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CHAPTER 1. INTRODUCTION TO INSURANCE. OBJECTIVES:. IMPORTANCE OF INSURANCE HOW DOES INSURANCE WORKS FUNCTIONS OF INSURANCE CLASS OF INSURANCE AGENTS’ DUTIES. INTRODUCTION OF INSURANCE. INDIVIDU Unexpected event of unfortunate

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CHAPTER 1


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chapter 1

CHAPTER 1

INTRODUCTION TO INSURANCE

objectives
OBJECTIVES:
  • IMPORTANCE OF INSURANCE
  • HOW DOES INSURANCE WORKS
  • FUNCTIONS OF INSURANCE
  • CLASS OF INSURANCE
  • AGENTS’ DUTIES
introduction of insurance
INTRODUCTION OF INSURANCE
  • INDIVIDU
    • Unexpected event of unfortunate
    • Eg Sudden death of breadwinner – left behind his wife and children suffering from two kind of misery i.e emotional and financial.
  • ENTREPRENEUR
    • Unexpected loss of business
    • Eg The factory was damaged in the flame due to no income will generate and will burden another extra expense.
slide4

EMPLOYER

    • Loss the job and directly loss the income due to company bankruptcy.
  • STUDENT
    • The parents passed away in the accident, the eldest child will drop from the school because want to take care of younger sibling- give a chance to the younger to study and get a better life.
answer for all the unexpected and unlucky events
Answer for all the unexpected and unlucky events :

BETTER PLAN to overcome the financial loss due to unfortunate events such as dead or flame is via INSTITUTION OF INSURANCE

importance of insurance
IMPORTANCE OF INSURANCE
  • THE NEED FOR INCOME
  • SOURCES OF INCOME
  • UNFORTUNATE EVENTS OR RISKS

PHOTO OF INSURANCE.pptx

how does insurance work
HOW DOES INSURANCE WORK?
  • POOLING OF LOSSES
    • Purpose : to take care of the importance of insurable person/individual
    • Pay compensate to those who are UNFORTUNATE!!!
    • COMPENSATE is obtained from the premium paid by a group of people who are exposed to the same class of risk
    • YouTube - How Does Insurance Work-.flv
slide8

Homeowner policy

  • CONCEPT OF INSURANCE
    • refer to the below diagram

Premium

#1

#2

#3

#999

#1000

RM 200

RM 200

RM 200

RM 200

RM 200

Claim

Insurance Fund

1000

X

RM 200

= RM 200 000

Contribution of Premium

Expenses/

outgoes

Profit

slide9
FUND WILL BECOME DEFICIT
  • Based on the above situation, fund was formed just adequate to pay two maximum claim only
  • This means that insurer’s expense and other outgoes do not count.
  • If there is two claims, the insurance fund does not enough and insurer will loss in this portfolio
premium must adequate to cope with the challenging business environment
PREMIUM MUST ADEQUATE TO COPE WITH THE CHALLENGING BUSINESS ENVIRONMENT
  • TO PROFITABLY OPERATE IN THE COMPETITIVE ENVIRONMENT, THE INSURER MUST STATE THE ADEQUACY PREMIUM AND CONTROL ADMINISTRATIVE EXPENSE AND ETC.
law of large number
LAW OF LARGE NUMBER
  • Insurans – saturancanganbgmenyebarkankerugiansegelintirdikalanganygramaihanyaakanberjayaapabila insurer2 bolehmengunderaitkansebilanganbesarrisikoygsama.
  • Apbl insurer2 bolehmengunderaitsebilanganbesarrisikoygsama, peraturanbilanganjumlahbesaroperasi.
  • Peraturanbilanganjumlahbesarmenjelaskaniaituapabilajumlahkerugianterdedahbertambah, ramalankerugianmenghampirikerugiansebenar.
slide12

SEBILANGAN BESAR RISIKO TERDEDAH KPD KERUGIAN YANG SAMA

  • KERUGIAN TERDEDAH MESTILAH BEBAS DR YG LAIN
  • KEMUNGKINAN TERJADI KERUGIAN ADALAH SECARA RAWAK

Jumlahbil.besarhanyabolehberoperasijika faktor2 berikutdipenuhi:-

definition of insurance
DEFINITION OF INSURANCE
  • INSTITUSI EKONOMIK BERASASKAN PRINSIP BERSALING DIBENTUKKAN BAGI TUJUAN MENUBUHKAN DANA AM.
  • KEPERLUANNYA TIMBUL DRPD BERLAKUNYA RISIKO YANG TIDAK DIDUGA YANG KEBARANGKALIAN BERLAKUNYA BOLEH DIANGGARKAN DENGAN MUNASABAH
essential features of insurance
ESSENTIAL FEATURES OF INSURANCE

Insuransadalahinstitusiekonomik

Insuransberasaskanprinsipbersalingataukerjasama

Objektifinsuransialahuntukmengumpuldanabagimembayartuntutanakibatberlakunya risiko2 tertentu

Hanyarisikotertentusahajabolehdiinsuranskan

function of insurans
FUNCTION OF INSURANS

PRIMARY FUNCTION

SECONDARY FUNCTIONS

STABILIZATION OF COST

STIMULATION OF BUSINESS ENTERPRISE

PROVISION OF SECURITY FOR BUSINESS EXPANSION

REDUCTION OF LOSSES

PROVISION OF A MEAN OF SAVING

PROVISION OF SOURCES OF CAPITAL FOR INVESTMENT

PROVISION OF EMPLOYMENT FOR MANYA

  • EQUITABLE DISTRIBUTION OF THE FINANCIAL LOSSES OF FEW WHO ARE INSURED AMONG THE MANY INSURED