What is Insurance?
The word insurance is well defined as "The act or system of insuring property, life etc.; a contract by which the one party (usually a company or corporation) undertakes, in consideration of a payment (called a premium) proportioned to the nature of the risk contemplated, to secure the other against pecuniary loss, by payment of a sum of money in the event of destruction of or damage to property (as by disaster at sea, fire, or other accident), or of the death or disablement of a person"( Oxford English Dictionary).It is not only important to know the definition of insurance but also to know about some significant terms as follows:
1. Insured -"The person (or persons) to whom an insurance upon property is to be paid on the occurrence of loss or damage, or upon whose death or disablement a (life or accident) insurance becomes due" (Oxford English Dictionary).
2. Insurer - "One who contracts, in consideration of the payment of a premium, to indemnify a person against pecuniary loss in the event of destruction of or damage to property, or against a particular event"(Oxford English Dictionary).
3. Underwriting-It is one of the most important tools in any financial sector let it be a commercial bank or insurance company. Insurance Underwriter decides on the quantum of premium to be paid by the insured to the insurer for the risk exposure in insuring property/person.
History of Insurance:-
To proceed to details of the insurance we have to look back into history. The concept of insurance was started in 3000 B.C in China. The Chinese merchants, wanted to make some profit from their goods that they shipped overseas. In the event of ship being pirated or lost the insuring partner would pay the loss of the ship owner and...