The Insurance business is broadly divided into two major
categories first is Life Insurance and other one is General Insurance. The Life
Insurance covers the loss to Human Life whereas the General Insurance is
primarily a Non-Life Insurance, which covers risk associated with various
things/affairs one found precious enough to be covered under an Insurance.
It is true that the Human Life is most precious asset one
can protect but at the same time it is also an undisputed fact that with the
passing time several other assets took place in human life which are inevitably
part of our day to day life. Human beings have now become materialistic and
hence the value of a Human Being also derived from the material assets he
possess. This may include your house, vehicles, shops and daily used utensils
and equipment etc.
All the assets you possess are open to various risks and it
is always a possibility that these assets can be destroyed or may be harmed in
a manner whereby its value get decreased by damage caused by any
uncertain/unforeseen event. As the Human Life can be shortened by deceases or
accidents, similarly or assets/property can be destroyed by natural calamities
or any man-made act. Many a times these kind of activities do not occur for
longer period of time, may be for decades, but the fact always remains the same
that we are exposed to the risk of happening of any uncertain/unforeseen event.
This are all risk cover under the General Insurance.
Although, its true, no one can see his/her future but at the
same time it is also true that we can predict the future events in a reasonable
manner and therefore we always try to avoid certain activities which may lead
us to losses and wherever we are unable to avoid some kind of acts we try to
protect ourselves from those events. Like for earthquakes we build houses
strong enough to be unaffected from earthquake up to a certain limit. But what
if the earthquake occurs with huge intensity that a whole city get destroyed in
minutes. Fortunately these events do not occur frequently but the fact again
remains the same that we are unable to avoid certain kind of losses that may occur
any time in future.
Simplified
Concept of Insurance
To cover up the damage occurred due to any foreseen or
unforeseen event and mitigate the losses the mankind evolved a wonderful
concept of Insurance. Since the occurrence of loss causing events are few in
numbers the mechanism of Insurance ensures that the losses to be shared by all
members of a certain group which is exposed to similar risk of occurrence of
such loss causing event. This mechanism runs over a simple concept of society
where we come together to form a group and this grouping make us feel protected
and similarly while having the insurance all the risk bearers ensure that any
loss occurring in future shall be borne by whole group despite of the fact that
actual loss occurred to a very few members in that group.
So in this manner, Insurance is a mechanism which ensures
that the unfortunate some, who suffered loss due to a certain event, get
compensated and their loss be mitigated by large number of contributors who are
exposed to similar kind of loss causing event ect.
Source From: http://insuranceblog.asia/insurance-an-introduction/
Thanks Nishant for sharing this helpful blog, i was looking for same kind of content realated to general insurance
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