Early methods[ edit ] Merchants have sought methods to minimize risks since early times. Methods for transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. The Babylonians developed a system which was recorded in the famous Code of Hammurabic. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen, or lost at sea.
What is the Role and Importance of Insurance? The process of insurance has been evolved to safeguard the interests of people from uncertainty by providing certainty of payment at a given contingency.
The insurance principle comes to be more and more used and useful in modern affairs.
Not only does it serve the ends of individuals, or of special groups of individuals, it tends to pervade and to transform our modern social order, too. The role and importance of insurance, here, has been discussed in three phases: Uses to an individual: Insurance provides Security and Safety: The insurance provides safety and security against the loss on a particular event.
In case of life insurance payment is made when death occurs or the term of insurance is expired. The loss to the family at a premature death and payment in old age are adequately provided by insurance. In other words, security against premature death and old age sufferings are provided by life insurance.
Similarly, the property of insured is secured against loss on a fire in fire insurance. In other insurance, too, this security is provided against the loss at a given contingency.
The insurance provides safety and security against the loss of earning at death or in golden age, against the loss at fire, against the loss at damage, destruction or disappearance of property, goods, furniture and machines, etc.
Insurance affords Peace of Mind: The security wish is the prime motivating factor. This is the wish which tends to stimulate to more work, if this wish is unsatisfied, it will create a tension which manifests itself to the individual in the form of an unpleasant reaction causing reduction in work.
The security banishes fear and uncertainty, fire, windstorm, auto-mobile accident, damage and death are almost beyond the control human agency and in occurrence of any of these events may frustrate or weaken the human mind.
By means of insurance, however, much of the uncertainty that centers about the wish for security and its attainment may be eliminated. Insurance protects Mortgaged Property: At the death of the owner of the mortgaged property, the property is taken over by the lender of money and the family will be deprived of the uses of the property.
On the other hand, the mortgagee wishes to get the property insured because at the damage or destruction of the property he will lose his right to get the loan replayed.
The insurance will provide adequate amount to the dependents at the early death of the property-owner to pay off the unpaid loans. Similarly, the mortgagee gets adequate amount at the destruction of the property.Insurance Governance and Risk Management 3 nance in the insurance sector. Accordingly the corporate governance of insurers is increasingly becoming concerned with the management of risk in addition to the traditional preoccupation with accounting, audit, managerial appointments and strategic issues.
Robust risk management requires two elements.
CORPORATE GOVERNANCE OF INSURERS IN AUSTRALIA Corporate governance for insurers relies on the general framework that is in place for corporations, overlaid with specific requirements for insurers that reflect obligations to policyholders.
This paper outlines both the general framework and the additional requirements placed on insurance companies. Explain the role of the finance function. Explain the principles of financial reporting and apply these to workplace scenarios. Interpret financial accounts of insurance organisations.
Evaluate and apply corporate finance concepts in insurance organisations including the raising of capital, project appraisal and business. The Insurance industry can play a major role in addressing this gap and earn up to $ trillion by from women alone—half of it in emerging economies if they target women, according to IFC’s SheforShield Report.
Hence, IFC is partnering with the private sector to better serve the market and increase financial protection and risk. Corporate Finance Jobs Hierarchy: From Analyst to CFO, What You Do in FP&A vs. Controllership vs. Treasury - Work, Lifestyle, Pay, and More. The role and importance of insurance, here, has been discussed in three phases: (i) uses to individual, (ii) uses to a special group of individuals, viz., to business or industry, and (iii) uses to the society.