Categories of InsuranceConsumer Products
We believe this will be an interesting journey.
A journey that we will be taking together tackling critical issues and setting a platform that will enable us to rebuild and restore the vibrancy of the insurance sector. We believe this is important since the sector plays an integral role in the country’s economic recovery.
We are also going to create platforms that will enable us to engage with you. Your views, contributions and comments on this industry rebuilding and confidence restoring initiative are welcome.
We will start with the fact that, throughout the time there has always been a need for insurance. The basic concept of insurance is to spread the risk among a large enough pool – so that no one person suffers the entire cost of a loss.
In Africa, ancient insurance concepts date back to early hunters. Hunters went on hunting expeditions in groups and shared whatever they got. This was intended to minimise chances that any of them would go back home without a catch. There is safety in numbers as it minimises outright exposure to a single person.
The first methods of transferring or distributing risks were practiced by Chinese and Babylonian traders over 4000 years ago. Chinese merchants travelling treacherous river rapids would distribute their wares across many vessels to limit the loss due to any single vessel. It is from these ancient practices that insurance has evolved and developed into the industry that we know it to be today.
The most basic definition of insurance business is that it is the pooling of risks from many insured entities – individuals or companies. The insured entities are protected from the risk for a fee, with the fee being dependent upon the frequency of the loss event, and the loss that will be incurred if an event happens. For the entity to be covered the risk insured against must meet certain characteristics in order to be an insurable risk.
An insurer, or insurance carrier is a company selling insurance, while the insured or policyholder, is the person entity buying he insurance policy. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.
There are two main forms of insurance namely:
- long term insurance:
Under long term insurance, typically known as life insurance, policies are written for a term longer than one year. Long term insurance products are usually split into protection and savings products. Protection products are designed to alleviate pain and suffering to dependants or beneficiaries, by providing a sum of money or regular income on death or disability of the life assured (the life assured being the person on whose life the benefits depends). The life assured and the insured do not have to be the same person. Savings products allow people to put aside in a secure medium for specific investment purposes like retirement and funding a child’s education. Various products with combination of protection and savings features are also available.
- short term insurance:
On the other hand, short term insurance encompasses all types of insurance other than life insurance. Basically you are able to ensure your possessions or your person annually or on another short term basis. Short term insurance products include vehicle, property, household, personal liability, travel and business insurance. The reason these policies are short term is because your insurance needs in this regard will change over time.