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CHAPTER 1

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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  1. CHAPTER 1 INTRODUCTION TO INSURANCE

  2. OBJECTIVES: • IMPORTANCE OF INSURANCE • HOW DOES INSURANCE WORKS • FUNCTIONS OF INSURANCE • CLASS OF INSURANCE • AGENTS’ DUTIES

  3. 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.

  4. 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.

  5. 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

  6. IMPORTANCE OF INSURANCE • THE NEED FOR INCOME • SOURCES OF INCOME • UNFORTUNATE EVENTS OR RISKS PHOTO OF INSURANCE.pptx

  7. 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

  8. 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

  9. 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

  10. 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.

  11. LAW OF LARGE NUMBER • Insurans – saturancanganbgmenyebarkankerugiansegelintirdikalanganygramaihanyaakanberjayaapabila insurer2 bolehmengunderaitkansebilanganbesarrisikoygsama. • Apbl insurer2 bolehmengunderaitsebilanganbesarrisikoygsama, peraturanbilanganjumlahbesaroperasi. • Peraturanbilanganjumlahbesarmenjelaskaniaituapabilajumlahkerugianterdedahbertambah, ramalankerugianmenghampirikerugiansebenar.

  12. 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:-

  13. 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

  14. ESSENTIAL FEATURES OF INSURANCE Insuransadalahinstitusiekonomik Insuransberasaskanprinsipbersalingataukerjasama Objektifinsuransialahuntukmengumpuldanabagimembayartuntutanakibatberlakunya risiko2 tertentu Hanyarisikotertentusahajabolehdiinsuranskan

  15. 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

  16. CLASSES OF INSURANCE

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