The concept, types and importance of insurance

The concept of insurance is a means in order to face risks that a person is exposed to in his money or entity during his life. The goal of insurance is to mitigate those risks through cooperation that is achieved through the participation of people exposed to the same risk by facing the effects that result from achieving it for some of them by paying each of them For a premium or subscription in order to collect certain amounts and be distributed to those who are affected by the disaster

Defining insurance more precisely

Insurance can be defined as specific social systems whose goal is to face uncertain losses to institutions or individuals by transferring the face of risk from one person to many people who are in solidarity with each other when that risk affects one of them by bearing the compensation of that person or that institution From the money they pay on a periodic basis, and accordingly, insurance is considered the solidarity of a group of institutions or people to face a specific risk when one of them is exposed to it

What is insurance?

When we talk about what is insurance, it means exposure to the concept of insurance accurately, and this requires us to know that it is a modern method that has arisen in order to confront certain risks and their consequences. their money and possessions

Meaning of insurance

The meaning of insurance can be considered a system that assumes the existence of a legal tool in order to regulate the relationship between the insured and the insured, but it is not limited to this aspect only. In addition, insurance is considered a technical process that insurance companies use technical means in order to be able to achieve their goals by covering what happens From risks as it uses technical elements necessary in order to manage the insurance process, such as rules that are derived from some sciences such as statistics and also a system that is located between risks and the application of the law of abundance as well in addition to the rules of financial management and thus it can accurately achieve the goal of covering risks

What are the functions of insurance?

When talking about the concept of insurance, we must mention the many functions of it, namely:

Insurance is a means of ensuring safety for the insured

The most important functions of insurance is that it provides the insured person with the security that he desires to obtain against the dangers that threaten him in himself and his money. Also, this security, which is guaranteed by insurance, exists in all its types, whether in insurance against damages, the insured insures against the dangers that may afflict him in His financial liability, for example, when insuring against the risk of fire, he finds in the amount of insurance that he is entitled to what compensates him for these losses

Just as the insurance of persons plays a major role in spreading the spirit of reassurance and security in the souls, the safety of the soul and the body is one of the things that may be exposed to some dangers. Therefore, a person can protect himself and his family from the effects of his death or disability.

Insurance is a means of creating capital

When the term comes or the insured risk is realized, the insurer is obligated to pay the insured the sum of insurance as well as pay this sum out of the total premiums that the insured had paid. From this aspect, the insurance is considered a type of saving as it is considered a compulsory saving, and the insured is obligated to: A small part is deducted periodically from his income and it is also paid to the insured in return for obtaining the insurance amount at maturity. The capital, which consists of the insurance companies from the total premiums, is of great importance for the insured and also for the strong economy, as for the insured, those collected funds with insurance companies represent a guarantee In order to fulfill their rights by these companies, and for the national economy, the capital, which is formed by insurance companies, plays an important role in its development and prosperity.

Insurance is a protective factor

The direct objective of insurance is to compensate the insured for the losses that befall them. The insurance plays an important role through an indirect method, which is the prevention of risks, as well as working to reduce the incidence of accidents by avoiding their causes and by working to avoid their occurrence, as it has become a factor of prevention in society. Which supports and strengthens the economy of institutions as well as individuals in the face of any dangers they are exposed to, as it serves as a strong shield in the face of multiple dangers

As this insurance leads to a preventive role through various means, insurance companies wish to limit the amounts of compensation in the narrowest limits. They also work through several methods in order to reduce the incidence of various risks, as well as to protect the insured from them. In order to achieve this, insurance companies often resort to forming joint associations. among them with the aim of studying the causes of risks as well as taking adequate precautions in order to avoid their occurrence, and for that they seek the assistance of specialists and experts to visit homes and factories in order to educate citizens and workers and guide them to ways to prevent accidents and reduce their rate

Types of insurance

When we talk about the concept of insurance, this naturally requires knowing the types of insurance, which means that it is divided into insurance in terms of form and in terms of subject matter:

The concept of insurance in terms of form

In terms of form, insurance means to divide it according to the entity or body that undertakes the insurance process. In this respect, it is divided into two types of cooperative or mutual insurance and insurance with a fixed premium:

Cooperative or mutual insurance, and in this type, a group of people who are linked by a link of interest and exposed to a renewed risk play the role of the insured and the insured, through the framework of a cooperative association that brings them together and through compensating the damages that may be incurred by one of them as a result of realizing the insured risk, and the amount of compensation is paid from the total contributions which each member is obligated to pay

Fixed insurance premiums In this type, the insured is obligated to pay an amount when the insured risk is realized in return for the fixed premiums that the insured pays. From this it becomes clear that the insured person is not considered a single person and that the premium and payment that the insured is obligated to be fixed, and also that the insurer is obligated alone towards the insured

Insurance by topic

Insurance is divided according to the subject into several sections, namely:

Marine, river, air and land insurance

As it works to cover and mitigate the effects of the risks that may be exposed to maritime transport, such as ship fire, cargo damage, shipwreck, ship hijacking, and for air transport, such as plane crashes, river transport is in canals and rivers, and for land transport it includes risks that do not fall under any of the previous types

Private and social insurance

Private insurance means what a person undertakes to avoid the consequences of a certain risk or a possible accident that may occur in the future, as the person who does this seeks to achieve his own interest or an individual interest, which is to obtain safety with an insurance company, and in return for this interest, the individual bears the unit Premiums and in this insurance, which is carried out by the company and whose goal is to achieve profit and social insurance to be borne by the states in order to cover social risks to which members of the working class are exposed, which may prevent them from starting their work, such as unemployment, old age, disability and disease, as this type responds to social considerations based on In essence, the idea of ​​solidarity or social solidarity

Damage insurance

This insurance is carried out by the person in order to cover the risks that the person is exposed to in his property and it does not include life insurance, as it is of two types, which is the insurance of things, which is insurance on the money of the insured and the insurance from liability, and this insurance covers the costs for a mistake committed by the insured, such as the insured’s destruction of property Another person in this case, liability insurance covers the costs of sabotage and also prevents the other party from holding him responsible and referring to him and insurance for persons. This insurance covers the costs of any risks to the insured person and has many types such as

The concept of personal insurance

This insurance covers the costs of any risks to the insured person and has many types, such as life insurance in the event of death. The insurance company pays the insurance amount upon the death of the insured. Marriage The insurance company pays the sum of insurance to the insured if he gets married before a certain date. In the case of childbirth, the insurance company pays the sum of insurance to the insured if he has a child. In the mixed insurance, the insurance company pays the sum of insurance after a period of time, and supplementary insurance occurs in case the insured is unable to Continuing to pay insurance premiums for a specific reason and group insurance in which a person responsible for a group of people pays insurance premiums as he covers the risks that any member of the group is exposed to, such as the owner of the factory and its employees

The importance of insurance

In the field of talking about the concept of insurance, this requires that we discuss the importance of insurance in the following points:

Achieving cooperation between individuals at risk

Help preserve wealth

Increasing productive efficiency by making an individual or organization feel safe

Collecting and utilizing national savings in investment fields

Providing job opportunities in various insurance companies

Conclusion

Insurance is a modern way to face risks to a person, whether in himself, his property, or his family, with the presence of legal means to regulate the relationship between the insured and the insured, and there are many jobs for insurance as it is a means for the formation of capital as it is a means to ensure the private safety of the insured There are many types of insurance, as it is divided into insurance in terms of subject matter and form, and insurance is of great importance, as it helps to achieve fruitful cooperation between individuals or institutions exposed to the same risk, as well as preserves capital from exposure to the risk of perishing, and insurance has many great benefits as well.