Insurance is a competitive field full of rivals and competitors that are always at each others throat. Even more difficult is the public does not understand the importance of insurance. Just as a brilliant marketing idea for sure, can you just start with the implementation of a program where you can begin to teach the public the importance and benefits of insurance but feel that they are benefiting, they will not buy its history. Will you be able to give any kind of promotional gift policy? People love gifts and they come to your business.

Any crazy bull story will not work when you are selling insurance products and packages. What most people fear and respect. So if you’re selling life insurance, teaches about death and what it entails and purchased. Any crazy bull story will not work when you are selling insurance products and packages. What most people fear and respect. So if you’re selling life insurance, teaches about death and what it entails and purchased.

                          

Health Insurance

Now in the U.S. No government programs on universal health insurance. People are older than 65 years and some of those disabled children can receive medical care within the Medicare program. Most Americans secure health at the expense of employers.

Most Americans secure health at the expense of employers. Full-time workers are more favorable position to receive full insurance at the expense of the employer. Thus, it is customary insurance covers not only the worker but also to members of his family. Conditions of such insurance rather favorable usual.

The problem arises in case of job loss. For the current position with the name of “COBRA”, the dismissals can book safe working conditions. However, they must pay in full, including the part previously paid by the employer. It often happens that it is too expensive for the person who just lost the job.

One of the most typical insurance arises in a case if you already have health problems. Generally, insurance companies try to reduce risks at the expense of insurance except existing diseases. As a result, the person will be secured against potential health problems in the future, but are required to pay for treatment before disease development.
If you work in you or do not work, in general, you should try to acquire personal insurance. There are many companies offering various conditions of insurance. Do not be too lazy to waste time on in-depth examination of tenders and arrange appropriate insurance company with a reputation for reliability.

Life insurance

If you have unexpectedly died today, could be your family without your salary? Your children can finish college? They could pay all your debts? Could pay funeral? The purpose of life insurance – to justify the implementation of these requirements in the event of your death.

There are two main views of life insurance. The most popular is called a safe run. The insurance company sets the fixed annual payment may be brought monthly or quarterly. The size of contributions depends on your age, health status, desirable area of insurance cover and other factors. The insurance is paid in the event of his death on the validity of what is normal is 20 and 30 years. Your beneficiaries receive the amount specified in the agreement.

The second type of life insurance is called INT. In this case at every stage of your monthly or annual pay rate. It is very similar to an accumulation account in the bank. In addition, the possible sum of insurance payments gradually increases. But this type of insurance is more expensive than regular term costs.

Car Insurance

Statistics show that in everyday life occupation is dangerous driving. According to the Ministry of Transport of the USA in 2006 in traffic accidents in the country had lost more than 42,000 people. This does not include a lot of people who suffered trauma and maiming one and does not reflect the loss amounts-strong property damage.

Auto insurance is good it is absolutely necessary, both for their protection, and protection of the other participants of traffic. In many states the availability of automobile insurance is mandatory. “Complete” (full coverage) insurance policy covers damage not only your vehicle, but also a loss to another machine or other property remains after the accident. “The full” insurance also covers the costs related to accidents in treatment, and even the payments in case of destruction.

In the absence of insurance runs the risk of being obliged to repay the cost of repair of a car and expenses in treating the victim. So try to find car insurance in good company with good reputation. While the insurance option will give you additional benefits, for example, can tow without the defective car.

Home insurance

As you know, people in the U.S. often face hurricanes, tornadoes, floods and earthquakes. Furthermore, in the U.S. the number of home fires is very great. According to official statistics, in 2006 412500 houses have suffered fires. In the fires were lost over 2500 people, real fire damages in the amount of $ 7 million.

For most Americans owned their own house is a sign of prosperity. Now try to present the owner if it is damaged by a natural disaster or house fire not feels assured. Home insurance is common in the obligatory condition that it is a home purchase loan. Many variants of homeowners insurance also cover these cases, such as thefts, accidents, damages due to problems with electricity and a water pipe.

                          

The number of people who say that insurance is something you can not step outside without seem to be equal to the number of people who are unaware of the opportunities offered insurance and call it a mere waste of money. On the surface, insurance is something that can be dispensed unless or until you have something to lose. Come to think of it, how many of us do not? Therefore, the question is not whether to insure or not, but what the insurance company and policy to choose.

In the situation of loss, you get the refund of your insurance company and thank you for being wise enough to have insurance. In other words, insurance is available to provide financial support to cover their medical, social, personal services or other you might need if the worst is over.

Insurance can protect against the potential risks to their life, health, property, etc., and compensation for the effects of the insured event. Life, Health, Business, Property, Auto, Travel are some aspects in our daily lives most people feel the need to secure the property. The insurance is not only costly premiums and hope that nothing will ever come you insured against your way. It is mostly about your insurance company trying to minimize the risks in fact, after the legal contract with certain conditions that you and your insurance company agree.

The concept of insurance is based on the principle of insurable interest, which means that you are entitled to secure any case (article) only under condition that you find a financial interest in the case (article) insured. It is very important to do your own research in insurance coverage, insurance plan, insurance policy and their types, and understand how it works, and what can and what can not be covered by your insurance.

Types of Insurance

- Life Insurance
- Health Insurance
- Dental Insurance
- Property Insurance
- Auto Insurance

- Travel insurance

Life insurance

No matter if you belong to a batch optimistic or pessimistic, life tends to respond to the expectations. One of our biggest concerns in life is the welfare of our loved ones. Life insurance is a guarantee that if the day comes when they can not take care of the people you love, still will be supported financially and cares.

Life insurance (life insurance) is a specific contract between you (the owner of the insurance policy) and the insurer, whereby the policy owner is paid a refund if the insured event occurs (is i.e. the policy owner’s death). You, as owner of the policy, agree to pay a fixed premium on a regular basis. Offers life insurance as insured events such as death and accidental death, excluding suicide, war and other factors of the liability of the insurer.

If you are single, married, single mother, a father who stays at home, a business owner with children himself, retired, or some other category, life insurance applies to all situations and should be considered seriously to fit into their long-term plans and budget.

Health Insurance

Health belongs to the unquestionable values. Nobody likes to get sick because no one wants to get into trouble they can not afford expensive medical treatment when necessary. Health is so expensive and valuable at all times, and today especially. Along with proper diet, exercise, peace of mind and preventive care, health insurance is a wise and necessary investment in your health.

Health insurance is an agreement between you and your insurance company (a government agency or private organization), under which the insurer pays the medical benefits referred to services covered in the event that, as an insured person become sick or injured accidentally. Your health insurance policy lists the medical services are covered and not covered services and you will pay.

It is important to choose the health plan most suitable. Private health plans are usually offered at work by their employers. Medicaid is a health care plan financed by the government to families and individuals with low income. Medicare is another government plan-sponsored health insurance offered to people over 65 years. Health insurance coverage pays for routine visits to your doctor, lab tests and other things not very expensive, but the main reason why they should be covered by health insurance is for protection against the huge expenses potential illness or injury.

Dental Insurance

A happy smile that shows the willingness and healthy teeth is characteristic of success and vitality. There is no point promoting dental care and regular dental visits. We are all aware of the need and the high cost dentistry. Dental insurance covers the costs of routine dental care with accidental damage to teeth.

Dental insurance typically pays for the general treatment such as dentures and crowns, root canal work, bridges, and emergency treatment. Cosmetic work implants and braces are usually excluded. Dental insurance through discounts on the costs of dentistry, the selection of a dentist you trust, fast and easy approval process and other benefits that are of great help and comfort when you’re at the dentist.

Car Insurance

In most states, it is illegal to drive without auto insurance. So if you are a car owner, car insurance is a necessity. The type of auto insurance is any driver thinks twice, the first, of course, is the safety of your car. Car Insurance driver makes nightmares, such as road accidents and the car so desperate cat.

Car insurance is a contract between you and your insurance company, which agrees to pay the premium, while the insurance company agrees to reimburse your loss as it is stated in your insurance policy. The insurance policy provides different types of coverage.

Bodily Injury Liability applies to injuries to a person in an accident by the policyholder. If you are involved in a serious accident, you have liability insurance if it is good sued for a large sum of money.

Medical payments coverage pays for injuries the policyholder and passengers can get in a car accident.

Liability for damage pays for damage that can cause the car of another driver. You can also include damage to other property objects might hit your car, e.g. fences, telephone booths, lamp posts, etc.

Collision coverage pays for damage to the insured car, which can result from a collision. It should be noted that even if you are to blame for the collision, the costs of repairing your car is refunded to you.

Complete coverage you pay for the losses due to damage by fire, explosion, vandalism, flood, and contact with animals or theft. In other words, is a broad reimbursement coverage for damage caused by other forces another car or object.

Uninsured driver coverage reimburses you if they are hit by an uninsured driver or hit and run and will also be helpful if you are hit as a pedestrian.

Property Insurance

It is impossible to predict disasters, but may be prepared and protected. Property insurance does not prevent fire hazards in your home or office robbery, but allows the safe recovery of any disaster listed in your insurance policy.

Property insurance protects against risks such as fires, storms, floods, earthquakes, damage and theft of other times. Therefore, we speak of the specialized forms of insurance cover for various reasons: fire insurance, home insurance, boiler insurance, earthquake insurance or flood insurance. Property insurance covers the costs of repairing damaged property or replaces the property lost.

There are two main ways to insure the property: open called dangers and hazards. Open threats are intended to cover all possible causes of loss. Common exclusions are war, terrorism, floods, earthquakes and nuclear accidents. In turn, the name hazards cover a specific cause of loss contained in the insurance policy are generally events such as fires, explosions and theft.

Travel Insurance

Traveling is one of the greatest pleasures of life, which makes long-awaited and costly. The more the pain when things go wrong before or during your vacation. Besides the personal reasons may soon have to cancel or postpone their travel plans, there are things such as travel delays, cancellations, interruption, baggage loss, baggage damage, emergencies, travel agency, bankruptcy, etc.

Travel insurance covers you for these challenges unwanted and provides reimbursement of the amount spent on holiday. For those who plan to drive during your vacation, rental car insurance can be very useful, as your own car insurance may not cover in another country. No matter if your trip, your possessions, your luggage, or your health, travel insurance plan will save you money right and nerves, and give you the opportunity to enjoy one of the greatest pleasures of life to the fullest.

Choosing an Insurance Company

When you know exactly what your insurance needs, you should select a company that suits your needs. It is a common mistake to consider an insurance company as a thriving business with no direct control over the factors they say payments. The insurance industry supports programs to reduce losses, prevent injuries and save lives in order to keep costs down.

Selection of an insurance agent or company right for you, consider your experience with private insurance if it occupies, as well as their professionalism and stability. An agent or company representative should be able to make a careful assessment of your insurance needs, and give you a selection of insurance products to meet your needs. Undoubtedly, an insurance agency or company you choose should ensure advice, information and quality service in the case of the occurrence of loss.

                          

The insurance policy is generally an integrated contract, meaning that it includes all forms associated with the agreement between the insured and insurer. In some cases, however, supplementary writings such as letters sent after the final agreement can make the insurance policy a non-integrated contract. One insurance textbook states that “courts consider all prior negotiations or agreements … every contractual term in the policy at the time of delivery, as well as those written afterwards as policy riders and endorsements … with both parties’ consent, are part of written policy”. The textbook also states that the policy must refer to all papers which are part of the policy. Oral agreements are subject to the parol evidence rule, and may not be considered part of the policy. Advertising materials and circulars are typically not part of a policy. Oral contracts pending the issuance of a written policy can occur.

General features

The insurance contract is a contract whereby the insurer will pay the insured (the person whom benefits would be paid to, or on the behalf of), if certain defined events occur. Subject to the “fortuity principle”, the event must be uncertain. The uncertainty can be either as to when the event will happen (i.e. in a life insurance policy, the time of the insured’s death is uncertain) or as to if it will happen at all (i.e. in a fire insurance policy, whether or not a fire will occur at all).

• Insurance contracts are generally considered contracts of adhesion because the insurer draws up the contract and the insured has little or no ability to make material changes to it. This is interpreted to mean that the insurer bears the burden if there is any ambiguity in any terms of the contract. Insurance policies are sold without the policyholder even seeing a copy of the contract.

• Insurance contracts are aleatory in that the amounts exchanged by the insured and insurer are unequal and depend upon uncertain future events.

• Insurance contracts are unilateral, meaning that only the insurer makes legally enforceable promises in the contract. The insured is not required to pay the premiums, but the insurer is required to pay the benefits under the contract if the insured has paid the premiums and met certain other basic provisions.

• Insurance contracts are governed by the principle of utmost good faith (uberrima fides) which requires both parties of the insurance contact to deal in good faith and in particular it imparts on the insured a duty to disclose all material facts which relate to the risk to be covered. This contrasts with the legal doctrine that covers most other types of contracts, caveat emptor (let the buyer beware). In the United States, the insured can sue an insurer in tort for acting in bad faith.

Structure

Early insurance contracts tended to be written on the basis of every single type of risk (where risks were defined extremely narrowly), and a separate premium was calculated and charged for each. This structure proved unsustainable in the context of the Second Industrial Revolution, in that a typical large manufacturer might have dozens or hundreds of types of risks to insure against.

In the 1930s, the insurance industry shifted to the current system where covered risks are initially defined broadly in an insuring agreement on a general policy form, then narrowed down by subsequent exclusion clauses. If the insured desires coverage for a risk taken out by an exclusion on the standard form, the insured can pay an additional premium for an endorsement to the policy that overrides the exclusion.

Parts of an insurance contract

• Declarations – identifies who is an insured, the insured’s address, the insuring company, what risks or property are covered, the policy limits (amount of insurance), any applicable deductibles, the policy period and premium amount. These are usually provided on a form that is filled out by the insurer based on the insured’s application and attached on top of or inserted within the first few pages of the standard policy form.

• Definitions – define important terms used in the policy language.
  Insuring agreement – describes the covered perils, or risks assumed, or nature of coverage, or makes some reference to the contractual agreement between insurer and insured. It summarizes the major promises of the insurance company, as well as stating what is covered.

• Exclusions – take coverage away from the Insuring Agreement by describing property, perils, hazards or losses arising from specific causes which are not covered by the policy.

• Conditions – provisions, rules of conduct, duties and obligations required for coverage. If policy conditions are not met, the insurer can deny the claim.

• Endorsements – additional forms attached to the policy form that modify it in some way, either unconditionally or upon the existence of some condition. Instead of allowing nonlawyer underwriters to directly customize core policy language with word processors, insurers usually direct underwriters to modify standard forms by attaching endorsements preapproved by counsel for various common modifications.

Life insurance specific features

Incontestability – in the United States, life insurance contracts may not be contested by the insurer at any point after the contract has been in force for two years. The insurer has the burden to investigate fully anything they wish to make sure the insured is an acceptable risk within those two years. Any material misstatements on the insurance application (which generally forms a part of the contract) cannot be used as a reason for the insurer not to pay the death benefit, as long as it does not constitute fraud on the part of the insured. The insurer’s only recourse if there is no fraud is to adjust the death benefit to correct for the insured’s age or sex if they different from what was stated on the application.

(References-http://en.wikipedia.org)

                          

Different types of insurance used to cover the different properties and assets such as vehicles, home, health care etc. Basically, an insurance policy may also be known as a safety net which ensures that from any future financial loss.
All you have to do is pay insurance companies a certain amount each month, known as premium, so they can care for you by providing you with financial backing in case of sudden health emergency or a fatal incident.

There are two ways to get insurance done.

One way is to visit an agent and consult with him the best choice you can make for your situation. And then trust him her for their suggestions on the type of insurance they think is right for you.

The other way is to research and choose for him, the type of insurance that is best for your situation. You should research the market and the network to find the best insurance companies, and moreover, the most appropriate type of insurance they offer.
They also explore different types of policies are available on the market, and then compare to decide which one to choose finally.

Insurance Health Care

With such high costs of medical and health care these days, it’s hard to even think of visiting a doctor. But what about an unexpected accident or disability or unexpected attack, where the potential for medical bills can shoot up to heaven? Where to get that money?

These are exactly the situations where you think you had a safety, which could come to their rescue and save him from the financial crisis. While some companies offer their employees health insurance, for others, this is a necessity.
Especially for aging couples, who have relatively more likely to need money emergency law. Health insurance does everything, so you do not have to worry about the huge expenditure in the last minute.
Health insurance may cover all routine immunization of a serious illness.

Life Insurance

The loss of a family member is a catastrophe that sadness of a family life. But even more tragic is the death of a bread only source of income for the family, which then has to go through the pain of losing loved ones, financial losses and threatening their survival.

This financial burden due to sudden death of a relative or disability resulting in loss of employment or inability to work can be largely avoided by adopting a policy of life insurance.
A life insurance or disability insurance covers such losses and pays a family to restore compensation for loss of income for them because of the sudden death or disability.

A monthly premium for life insurance is usually based on age, health and information of the occupation of the applicant, in addition to the total benefits payable to him by his policies.

Home Insurance

The real estate and hard assets are subject to accidental risks like theft, destruction due to natural disasters or fire accidents, so huge investments icon gone to buy a property as your home or office, the risk that involves a loss of large amount of money.

Home and property insurance helps in the management and protection against these risks. The cost of real estate and insurance is mainly based on the value of hard assets and insured, and also the place where the assets are located.

Travel Insurance

This is intended to cover any financial or any other losses which were incurred by the insured during the trip, whether national or international law, as mountain trekkers, cruise travelers etc.

Auto Insurance

Every vehicle on the road, no matter how secure it is their driver, is required to meet with an accident or two, so you can leave with just a few scratches, or fall up completely. Most countries today require you to have car insurance while on the road in their vehicles.

If you have an accidental car crash, a total repair can cost a fortune. Furthermore, a small scratch on his Land Cruiser could also rise to their accounts and higher.

Whether or not you need car insurance mostly depends on the type of car you own.

If you have an expensive car and a little repair could remove you financially, you should do well in a purchase of an all-inclusive and accident insurance that would protect against any and all damage caused to your vehicle.

                          

Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practised by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel’s capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practised by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender’s guarantee to cancel the loan should the shipment be stolen or lost at sea.

Achaemenian monarchs of Ancient Persia were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on ancient Iran: “[W]whenever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much.”

A thousand years later, the inhabitants of Rhodes invented the concept of the ‘general average’. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sink age.

The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called “benevolent societies” which cared for the families and paid funeral expenses of members upon death. Guilds in the middle Ages served a similar purpose. The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, “friendly societies” existed in England, in which people donated amounts of money to a general sum that could be used for emergencies.

Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed.

Some forms of insurance had developed in London by the early decades of the seventeenth century. For example, the will of the English colonist Robert Hayman mentions two “policies of insurance” taken out with the diocesan Chancellor of London, Arthur Duck. Of the value of £100 each, one relates to the safe arrival of Hayman’s ship in Guyana and the other is in regard to “one hundred pounds assured by the said Doctor Arthur Ducke on my life”. Hayman’s will was signed and sealed on 17 November 1628 but not proved until 1633. Toward the end of the seventeenth century, London’s growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd’s of London remains the leading market (note that it is not an insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance.

Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted the development of insurance “from a matter of convenience into one of urgency, a change of opinion reflected in Sir Christopher Wren’s inclusion of a site for ‘the Insurance Office’ in his new plan for London in 1667.” A number of attempted fire insurance schemes came to nothing, but in 1681 Nicholas Barbon, and eleven associates, established England’s first fire insurance company, the ‘Insurance Office for Houses’, at the back of the Royal Exchange. Initially, 5,000 homes were insured by Barbon’s Insurance Office.

The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contribution ship for the Insurance of Houses from Loss by Fire. Franklin’s company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners’ organization. In recent years, some have called for a dual state and federal regulatory system (commonly referred to as the Optional federal charter (OFC) for insurance similar to that which oversees state banks and national banks.

(References-http://en.wikipedia.org)

                          

1. A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004. The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers,” which in effect states that as the number of exposure units increases, proportionally the actual results are increasingly likely to become close to expected proportions. There are exceptions to this criterion. Lloyd’s of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable.

2. Definite Loss. The event that gives rise to the loss that is subject to the insured, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured person on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.

3. Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.

4. Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.

5. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113)

6. Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.

7. Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurer’s appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and re insurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer’s capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.

(References-http://en.wikipedia.org)