Understanding Insurance by Mark R. Greene is an economic institution or organization that aims to reduce risk by combining in one management and group of objects within a more detailed scope.
According to Commack, Understanding Insurance is a tool to reduce financial risk by collecting units in sufficient quantities with the aim that individual losses can be estimated, then the forecasted losses can be uniformly shared by those who joined.
Robert I. Mehr proposes Understanding Insurance, Insurance is a tool that aims to reduce risk by combining a number of units at risk so that individual losses can be predicted together. The predicted loss is then shared and distributed fairly and equally among all units in the composite.
Definition of Insurance in the opinion of C Arthur Williams JR is a tool in which the risk of two or more persons of two or companies combined through the contribution of a certain premium or that is determined as the funds used to pay claims.
Understanding Insurance in Law. Insurance is an agreement between two parties, namely an insurance company with a policyholder, which becomes the basis or reference for premium revenue by an insurance company in return for:
a. provide reimbursement to the insured or the policyholder due to the loss he suffers, damages, costs incurred, loss of profits or legal liability to any third party who may be subject to suspect / policyholder due to the occurrence of such an uncertain event; or
b. provide payment with reference to the death of the insured or payment based on the insured's life with the benefit of which the amount has been determined and or based on the results of the fund management.
From the definition of insurance above, it can be concluded that Understanding Insurance is a tool to reduce the risks inherent in the economic system, by combining a number of units that are exposed to the same risk or are exposed to nearly the same risk, in large enough quantities for the probability of losses predictable and if a predicted loss occurs, it will be proportionally shared to all parties in the composite "
| Insurance Objectives |
Speaking of insurance objectives, the purpose of insurance includes the purpose of risk transfer, the purpose of compensation payment, the purpose of payment of compensation, the welfare of members. For more details about insurance purposes will be discussed below.
1. Insurance Objectives for Risk Redirection
The most important insurance objective is to transfer risk. In the theory of risk transfer, the insured is aware of a threat of danger to his or her own property or to his soul. If one day the danger befalls his property or his soul, then he will suffer loss or loss of life or physical disability will affect the journey of one's life or his heirs. Insured in this case as the party in danger feels heavy carrying the burden of risk that can happen at any time.
To reduce or eliminate the burden of risk, then the insured seeks to find a way if there are other parties who are willing to take over the burden of the risk of danger and he was able to pay counter-achievement called the premium. In this case the insured held an insurance with the aim of transferring the risk that threatens his property or his soul. By paying a premium to the insurance company (the insurer), since then the risk of switching to the insurer. If until the end of the insurance period does not occur adverse events, then the insurer is lucky to have and enjoy the premiums that have been received from the insured.
2. Insurance Objective for Compensation Payment
The next insurance objective is the payment of compensation. In the event of an event that causes losses, then there is no problem to the risks borne by the insurer. In practice, the danger is not always going to happen. This is a good opportunity for the insurer to collect premiums paid by some insured who bind themselves to him. If at one time saduh really happened events that cause losses, then to the insured in question will be paid compensation balanced with the amount of insurance. In practice, such losses are partial, not all of which are total losses. Thus, the insured holds an insurance that aims to obtain payment of compensation that really suffered.
3. Insurance Objectives for Benefit Payment
The next insurance objective is for the payment of compensation. Insurance losses and also life insurance is held under a free agreement (voluntary) between the insurer and the insured. However, the law provides for compulsory insurance, meaning that the insured is tied to the insurer because the law is not a contract. This type of insurance is commonly referred to as social insurance. Social insurance aims to protect the public from the danger of accidents that result in death or disability. By paying a certain amount of contribution (such a premium), the insured person is entitled to protection from danger.
The insured who pay for the contribution are those who are bound to a certain legal relationship established by law, such as employment relationships, public commentators. If they receive accident accidents during their work or during transport, they (their heirs) will receive compensation payments from BUMN insurers, whose amount has been established by law is to protect the interests of the people and those affected will be given a sum of money.
4. Insurance Objectives for Members' Welfare
The last insurance objective is for the welfare of its members. If some people are gathered in an association, then the association is located as the insurer, while the members of the association are the insured. In the event of an event which resulted in loss or death to the member (the insured), the association shall pay the sum of money to the member (the insured) concerned. Prof. Wirjono Prodjodikoro calls such insurance is similar to the association of cooperatives. This insurance is a joint insurance or joint business insurance that aims to realize the welfare of members.
| Insurance Premiums |
Speaking of insurance premiums, In the insurance known as the insurance premium.
1. Important Insurance Premium Elements
In article 246 of the KUHD there is a formula as follows: "with which the insurer binds himself to the insured by receiving the premium".
Based on the formula, it can be seen that the premium is one important element in the insurance because it is the main obligation that must be met by the insured to the insurer. In this insurance legal relationship, the insurer receives a risk transfer from the insured 8 and the insured pays a premium in return. But if the premium is not paid, the insurance can be canceled or at least the insurance will not run. This insurance premium must be paid first by the insured because the insured party concerned.
Insurance premium is an absolute requirement to determine insurance agreement implemented or not. The criteria of insurance premium are:
(a) in the form of a sum of money,
(b) paid in advance by the insured,
(c) in return for risk transfer,
(d) calculation based on percentage of the value of the transferred risk.
2. The amount of Insurance Premiums to be Paid
The determination of insurance premium rates should be based on healthy risk analysis calculations. The amount of insurance premium to be paid by the insured is determined based on the risk assessment borne by the insurer. In practice, the determination of the amount of the premium is agreed upon by the insured and the beneficiary secarfa worthy and included in the policy. The amount of insurance premium is calculated in such amount, so with the receipt of premium from some insured, then the insurer is able to pay the claim of compensation to the insured who is affected by the event that caused the loss.
In the amount of premium to be paid by the insured also includes expenses related to the procurement of the insurance. Details that can be calculated in the amount of insurance premium are:
(a) the percentage of the amount insured.
(b) the amount of costs incurred by the insurer, such as the stamp duty, the cost of the policy.
(c) Kurtase for broker if the insurance is held through a broker.
(d) Advantage to the insurer as well as the amount of reserves.
3. Restorno Premium
Insurance premiums paid by the insured to the insurer may be required for their refund, either in whole or in part if the insurance is void or void, if the insured has acted in good faith. Premiums that must be paid back by the insurer is called the premium restorno. At restorno premiums must be met the requirement that the insurer does not face the danger. In article 281 of the KUH Dagang emphasizes on the requirement that the insurance is void or void not because of the guilt of the insured and also not because of the insured's evil intent, but because the insurer is not in danger. In this case it is appropriate that the premium already paid by the insured is returned by the insurer. This is in line with the principle of balance and sense of justice.
As long as the discussion about the definition of insurance, insurance purposes and insurance premiums, hopefully my writing on the definition of insurance, insurance purposes and insurance premiums can be useful.
Source: Books in Writing Understanding Insurance, Insurance Objectives and Insurance Premiums:
- Abdulkadir Muhammad, 2006. Indonesian Insurance Law. Publisher PT Citra Aditya Bakti: Bandung.