INDIRIZZO DI STUDI: Amministrazione Finanza e Marketing
DISCIPLINA: English
ANNO DI CORSO: 4
Insurance
The principle of insurance
Insurance allows individuals and firms to reduce the risk of loss which inevitably occur in business,
and to obtain indemnity in the event of loss.
Insurance companies, also known as underwriters, draw up policies with people wishing to protect
themselves against risk. These people pay regular premiums to the insurance companies, and as a
result they are covered for damage or loss, meaning that the underwriters have agreed to pay them
compensation in the event of certain unfortunate incidents. Premiums are usually calculated on a
number of factors, including the value of goods, the number of risks being insured against and the
statistics of past losses.
Householders can insure against fire or theft. Motor vehicle insurance is obligatory. A household
insurance policy may cover all sorts of risks fire, burglary and flooding. An employer’s liability policy
covers employees if they are injured at work, and “third party” insurance covers the employer even if
someone who is not an employee is injured through the fault of his/ her firm.
The policy is the contract between the insurer and the policy holder. A commercial policy may cover
either a certain period of time, or a certain number of shipments of goods. An insurance certificate is
issued for each shipment that is made, and includes a declaration form with all details of the
consignment.
If a policy holder suffers a loss, he/she makes a claim to the insurance company, and they will
reimburse him/her for the amount that he/she has lost. He/she may, however, have to pay some excess.
Excess payments stop people from making claims on losses that are too small.
Modern insurance
Insurance became far more sophisticated in Enlightenment era Europe, and specialized varieties
developed.
Property insurance as we know it today can be traced to the Great Fire of London, which in 1666
devoured more than 13,000 houses. The devastating effects of the fire converted the development of
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insurance "from a matter of convenience into one of urgency, a change of opinion reflected in Sir
Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for London in 1667".
A number of attempted fire insurance schemes came to nothing, but in 1681, economist Nicholas
Barbon and eleven associates established the first fire insurance company, the "Insurance Office for
Houses", at the back of the Royal Exchange to insure brick and frame homes. Initially, 5,000 homes
were insured by his Insurance Office.
At the same time, the first insurance schemes for the underwriting of business ventures became
available. By the end of the seventeenth century, London's growing importance as a centre for trade
was increasing demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house,
which became the meeting place for parties in the shipping industry wishing to insure cargoes and
ships, and those willing to underwrite such ventures. These informal beginnings led to the
establishment of the insurance market Lloyd's of London and several related shipping and insurance
businesses.
The first life insurance policies were taken out in the early 18th century. The first company to offer
life insurance was the Amicable Society for a Perpetual Assurance Office, founded in London in 1706
by William Talbot and Sir Thomas Allen. Edward Rowe Mores established the Society for Equitable
Assurances on Lives and Survivor ship in 1762.
It was the world's first mutual insurer and it pioneered age based premiums based on mortality rate
laying “the framework for scientific insurance practice and development” and “the basis of modern
life assurance upon which all life assurance schemes were subsequently based”.
In the late 19th century, "accident insurance" began to become available. This operated much like
modern disability insurance. The first company to offer accident insurance was the Railway
Passengers Assurance Company, formed in 1848 in England to insure against the rising number of
fatalities on the nascent railway system.
By the late 19th century, governments began to initiate national insurance programs against sickness
and old age. Germany built on a tradition of welfare programs in Prussia and Saxony that began as
early as in the 1840s. In the 1880s Chancellor Otto von Bismarck introduced old age pensions,
accident insurance and medical care that formed the basis for Germany's welfare state. In Britain more
extensive legislation was introduced by the Liberal government in the 1911 National Insurance Act.
This gave the British working classes the first contributory system of insurance against illness and
unemployment. This system was greatly expanded after the Second World War under the influence of
the Beveridge Report, to form the first modern welfare state.
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People in business
The insurance industry has a number of commercial specialists, such as:
Insurance brokers
These people advise customers across the whole field of insurance. They are experienced in the
various policies available form different companies.
Adjusters
Adjusters are independent inspectors of insurance claims, called in to inspect the details of the claim
and to provide an estimate of damage.
Surveyors
These people assess the risks involved in certain businesses or buildings, and use this information to
decide how much a business ought to be paying in insurance premiums.
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