UNDERSTANDING INSURANCE
NATURE OF INSURANCE
Various Views
There are three schools of thought about insurance. The first flow of insurance in respect of the relationship of the insured by the insurer that is insurance as a means of transfer of risk. The second stream of ignoring this relationship and look at insurance as engineering or mechanism of bearing. The third stream of combining both views.
According to the first flow (the flow of transfers), insurance is the transfer of risk from the insurer to the insured is pure. The insured is the person or company who are facing a risk and the insurer is the person or company that specializes from bearing the risk. The main business of the insurer is bearing the risk by receiving the fee. Admission fee is to differentiate with other risk bearers.
The second stream of ignoring aspects of the mutates and transfer attention to aspects of the technique. Professor Mehr and Cammack for example, defines insurance as ".... social tools to reduce risk by combining a number of adequate units that open to the risk of the individual losses of loss-so that they collectively can be foreseen. Then the losses be foreseen. Then the losses be foreseen that shouldered evenly by all those who join it. "
The third stream of combining both views. Professor Willet defines insurance as a "social tool for the buildup of funds to cope with the loss of capital that are not necessarily carried out through the transfer of risk from many individuals to one or group of people." Other definitions are: "insurance is the transfer of risks with additional features (1) incorporation of risk and (2) valuation of losses against the future."
It seems that what insurance it depends on who is looking at it.
Professor Kulp says that "insurance can be regarded as a business, as a
mathematical science-detailed statistics or as social engineering or
tool."
Our Definition
While the presence of varying opinions as to the definition of insurance, each definition that helps us gain an understanding about the nature of that insurance. Definition of the Esensil traits incorporate insurance is as follows: insurance is a social tool that combines the risks individuals into a group and using funds donated by members of the Group had to pay a loss-loss.
The goal of insurances
Load leveling insurance losses with funds donated by the members of that group for the payout. So, it is a tool of equitable insurance losses. To reduce the economic burden on the members of the group then the insurer also participated in the activities of prevention of losses. However, the principal aim of the insurance is not equitable as well as prevention of losses, but reducing uncertainty (uncertainty, doubt) caused by an awareness of the possibility of losses. Insurers provide assurance to each Member of the group with leveling the cost of losses. The contributions of individuals in the group with leveling the cost of losses. The contributions of individuals in the Group were determined based on a prediction of his share in the losses suffered by the group. The rewards of his contribution, he received assurance that the group will bear any losses sustained. He moved the risk to the Group and flatten the cost disadvantages so substituting it with the certainty of uncertainty. He pays certain premium instead of facing the uncertainty of the possibility of big losses.
Insurance and Gambling
Not uncommon that insurance people consider such gambling. This is not true. Insurance and gambling is indeed concerned moved his hands the money based on a coincidence of events, but in the event of accidental insurance that is outside of the transaction while on gambling in the transaction itself. For example, if his house against fire insuring amir, then he must pay the premiums to the insurance company. If there is not a fire occur, then the premium it becomes the right insurance company and amir did not receive the money. Conversely, if the fire occurs then the insurance company will pay losses because the fire was Amir. This event fires is serendipitous events from the outside. Not so, if amir bet with Yusuf that Indonesia Football Squad will win from Malaysia. Win or lose here occurs in the transaction itself. So, gambling is an activity that creates risk for the participants, while insurance is a tool to remove the risk from one party to the other party.
