Insurance Part II

Insurance in the Book of the Law of Commercial Law (Commercial code)
Definition of Insurance according to the Book of the Law of Commercial Law (Commercial code), about her age or insurance coverage, Chapter 9, Article 246:
"Insurance or Coverage is an agreement by which an insurer is binding to an insured, to receive a premium, to provide reimbursement to him for any loss, damage or loss of expected profit, which may be experienced as an event that is not certain."

Insurers use actuarial science

Insurers use actuarial science to calculate the risks they expect. Actuarial science uses mathematics, particularly statistics and probability, which can be used to protect the risk to estimate the claim at a later date with reliable accuracy.

For example, many people buy homeowner's insurance policy and then they pay premiums to insurance companies. When you lose a protected place, the insurer must pay claims. For some of the insured, the insurance benefit they receive is much greater than the money they had paid to the insurer. Others may not make a claim. When averaged from all policies sold, the total claims paid out is lower than the total premiums paid to the insured, the difference is cost and profit.

insurance company profits

Insurance companies also benefit investment. This is obtained from investing premiums received until they have to pay the claim. This money is called "float". Insurers can benefit or loss from price changes in the float and also interest rates or dividends on the float. In the United States, loss of property and deaths recorded by the insurance companies was U.S. $ 142.3 billion within five years ending in 2003. But the total profits in the same period was U.S. $ 68.4 billion, as a result of the float.

The basic principle of insurance

In the insurance world there are 6 basic principles that must be met, namely:

* Insurable interest right to insure, arising from a financial relationship, between the insured with the insured and legally recognized.

* An action Utmost good faith to disclose accurately and completely, all facts material (material fact) about something that will be insured either requested or not. The meaning is: the insurer must honestly explain everything clearly about the extent of the terms / conditions of the insurer and the insured must also provide a clear and correct for objects or interests of the insured.

* Proximate cause means the active, efficient cause of events which lead to a result without the intervention of the start and actively from a new and independent sources.

* Indemnity A mechanism by which the insurer provides financial compensation to place the insured in a financial position that he had prior to the loss (Commercial code article 252, 253 and affirmed in article 278).

* Subrogation The transfer of demand from the insured to the insurer after a claim is paid.

* Contribution Rights of insurer to invite the other person equally bear, but do not have the same obligations to the insured to help provide indemnity.

rejection of insurance

Some people think of insurance as a form of bets that apply during the policy period. Insurance companies are betting that property buyers will not be lost when the buyer pays the money. The difference in fees paid to the insurance company against the amount they can receive when the accident happened about the same as if someone bet on horse racing (eg, 10 to 1). For this reason, several religious groups including the Amish avoid insurance and depend on support received by their communities when disasters occur. In communities close relations and supportive environment where people can help each other to rebuild lost property, this plan can work. Most people can not effectively support the system as above and this system will not work for large risks.

Converted the language of :
1. (Inggris) The Free Dictionary.com: Insurace
2. Kitab Undang-Undang Hukum Dagang. Cetakan IV. Citra Umbara, Bandung.