Glamor Economics

Chapter 176

Chapter 22, Section 5 Originates from the risk management method of mutual aid organizations——Insurance

Around 2500 BC, the king of the Babylonian Kingdom ordered monks, judges, and village chiefs to collect taxes as funds for fire relief.

Stonemasons in ancient Egypt set up funeral mutual aid organizations to solve the funds for burial by paying dues.

The soldiers' organizations in the ancient Roman Empire provided living expenses for the survivors of the fallen soldiers in the form of fundraising, gradually forming an insurance system.

During the Punic War, in order to solve the problem of military transportation, the ancient Romans collected 24% to 36% of the fees from merchants as a reserve fund to compensate for the loss of cargo. This is the origin of marine insurance.

In 133 BC, the Recchia (Freemasonry Organization) established in ancient Rome charged 100 zeshi and a bottle of respectful sake to those who joined the organization, and charged 5 zeshi every month, accumulating Become a provident fund, used for funeral subsidies, this is the bud of life insurance.

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Insurance is one of the oldest risk management methods.An insurance contract in which the insured pays a fixed amount (premium) to the insurer, who is guaranteed a certain compensation for any loss caused by a particular event or group of events within a specified period.Observing financial history, we find that insurance has gradually developed from the embryonic form of mutual aid to risky lending, to marine insurance contracts, to marine insurance, fire insurance, life insurance and other insurance, and gradually developed into modern insurance.

Some people compare insurance to a seat belt. With it, our life journey can be more stable.Insurance is actually a socialized arrangement that disperses risks and centralizes commitments.For the entire social economy, insurance can play an important role in maintaining the continuity of economic development.In the event of a major catastrophic event, the huge loss will seriously impact the stable development of the social economy, and even break the chain of social and economic development. Insurance can play a buffer and remedy role to help the society tide over the difficulties.

On September 2001, 9, the United States suffered a serious terrorist attack. The World Trade Center was collapsed, thousands of elites died, and the loss was huge.However, due to the perfect insurance system, the global insurance industry has paid tens of billions of dollars in insurance payments for this, and the US economy has not experienced severe turmoil.

We often say that insurance is like a reservoir, and everyone contributes a little "scrap", and the insurance company pools these funds to make up for the losses suffered by a few unfortunate people.Obviously, the more people involved in this reservoir mechanism, the more stable the function of the reservoir will be.It is worth noting that insurable risks in insurance only refer to "pure risks".Pure risk means that there is only the possibility of loss and no possibility of profit.For example, risks such as property theft and physical illness are pure risks, which will only suffer losses and cannot make profits.Losing money investing in stocks is not a pure risk, because investing in stocks can make a lot of money.Therefore, insurance companies generally do not insure stocks.Specifically, an insurable risk must meet the following conditions:

1. High degree of loss.If the potential loss is not large, negligible or people can bear it, such risks do not need to take insurance at all.For example, you would not buy insurance specifically because you are worried about losing an apple.

2. The probability of loss is small.If the probability of loss itself is very high, insuring against such risks means expensive premiums, and there is no way to talk about transferring and dispersing risks.For example, the theft rate of new bicycles in an area is as high as 40%. If you insure new bicycles, you need to pay 40% of the pure premium, plus the premium charged by the insurance company to cover operating expenses (say 10%), then the total premium reaches half the price of the car.Obviously, it's not worthwhile to take such a risk.

3. The loss has a definite probability distribution.When an insurance company decides to collect insurance premiums, it needs to clarify how likely this risk is to occur and how much loss it will cause after it occurs, and then calculate the premium that should be paid accordingly.Therefore, insurance companies must grasp the probability distribution of risk losses and adjust these data in a timely manner according to changes in the external environment.

4. There are a large number of insurance targets with homogeneous risks.For any type of insurance, the number of insurance objects must be large enough, otherwise it will not be able to diversify and transfer risks.In addition, the more people insured, the more insurance objects, the more stable the probability of risk occurrence and the degree of loss, which is obviously more conducive to insurance companies to measure risks and ensure stable operations.

5. The loss must be accidental.If it is done intentionally, the insurance company will not pay compensation.

6. Losses must be identifiable and measurable.Once a loss occurs, the insurance company needs to clarify the value of the loss and make compensation. If it cannot be determined and measured, insurance cannot be carried out.

The distinction between insurable and uninsurable risks is not absolute.For example, in the past, once catastrophe risks such as wars, earthquakes, and floods occurred, the insurance subject matter would generally be damaged, and the losses varied greatly. Due to the insufficient financial resources of insurance companies, backward insurance technology and small reinsurance market, such risks are generally not classified as an insurable risk.However, in recent years, with the growing strength of insurance companies and the expansion of the reinsurance market, this type of catastrophe insurance has also been included in the scope of insurance liability by some insurance companies.

[links to related words]

Insurance means that the policyholder pays insurance premiums to the insurer according to the contract, and the insurer is liable for compensation for property losses caused by possible accidents as agreed in the contract, or when the insured dies, becomes disabled, or reaches the age stipulated in the contract, Business behavior that assumes the responsibility for paying insurance money during the deadline.

Property insurance refers to a socialized economic compensation system that takes various property materials and related interests as the subject of insurance, and whose basic purpose is to compensate the economic losses of the policyholder or the insured.Property insurance is a property insurance system including property loss insurance, liability insurance, credit guarantee insurance and agricultural insurance.

Property loss insurance is a general term for various insurance businesses that cover the risk of property and material loss of customers, and it is also the most traditional and extensive business of insurance companies.Common fire insurance, such as group fire insurance, household property insurance, etc.; various transportation insurances, such as motor vehicle insurance, aircraft insurance, ship insurance, cargo transportation insurance, etc.; various engineering insurances, such as construction engineering insurance, installation engineering insurance , technology engineering insurance, etc.

Life insurance is an insurance that takes people's life and body as the subject matter of insurance.The insured pays the insurance premium to the insurer according to the insurance contract. When the insured suffers from death, disability, disease and other insured accidents within the contract period or reaches the age and period stipulated in the contract, the insurer shall bear the insurance payment according to the contract. gold responsibility.

Property insurance emphasizes compensation for losses, but personal insurance is different. Its target is human life and body, but human life and body cannot be measured by money, and it is impossible to require insurance companies to pay for the loss of both legs in a car accident. The insured "indemnifies the loss."That is to say, the insurance amount of a personal insurance contract is not based on the value of the insured object like property insurance, but is determined on the basis of the insured's demand for insurance, the policyholder's ability to pay, and the insurer's affordability.You can purchase as many contracts of life insurance as you want, for yourself or for others.Personal insurance emphasizes that the beneficiary of the insurance should benefit according to the law. Except that medical expenses cannot be paid repeatedly, multiple insurance benefits can be obtained.

(End of this chapter)