Insurance
is the one of the site of banking.By this insurance we can see
insurance company,classic car insurance & guardian insurance &
lots of many insurance policy.The insurance
business is one of the three pillars of the financial markets, together
with
the credit market and banking and securities markets or financial
instruments. Its
strategic importance, social and economic, leads to their being subject to
strict administrative supervision with its own rules of operation, control and
inspection.
Insurance companies for its mediating role in the financial system are few financial intermediaries with special characteristics that differentiate them from companies in other sectors of the economy and even with other financial companies.
Characteristics of the insurance
The insurance companies, in order to address the risks associated with its activity must have sufficient financial resources and therefore the law imposes certain restricciones.1
Given the desirability of permanence and stability in this sector, the legal rules generally prohibit this activity can be developed by individuals.
To ensure the solvency of insurance companies, law rejects such firms to exert any activity other than the insurer.
The exercise of financial intermediation has to inspire the utmost confidence among policyholders and investors means that these entities are subject to the supervision of the State that submits to control, both for the beginning of its activity as development.
Technical principles
The insurance companies must consider a number of technical principles that assume remitter risks.1 coverage
Individualization. In necessary the definition and delimitation of each of the risks to be able to classify and evaluate them and group them.
Accumulation. According to the laws of probability, the higher the risk pool, the lower the errors between theoretical probability and the number of casualties. (See Bernoulli's Theorem and the Law of Large Numbers)
Risk selection. Insurers should only accept risks which by their nature, are deemed to originate not necessarily unbalanced results.
Another basic principle of insurance companies, is the distribution or division of risks. The existence of technical risk insurer to insurer takes the need to ensure that the risks assumed under insurance contracts are uniform quality and quantity, so that it meets the principle of mutual or compensation. This can be achieved by distributing time (constituting technical reserves or provisions for deviations in claims in the years economically favorable or positive), geographically (valid only when the consequences are minor), operating in several lines and types of insurance (offsetting losses between them), between the insured (through franchising or underinsurance-going part of the compensation by the same-), or between other companies coinsured or reinsurers, or even also pursuing a policy of risk selection adequate.
With the ability to distribute the risks involved including insurance and reinsurance homogeneity is achieved quantitative thereof, more easily controlled and put into practice the qualitative, it is based on one fundamental principle for the insurance company, the principle distribution or division of risks, indicated generally above but also focuses on the company that is better (in normal and uniform) execute a large number of contracts with high sum insured (as in this case the deviations are greater). However, for the reasons set forth above, the application of this principle alone is insufficient, given the degree of heterogeneity of the insured amounts and diversity of the risks assumed, and it can not be generalized to all companies, it also depends on the volume business, of its assets, the amount or amount of technical provisions or reserves, and control (reduction of deviations) of technical risk insurer ultimately.
Technical and insurance contract
From the standpoint of economic and financial, insurance companies are financial intermediaries that issue as a financial asset specific policies or contracts of insurance, obtaining financing through the receipt of payment or insurance premium, and constitute appropriate reserves or reserves (operations passive) waiting to make payment of compensation or guaranteed benefit (sum assured), or because the damage occurred or compensable loss (loss) under the contract signed, or because its possible occurrence is estimated by methods and actuarial procedures.
The technique is based on certain prepayment of the resources invested in the long term, noting special reserves, the so-called technical provisions that guarantee when harmful events occur, the payment of compensation per claim. Those techniques reserves or provisions are invested by insurance companies normally in real assets (real estate) or other financial assets (securities or securities lending transactions).
For the insurance contract, the insurer or insurance company, to receive a premium for payment, the insured is obligated to pay compensation as agreed, if the event becomes expected. All this must be clearly established between the insured and the insurance company on a policy or contract.
Technical provisions and the solvency margin
Technical provisions
Technical provisions are those provisions which are derived immediately from insurance contracts, as they form a part of the contributions from the insured and correspond to the future obligation to them is that the insurer. They give the end of the year and constitute the largest item on the liability of the insurers.
The basic reason of technical provisions is based on the need to accrue income and typical expenses of insurance companies, accusing each year who really are. Ensure compliance with the commitments made by the company and although their functions are mixed according to the kind of provision in question, as a whole, perform the same economic function of strengthening the solvency margin of the company through its perfect constitution and finally assigning specific to each, in particular, deserves.
Insurance companies are required to establish and maintain at all times adequate technical provisions in all its activities.
Technical provisions should reflect the balance of the insurance the amount of the obligations arising from insurance and reinsurance contracts. They are in an amount sufficient to ensure, based on prudent and reasonable, all the obligations under the contracts, and to maintain the necessary stability of the insurance against random or cyclical fluctuations in claims or against compromise Special.
Solvency margin
Insurance companies must have at all times an adequate solvency margin in respect of its entire activities. It will consist of the assets of the insurance company free of any foreseeable liabilities, less any intangible items. Consolidated groups of insurance companies must have at all times, as the solvency margin, a consolidated unencumbered assets sufficient to cover the amount of the legal requirements applicable to credit each of the group entities.
Insurance companies for its mediating role in the financial system are few financial intermediaries with special characteristics that differentiate them from companies in other sectors of the economy and even with other financial companies.
Characteristics of the insurance
The insurance companies, in order to address the risks associated with its activity must have sufficient financial resources and therefore the law imposes certain restricciones.1
Given the desirability of permanence and stability in this sector, the legal rules generally prohibit this activity can be developed by individuals.
To ensure the solvency of insurance companies, law rejects such firms to exert any activity other than the insurer.
The exercise of financial intermediation has to inspire the utmost confidence among policyholders and investors means that these entities are subject to the supervision of the State that submits to control, both for the beginning of its activity as development.
Technical principles
The insurance companies must consider a number of technical principles that assume remitter risks.1 coverage
Individualization. In necessary the definition and delimitation of each of the risks to be able to classify and evaluate them and group them.
Accumulation. According to the laws of probability, the higher the risk pool, the lower the errors between theoretical probability and the number of casualties. (See Bernoulli's Theorem and the Law of Large Numbers)
Risk selection. Insurers should only accept risks which by their nature, are deemed to originate not necessarily unbalanced results.
Another basic principle of insurance companies, is the distribution or division of risks. The existence of technical risk insurer to insurer takes the need to ensure that the risks assumed under insurance contracts are uniform quality and quantity, so that it meets the principle of mutual or compensation. This can be achieved by distributing time (constituting technical reserves or provisions for deviations in claims in the years economically favorable or positive), geographically (valid only when the consequences are minor), operating in several lines and types of insurance (offsetting losses between them), between the insured (through franchising or underinsurance-going part of the compensation by the same-), or between other companies coinsured or reinsurers, or even also pursuing a policy of risk selection adequate.
With the ability to distribute the risks involved including insurance and reinsurance homogeneity is achieved quantitative thereof, more easily controlled and put into practice the qualitative, it is based on one fundamental principle for the insurance company, the principle distribution or division of risks, indicated generally above but also focuses on the company that is better (in normal and uniform) execute a large number of contracts with high sum insured (as in this case the deviations are greater). However, for the reasons set forth above, the application of this principle alone is insufficient, given the degree of heterogeneity of the insured amounts and diversity of the risks assumed, and it can not be generalized to all companies, it also depends on the volume business, of its assets, the amount or amount of technical provisions or reserves, and control (reduction of deviations) of technical risk insurer ultimately.
Technical and insurance contract
From the standpoint of economic and financial, insurance companies are financial intermediaries that issue as a financial asset specific policies or contracts of insurance, obtaining financing through the receipt of payment or insurance premium, and constitute appropriate reserves or reserves (operations passive) waiting to make payment of compensation or guaranteed benefit (sum assured), or because the damage occurred or compensable loss (loss) under the contract signed, or because its possible occurrence is estimated by methods and actuarial procedures.
The technique is based on certain prepayment of the resources invested in the long term, noting special reserves, the so-called technical provisions that guarantee when harmful events occur, the payment of compensation per claim. Those techniques reserves or provisions are invested by insurance companies normally in real assets (real estate) or other financial assets (securities or securities lending transactions).
For the insurance contract, the insurer or insurance company, to receive a premium for payment, the insured is obligated to pay compensation as agreed, if the event becomes expected. All this must be clearly established between the insured and the insurance company on a policy or contract.
Technical provisions and the solvency margin
Technical provisions
Technical provisions are those provisions which are derived immediately from insurance contracts, as they form a part of the contributions from the insured and correspond to the future obligation to them is that the insurer. They give the end of the year and constitute the largest item on the liability of the insurers.
The basic reason of technical provisions is based on the need to accrue income and typical expenses of insurance companies, accusing each year who really are. Ensure compliance with the commitments made by the company and although their functions are mixed according to the kind of provision in question, as a whole, perform the same economic function of strengthening the solvency margin of the company through its perfect constitution and finally assigning specific to each, in particular, deserves.
Insurance companies are required to establish and maintain at all times adequate technical provisions in all its activities.
Technical provisions should reflect the balance of the insurance the amount of the obligations arising from insurance and reinsurance contracts. They are in an amount sufficient to ensure, based on prudent and reasonable, all the obligations under the contracts, and to maintain the necessary stability of the insurance against random or cyclical fluctuations in claims or against compromise Special.
Solvency margin
Insurance companies must have at all times an adequate solvency margin in respect of its entire activities. It will consist of the assets of the insurance company free of any foreseeable liabilities, less any intangible items. Consolidated groups of insurance companies must have at all times, as the solvency margin, a consolidated unencumbered assets sufficient to cover the amount of the legal requirements applicable to credit each of the group entities.
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