RISK AND INSURANCE
The purchase of insurance is to risk because of the dozens of dangers that may harm someone. What is the meaning of "risk" it? Users of the term risk, hazard and chance of loss (risk, danger, and possible losses) are often interchangeable people. However, by providing a more precise meaning on these terms will help us better understand the world of insurance.
UNDERSTANDING-UNDERSTANDING OF THE SUBJECT MATTER
Each discipline has its own terms. Insurance is no exception. Certain terms such as change loss, risk, peril, hazard and loss (loss) not only has some additional sense outside this business but also vary their use in business. This variation may not confuse people who are proficient in this field, but it can be confusing to new students.
The definitions given here have been made in such a way as to explain his differences carefully so as to provide a clearer understanding on the basics of insurance.
Chance of Loss (The Possibility of Loss)
Chance
of loss is the relative frequency of long-term losses. Chance of loss
should preferably be expressed in fractional or percentage. He demonstrated the possibility of the number and severity of the disadvantages of a certain number of possible loss. If you toss a coin with a bet a cup of coffee, then chances are you lost ½ or 50%. There are only two ways to fall of a coin and only one that can cause you to lose. Therefore, the chance of loss (loss/lose possibilities) you are one of the two. If you are offered a gift by taking a white ball from a box containing 9 ball black and white ball, then chances are you are wrong or chance of loss you are a 9/10 or 90%.
In
the things above is easy to measure the chance of loss. But what about
possible losses (chance of loss) due to fires, hurricanes, and other
disasters? In this case, we can not only compromised on logic alone, but we have to collect lots of data statistics. Statistics is defined as usage data are incomplete with the methods questions to obtain conclusions about a has-been.
To
measure the chance of loss to the insurance then calculated its
possibilities is based on experiences with the use of statistical
methods. So, if for example you want to find out the possibility of a loss against your home due to a fire, you have to collect all the statistics you can get against the same goods. You need to find out how much the fire occurred during a specific time period and how many houses affected by fires during that period of time.
If you with 100 houses have been burned from 100,000 fruit home as your
home, then you can specify that the chance of loss against your home
due to a fire during the same period was 100 of 100,000 or 0.1%. However, this number only gives the frequency of losses. For insurance, we are more concerned with the gravity of the losses.
If the price of each House was Rp 10 million then the total price is
100,000 x Rp 10 million = Rp 1,000,000 million. And if a total loss of
Rp 500 million (the House that caught fire is not burning completely
runs out) then the chance of loss expressed by weight loss is USD 500
million: Rp 1,000,000 million million = 0.05%.
The
same principle is used to determine the likelihood of death at a
certain age, if we get that from 1000 people who were still alive at the
age of 75 years, only 935 people reach the age of 76 years, then we say
that the likely died at the age 75 years is 65/1,000 or 6.5%. Because death is permanent and total, then the frequency and gravity of the harm of loss are the same i.e. 6.5%.
Chance of loss is important in insurance because it is the basis for setting rates. Adequate level of commonality in measuring possibilities – the possibility of harm is necessary if we want to develop sufficient insurance rates, fair, and no excess – the remainder.
