INSURANCE TECHNICAL AND COMMERCIAL ENGLISH GROUP 6 MEMBERS SUPERVISED BY Hans TOGNON Mr Pascal ZANKLAN Olabissi GBANGBOCHE Esperance HOUEDEY Princélu GBODOGBE Fresnel DOSSOU Jérémie DANSOU Samuel AHOUEYA OUTLINE ➔ What is insurance ? ➔ Why is it important ? ➔ How does insurance work ? ➔ Who provides insurance ? ➔ What kind of insurance is it possible to subscribe to ? WHAT IS INSURANCE ? According to the online encyclopedia, Wikipedia, insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person or entity who buys insurance is known as an insured or as a policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and usually involves something in which the insured has an insurable interest established by ownership, possession, or pre-existing relationship. So, insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party. WHY IS IT IMPORTANT ? Insurance plays a significant role in situations where a loss occurs. It can help societies and individuals prepare for disasters and mitigate the effects of disasters on both households and societies. For instance, if your company is harmed by an incident like a fire , unless you insured it, you would simply lose almost everything but an insurance gives you a guarantee that your losses will be covered financially. Having insurance doesn’t protect yourself only, but others also. Let’s say you own a food business and a customer becomes ill after eating one of your products or a delivery business and one of your vehicles hits a pedestrian, you need to be able to pay for the damage you've caused. Having an insurance policy help you to mitigate the impacts of any incident that can happen or that you can accidentally cause to a third party.Everyone, not only businesses, should subscribe to an insurance policy. INSURANCE PROTECTS YOU AND PEOPLE AROUND YOU! HOW DOES INSURANCE WORK ? There are a multitude of different types of insurance policies available, that any individual or business willing can subscribe to for a certain price depending on the insurance companies. The most common types of personal insurance policies are auto, health, homeowners, and life. Most individuals in some countries have at least one of these types of insurance, and car insurance is generally required by law. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insurer will compensate the insured. The amount of money charged by the insurer to the policyholder for the coverage set forth in the insurance policy is called the premium. If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster. The insurer will define in the contract, the policy limit which represents the maximum amount he will pay under the policy for a covered loss. Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over the life of the policy, also known as the lifetime maximum. Before claiming, the insured should pay a deductible, an amount he has to pay toward an insured loss , which represents the way in which a risk is shared between him, the policyholder, and his insurer. THE INSURANCE DOESN’T COVER ALL! WHO PROVIDES INSURANCE ? ● Mutual and Proprietary companies Insurance companies are generally classified as either mutual or proprietary companies. Mutual companies are owned by the policyholders, while shareholders (who may or may not own policies) own proprietary insurance companies. Demutualization of mutual insurers to form stock companies, as well as the formation of a hybrid known as a mutual holding company, became common in some countries, such as the United States, in the late 20th century. However, not all states permit mutual holding companies. ● Reinsurance companies Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from substantial losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well. ● Captive insurance companies Captive insurance companies may be defined as limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house self-insurance vehicle. Captives may take the form of a "pure" entity, which is a 100% subsidiary of the self-insured parent company; of a "mutual" captive, which insures the collective risks of members of an industry); and of an "association" captive, which self-insures individual risks of the members of a professional, commercial or industrial association. Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices. WHAT KIND OF INSURANCE IS IT POSSIBLE TO SUBSCRIBE TO ? There are many types of insurance, but some common types are described here : ● Health insurance Helps you pay for doctor fees and sometimes prescription drugs. Once you buy health insurance coverage, you and your health insurer each agree to pay a part of your medical expenses; usually a certain amount or percentage of the expenses. ● Life insurance Pays a person you select a set amount of money if or when you die. The money from your life insurance policy can help your family pay bills and cover living expenses. ● Disability insurance Protects individuals and their families from financial hardship when illness or injury prevents them from earning a living. Many employers offer some form of disability coverage to employees, or you can buy an individual disability insurance policy. ● Auto insurance Protects you from paying the full cost for vehicle repairs and medical expenses due to a collision. In some countries, the law requires you to have auto insurance when operating a motor vehicle. ● Homeowner’s or renter’s insurance Protects your home and personal property against damage or loss and insure you in case someone gets hurt while on your property. If you have a mortgage on your property, most lenders require you to have homeowners insurance as a condition of the loan. Most experts agree that life, health, long-term disability, and auto insurance are the four types of insurance you must have. 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