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Stone Manor - Commercial Vehicles Are Insured On Much The Same Basis, With Rates Established
Commercial vehicles are insured on much the same basis, with rates established on the type of vehicle and its use. Most renewals of motor insurance policies are on an annual basis. Other Types of Insurance National Insurance: The National Insurance system is operated by the Department of Health and Social Security, not by a private insurance company. The government first introduced the principle of National Insurance in 1912, and since then the system has been gradually extended. The National Insurance system has some elements in common with other types of insurance: people pay contributions to insure themselves against the possibility of certain events occurring.
However, it differs from other types of insurance because it is administered by the government, and all working people and their employers are obliged to pay contributions to the government. The size of individual contributions varies with earnings. There are no tests or conditions for becoming insured, as almost all working people are legally obliged to be insured under the scheme. There are benefits payable under the scheme for unemployment, sickness, retirement, widowhood and death. Reinsurance: Reinsurance is a scheme which allows insurers to spread their risks as widely as possible around the world.
What happens is that an insurance company pays part of the premium received for a particular policy to other insurers. In return, the latter insurers agree to pay a certain proportion of costs should a claim arise. For example, insurance company A receives a premium of £32,000 on insuring a factory for the sum of £4,000,000. However, the company can only afford to pay out £3,100,000 towards a claim. Therefore, company A will pay £24.000 of the premium, minus a commission, to insurance companies B, C, D and E, each of whom will receive about £2000 premium and will agree to pay out £200,000 in the event of a claim. Reinsurance is an international business, as insurers spread their risks as widely as possible around the world.
It is placed and accepted by insurance companies, reinsurance companies, and Lloyd's syndicates. Risk Management and Captives: Some large industrial companies have set up their own insurance subsidiaries to reduce their insurance costs.
These are known as captives. A captive company will reinsure almost all of its risks with other insurance companies. Captives are usually advised by large brokerage firms, who provide a risk management service. They attempt to discover ways of reducing insurance costs. Specialist surveyors and risk management experts consider all aspects of business, and are employed by brokers, insurance companies and captives.