Insurance companies offer different products or cater to the different customer base. Among the largest insurance companies are accident and health insurers; property and casualty insurers; and financial guarantors. The basic concept of insurance is that one party, the insurer, will guarantee payment for an uncertain future event. Meanwhile, another party, the insured or the policyholder, pays a smaller premium to the insurer in exchange for that protection on that uncertain future occurrence. Common types of insurance policies are auto, health, homeowners, and life. Most individuals in South Africa have at least one of these types of insurance, and car insurance is required by law.
Insurance is structured for the protection of monetary well-being of a person, company, or some other body in case of unpredictable loss.
Companies can plan for assuming the risks from failed business strategies, non-payment from customers or poor management decisions, but they can’t plan for assuming the costs of natural disasters, fire at their facilities or accidents resulting in liability, very much like Covid19. If an insured event occurs and you suffer damages, the insurance company pays you up to the agreed amount of the insurance policy.
Some types of insurance are law demands, while in some other cases are optional. After insurance term agreement takes place, a commitment between both persons (i.e. insurer and insured) gets final. In return of payments, also known as premiums, the insurer concurs to pay some amount to policyholder whenever any sort of event takes place. Insurance Companies work in different styles, depending on their profile base.
An official definition for Insurance – “A reimbursement promise for probable losses in future where trading in carried out in form of continual payment”.