Insurance is important because it safeguards against future losses and damages when there is a peril or an event. The insurance market is a very wide and broad market which deals with various types of insurance. The market offers a wide range of products and advisory services. Insurance is all about managing risks. Most of these risks like weather changes are inevitable and they can cause heavy financial losses and personal injuries. Individuals and organizations manage different types of risks by purchasing insurance covers. When the inevitable happens, the insurer compensates them for the losses and damages suffered to return the situation to the pre-loss state as much as it is possible. There are many types of insurances available sold by various insurance companies to cover so many risks even Cyber fraud and identity theft.
The insurance companies are divided into Non-Life and Life insurance. General or Non-Life insurance deals with insurances which include property, casualty insurance and liability insurance which can be renewed yearly. Life insurance deals with long-term insurances which include life insurance, health care, pension plans and annuities. The insurance companies invest the funds in mutual funds, stocks and other securities to make a profit and add gains to the shareholder funds. They offer investment advisory services and financial planning services.
Property insurance is a wide market which includes individuals, businesses and other organizations. The individual mainly buys-:
- auto insurance
- homeowner's insurance
- mortgage insurance
- renters insurance
- theft insurance
- fire insurance
- health care insurance
Businesses and organizations mainly purchase-:
- property and casualty insurance
- Workers' Compensation
- Landlord insurance
- Earthquake insurance
- Flood insurance
- Windstorm insurance
- business continuation
- commercial vehicle insurance
- Directors and Officers Liability Insurance etc.
Health care and Social Security programs are offered by the governments and private health care insurance companies. The cost and demand for health care is very high and the government has adopted the Health Care Reform to make health care affordable and available to all.
When underwriting life insurance premium rates there are factors to be considered which include age, gender, mortality rate and others, to determine the risk of death. The older the person is the greater the risk and the higher the premium. If the person is likely to have a shorter life span the premium will be greater.
Insurance companies are owned by either a mutual fund or shareholders. Many mutual fund insurance companies have become shareholder-owned. The policyholders are the shareholders. The company can offer all types of insurance or it can specialize in one or more major insurances. These can be-:
- Health insurance
- Life insurance
- Property, Casualty and Liability insurance
Reinsurance is when an insurance company purchases insurance from other insurance companies. Insurance companies have been able to offer other services which include financial planning and advisory services, investment advisory services, retirement, estate and tax planning among others. An insurance company can act as a surety or guarantor.