientifically insurance.
