Insurance is an insurance or agreement between two parties, where one party is obliged to pay contributions/contributions/premiums. The other party has the obligation to provide full guarantees to the payer of contributions/contributions/premiums if something happens to the first party or their belongings in accordance with the agreement that has been made)
The term insured usually refers to anything that is covered.
Insurers use actuarial science
Insurers use actuarial science to calculate their estimated risk. Actuarial science uses mathematics, especially statistics and probability, which can be used to hedge risks to estimate claims at a later date with reliable accuracy.
For example, many people buy a home ownership insurance policy and then they pay a premium to the insurance company. If the covered loss occurs, the insurer must pay the claim. For some of the insured, the insurance benefits they receive are far greater than the money they have paid the insurer. Others may not make a claim. When averaged over all policies sold, the total claims paid out are lower than the total premiums paid to the insured, with the difference being costs and profits.
Insurance company advantages
Insurance companies also benefit from investments. This is obtained from the investment of premiums received until they have to pay claims. This money is called "float".[citation needed] Insurers can gain or lose from the changing price of the float as well as the interest rate or dividends on the float. In the United States, the loss of property and death recorded by insurance companies was US$142.3 billion in the five years ended 2003. But the total profit in the same period was US$68.4 billion, as a result of the float.
Basic principles of insurance
In the world of insurance there are 6 basic principles that must be met, namely:
Insurable interest
The right to insure, which arises from a financial relationship, between the insured and the insured and is legally recognized.
Utmost good faith
An action to disclose accurately and completely, all material facts about something to be insured, whether requested or not. This means: the insurer must honestly explain clearly everything about the extent of the terms/conditions of the insurance and the insured must also provide clear and correct information on the object or interest insured.
Proximate cause
An active, efficient cause that gives rise to a chain of events that gives rise to an effect without the intervention of something that begins and is active from a new and independent source.
Indemnity
A mechanism in which the insurer provides financial compensation in an effort to place the insured in the financial position he had shortly before the loss occurred (KUHD articles 252, 253 and emphasized in article 278).
Subrogation
Transfer of claim rights from the insured to the insurer after the claim is paid.
Contribution
The right of the insurer to invite other insurers who share the same, but not necessarily the same obligation to the insured to participate in providing indemnity.