THE WORKINGS OF THE INSURANCE
To understand the workings of insurance we need to understand the basic principles of insurance include:
-to bear the risk.
-Probability (to be so likely); and,
-the law of large numbers.
Bear The Risk Of
Insurance was created by insurance companies as bearers of risk professionals who bear the risks transferred to him by the insured. The insurance contract is generally expressed in the amount that the insurer despite replacing the insured not with money but with merits.
Life insurance contract for example require the insurer to pay a
certain sum of money at the time of the death of the person that his
soul was taken away. In contrast, the plaintiff's responsibility insurance policy not only requires that the insurer pay the money but also provides legal services and investigations are needed when events in insure that happens. The terms of service sets out health insurance policy and the hospital treatment to the insured when he is sick or hurt. Whether the insurer fulfills its obligations with money or services (services), but it is the burden of the financial burden. The insurer does not guarantee that events in insure it won't happen. In addition, he could not change the value of feelings or bear the psychological burden of a loss. A House may be only worth Rp 10 million for insurance purposes but its value for the owner's feelings are probably umpteen times that. The death of a man in love cause suffering inner that do not maintain a completely unable to diminish with the receipt of an amount of money from the insurer. Both of these losses cannot be measured with money, and therefore the risk so it can not be on the move to the insurer.
Probability
The insurer risk doing so can mensubstitusi with an estimated loss indeed with average losses thus giving certainty to the insured. Because the funds on pay for insured losses suffered were usually collected from the members of the group before, then the insurer should be able to predict losses accurately. Premiums on the insured will be loaded at itru is based upon the prediction in and forecast that is based on the above estimates of probability (to be so, it is likely).
When someone says "there is most likely something will happen" or "less likely" to happen, then he thinks based on probability. Probability is a measure of the likelihood of the occurrence of an event. If there is no possibility of the occurrence of an event, then the probability is zero. when an event definitely is the case then the probability is one. Probability can be expressed as a fraction or a percentage.
The Law Of Large Numbers
The law of large numbers says: "the greater the number of things in investigating, the closer the result with probability or the probability of essentially pure. Examples. A coin is we throw the British, then chances are the opening of side A and side B is namely ½ or 50%. However, if we throw a coin ten times, not necessarily the outcome 5A and 5B, maybe 4A and 3A and 6B, 7B and 8B 2A, and so on. But according to the law of large numbers bead a lot of time in throw the closer the results obtained with the probability in essence that is ½ or 50%. If a coin was flung at a number of infinite then the result will be the same lot that is 50% A and 50% B.
The probability of getting the discharge numbers want from a dice can in a similar way the appraiser. Because of the dice has 6 sides, then there are 6 possibilities figure that out if dice on the throw. So each side has the pure probability 1/6. If dice throwing in unlimited amounts of time then results in gain will be equal to 1/6.
Insurance companies in influence by this law. If want to make accurate estimates about the possibility of something, then the occurrence needs to be observed in a large number of cases.
