World insurance
| World insurance |
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| See also |
World insurance is a liability policy that has coverage extended to whole world. Insurance is related to risk management used to hedge against the risk of the contingent, uncertain loss. Some of policyholders require coverage limited only to one country. But if the policyholder trades of travels all around the world it is necessary to obtain wider protection. Then world insurance comes into play. It allows to help policyholder independently of the country where the problem arises
World insurance is usually paid extra and depending on scope of protection it can be expensive. Therefore, insurers offer several types of world insurance, e.g.:
- general - similar to domestic, but working in every country
- auto - against damage of cars abroad
- employee or voluntary workers - costs of medical assistance abroad
- commercial property - stolen laptops and other property
- crime - against theft by employees
General insurance
Over several hundred years the next generations of insurers were able to skillfully evaluate different risks and underwrite them. Although they hadn't got extensive statistical data. The premiums were more than adequate and included substantial margins for contingencies so the business was profitable.
The twentieth century saw the development of fierce competition between insurers in markets which were severe rate-cutting and they was better informed, government control of premium rates in certain classes of business, all of which combined to make the underwriting of insurance in modern conditions extremely difficult. Due to the high inflation, the settlements were considerably higher than those allowed for in the premiums. Fast development of new technologies caused new risks, for which there is inadequate experience upon which to base rates, now comprise a larger proportion of all risks.
Clients want to change their insurers whenever they can see an advantage in doing so. It isn't longer possible, therefore, for an insurer to charge a premium which is more than adequate [1].
European invention
The year 1763 was an important year for European expansion, it was also the beginning of the modern insurance industry. Following the Peace of Paris between France, England, and Spain, Europe was able to expand its control of extensive areas around the world. Europeans began to mechanize production at the same time. It was spurred on by their 'technology-centric' mind-set, thereby widening the gap between their productivity and that of the rest of the world. Production volumes increased - Europe became one of the world's most important goods manufacturers. Created a new global division of labour, with Europeans dominating the rapidly growing trade, including marine insurance company. The merchants were low levels of capital who had before provided marine insurance cover as an addition to their other businesses and at their own expenses. They couldn't longer keep up with the risks involved in the rapidly expanding maritime trade. Public limited companies with substantial capital resources were created and provided marine and fire insurance services for global trade. At the same time the group of underwriters create a powerful new marine insurance company which in 1763 set up their own register of shipping and in 1771 founded the Society of LIoyds, an official association.
In the history of modern insurance was that of life insurance. It was based on probability calculations and population statistics. This development was result the common work of scientists from several European countries. It was in a sense the expression of a common European culture and way of thinking. "Life insurance as a concept resonated with Europeans. It expresses their characteristic need for clarification and conformity with patterns, the statistical encapsulation of natural events and the calculation of future developments"[2].
Internationalization
Since the end of the eighteenth century the expansion of the insurance industry reflected this increasted readiness to take on risk. there were five elements which brought the British system' of risk insurance to the rest of the world:
- scientists,
- traders,
- migrants,
- reinsurers,
- imitators
National as well as inter- national scientific associations and freely available publications also made it possible to open up access to the scientific underpinnings of the insurance industry for countries which, for a variety of reasons hadn't their own insurance sectors. The technical experts of the insurance Indus try developed their first transnational institution thanks to the International Actuarial Congress. From the close of the eighteenth century, the first most effective agents in bringing the modern insurance business to the inter- national markets were entrepreneurs and British entrepreneurs.
Between 1780 and 1850, when the United Kingdom increased its Mari-time transport capacities and saw more than a ten-fold increase in the value of its exports, the first to reacted marine insurers, increasing their capacity and setting up new share-based companies in all North Atlantic ports. "'Inter national safety net was established. Traditional marine insurance offered by individual entrepreneurs or trading houses at their own expense and as a supplement to their main business"[3].
References
- Browne, M. J., Chung, J., & Frees, E. W. (2000). International property-liability insurance consumption. Journal of Risk and Insurance, nr 1, s.73-90
- Hossack I.B, Pollard J.H, Zehnwirth B. (2003). Introductory statistics with applications in general insurance. Cambridge University Press
- Borscheid P., Haueter N.V. (2012). World insurance : the evolution of a global risk network. Oxford
Footnotes
Author: Agnieszka Pytel
