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The Concept of Insurance

The concept of insurance
The concept of insurance is old man kind. Its origin appears simultaneously  with the appearance of human society. From the beginning of society protection has remained an important need of human beings. 

The man has always thought of 

protection of his life, his family, his assets and his earning capacity. The owner of the 

assets have to suffer heavy loss. 

Insurance is an arrangement to indemnify the loss or  risk caused by the perils to the property. Fire, flood, earthquake, theft are the probable events and are called 'perils. Risk means the possibility of loss due to the perils which are unforeseen and loss may occur or not. Uncertainty is an important aspect of risk. 

Thus, insurance is a contract in which persons exposed to similar risks come together and decide among themselves, that the loss of any person due to such risk shall be shared by all persons on some equitable basis. 
   Definition of insurance

Definition : 
There various definitions of insurance are given by experts. They can be divided into two groups i.e. functional definition and contractual definition. They are as follows; 

Functional Definitions 
1. Ghosh and Agrawal : Insurance is a cooperative form of distributing a certain risk over a group of persons who are exposed to it.

2. Rock Fell :Insurance is the source of distribution of loss of few persons into many persons. 

3. A.Z.Mayerson : Insurance is a device for the transfer to an insurer of certain risks of economic loss that would otherwise come by the insured.

4. Encyclopedia Britannica : Insurance may be described as a social device whereby a large group of individuals, through a system of equitable contributions, may reduce or eliminate certain measurable risks of economic loss common to all members of the group. 

5. W. Beverideges : The collective bearing of risk is Insurance. 

6. D.S.Hancsell : Insurance may be defined as a social device providing financial compensation for the effects of misfortune, the payments being made from the accumulated contribution of all parties participating in the scheme. 

7. Wherry and Newman : Insurance by lessening uncertainty, frees the individual from the same element of risk .