Licentiate Examination - IC 01 - Principles of Insurance Exam - Important Points
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Diversification - Spreading risks across different areas
Indemnity agreements - One party agrees to compensate for losses the other party may incur
Hedging - Financial transaction is made to offset the loss in another transaction
Concept of insurance - An insurance company (referred to usually as the insurer) promises to pay to the owner (insured) or beneficiary of the asset, a certain sum of money (sum assured), if a loss occurs, to ensure continuance of the financial benefits. The insured pays a certain amount (consideration) to the insurance company for bearing the risk, which is known as premium.
The business of insurance is related to the protection of the economic value of assets, An asset is valuable for the owners because they get benefits from it in the form of comfort and convenience.
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