Helping people break into the insurance market
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Stone Manor - In Practice, This Opened The Door To Individual Underwriters (people Who Have
In practice, this opened the door to individual underwriters (people who have the authority to insure someone), who became the acknowledged masters of marine insurance. Later they founded what was to become Lloyd's. Insurance quickly extended into other fields: Fire insurance had a sudden boost following the Great Fire of London in 1666 and life insurance was proposed by the two chartered companies soon after 1720.
The growth of international trade in the nineteenth century led to the establishment of specialist insurance offices, and to the development of accident insurance.
This was a result of the hazards of industrial life and the increasing dangers of transport At this time, insurance companies were expanding their activities internationally. They made use of improved communications, and growing British interests throughout the world supported their expansion, so that some companies were soon transacting more foreign than domestic business.
This situation is still true today. How Insurance Works If you want to buy insurance, you approach a company or a broker to arrange it for you Insurers are mainly insurance companies or underwriters at Lloyd's. Usually you have to fill in a proposal form, giving details of yourself and the insurance you require.
The insurers then tell you if they are prepared to insure you and the amount you must pay, which is called a premium This buys a specified period of insurance. (Normally, premiums are calculated on an annual basis, so the policy must be renewed annually.) If whatever you have insured against happens - your house burns down or you have a car crash - you put in a claim to the insurer to reimburse you for your loss, according to the terms of the policy.
Insurance is based on the law of averages the knowledge that, for example, if a coin is tossed 100 times, on average heads will turn up 50 times According to this principle, insurers can be reasonably sure that only a certain proportion of the clients they have insured will experience losses. The insurers must be careful to see that, in addition to ascertaining the probability of a loss, they have a wide spread of risks.
For example, in fire insurance it is obviously more risky to insure 10 houses in one street where a fire might spread than the same number of houses in separate towns Insurers receive a premium for accepting the potential risk of loss. Premium income is put into a fund to meet claims.
Insurers rely on the probability that only some of the losses they insure against will occur in a certain period, and hope that they will therefore be left with a profit. The insured justify the output of a premium because of the financial security it provides in case of loss, enabling them to venture their capital more freely.