Insurance

Insurance is a system for lowering the financial loss by channeling the risk of losing from a person or entity to another ..
Entities called channeling risk "insured", and the body receiving the risk is called "insurer". Agreement between the two entities is called policy: this is a legal contract explain each terms and conditions protected. Fees paid by the "tetanggung" to "insurer" for the risk it took called "premium". This is usually determined by the "guarantor" for funds that can be claimed in the future, administrative costs, and profits.

For example, a couple bought a house for Rp. 100 million. Knowing that the loss of their homes would lead them to financial ruin, they took the insurance protection in the form of home ownership policy. The policy will pay for replacement or repair their homes in case of disaster. Insurance companies on their premiums Rp1 million per year. The risk of losing their homes have been distributed from the company's homeowners insurance.

Insurer uses actuarial science to calculate the risks they expect. Actuarial science uses mathematics, particularly statistics and probability, which can be used to protect the risk to estimate the claims at a later date with reliable accuracy.

For example, many people purchase insurance policies and home ownership then they pay a premium to the insurance company. When you lose a protected place, insurer must pay the claim. For some of the insured, the insurance benefits that they receive far greater than the money they have paid to the insurer. Others may not make a claim. If it is averaged from all policies sold, the total claims paid out lower than the total premium paid to the insured, the difference is the cost and benefits.
Insurance companies also benefit investments. This is obtained from the investment premiums received until they have to pay the claim. This money is called "float". Underwriter can benefit or loss from price changes and also float interest or dividends on the float. In the United States, loss of property and deaths recorded by the insurance company is U.S. $ 142.3 billion in five years ended in 2003. But the total profit in the same period was U.S. $ 68.4 billion, as a result of the float.