What is the insurance?

Definition

Insurance is, by definition, a system that protects an individual, an association or an enterprise against the financial and economic consequences of the occurrence of a particular risk (random event).

The means implemented by the insurance organizations to protect them against this risk is to associate them with a community of people (the insured), who contribute to be able to compensate those among its members who would suffer material damage or in the event of risk realization. Thus, insofar as it is the entire community of insured persons who materially bear the damage suffered by its members struck by the realization of the risk, insurance is a risk management system based on the concept of solidarity.The actors of insurance

In France, there are three types of insurance organizations, governed by three separate legal codes:

• Insurance companies, which fall under the Insurance Code
• Mutuals (groups) governed by the Code of mutuality
• Provident institutions whose activities are regulated by the Social Security Code

The insurance world is not limited to insurers alone, but engages many other players.The field of insurance covers in particular all trades that are carried out in companies whose activities are governed by the Insurance Code, namely:

• Trades practiced within public limited companies (SA)
• Trades practiced in mutual insurance companies (SAM)
• Trades practiced in mutual insurance companies (SMA)
• Intermediary trades such as general insurance agents and brokers
• The professions of insurance auxiliaries represented by insurance experts

The different types of insurance

The European Community Directives distinguish two types of insurance:

    Non-life insurance (property insurance, liability insurance and health insurance)
    Life insurance (life, death, savings, retirement ...)This distinction between these two types of insurance is based on the difference in the way premiums are managed. In fact, non-life insurance generally manages premiums on a pay-as-you-go basis (the group management method where the premiums of the community of insured persons are used to pay the claims of the community of insured persons for the same financial year), while the insurances  life manage them by capitalization (individual management mode where the premiums of the insured are used to deliver him a benefit at the time of the occurrence of the risk).Alongside this distinction between non-life and life insurance, there is another distinction between:

    P & C insurance (Fire, Accidents, Miscellaneous Risks): they combine property and liability insurance

    personal insurance: they combine health insurance and life insurance.From a general point of view, insurance companies are considered as institutional investors; indeed, they have at their disposal a huge mass of money consisting of the premiums of the insured; they must therefore manage these amounts on behalf of the insured and sometimes for a long time. Insurance companies therefore have a huge capacity to finance the national economy, through the investments they have to make, especially in the context of the budget deficit.Roles of insurance

Insurance aims to protect wealth and people, but also plays an important role in the economy:

By making business relationships more reliable
    By playing an important role as investor of the national economy
    By promoting investment

Insurance also plays a social role. The benefits paid to policyholders and beneficiaries of contracts allow them:

• To maintain their income
•  To restore their heritage
•  Not to be the responsibility of the public authority for the victims of accidents
•  To save jobs, skills
• To preserve the economic fabric.

Life insurance

At the individual level, life insurance has a security function in the sense that it guarantees people against the risk of death. In the event of death for example, the insurer will pay a capital mentioned in the contract to the designated beneficiary. On the other hand, it can also allow the insured to build a capital or an annuity in life insurance; it then plays a savings function. Another characteristic of life insurance is that it can constitute for the policyholder a credit instrument by the possibility of obtaining from the insurer.ReinsuranceLittle known to the general public, reinsurance is a sector of the economy essential to the insurance business. In addition, it is a key instrument for any organization