AXA Professional Financial Consultant : Tips to Avoid Fraud in Insurance - Today many emerging-investment products under the guise of insurance. that led to the fraud. A few weeks ago a friend asked about the doubts the existence of insurance companies offer to invest money to save money as well as health insurance. However, due to the vagueness of information that offers he became hesitant to take the offer, which he was asked to contribute to a party Rp.500.000 per month for insurance that can be taken within a certain period if not used. Doubts whether this is a form of fraud because not a few people who have been fooled by products such as this.
The first of the Most Effective Tips to Avoid Scams guise of insurance is to understand the workings of insurance companies. If there are companies that offer and not in accordance with the rules of the workings of the insurance company is right then you should be suspicious that this is a fraud.
How it Works in Insurance
Insurance for some people is vital. Even if it could be anything in the insured. Reality of rapidly growing insurance company, in 2009 some insurers have a huge growth. One insurance company, including from some of the largest companies in Indonesia and worldwide. How does insurance work, what are the benefits?
Insurance companies are financial intermediaries, which is based on the premiums it receives, will make payments if certain events occur. The insurance company serves as an underwriter of risk. There are two types of insurance: life insurance companies and insurance companies and property losses.
While insurance in Act No. 2 of 1992 on business insurance is an agreement between two or more parties, with which the insurer is binding to the insured, by accepting the insurance premium, to provide reimbursement to the insured for loss, damage or loss of expected profit or legal responsibility to a third party which may be suffered by the insured, arising out of an uncertain event, or provide a payment based on life or death of an insured person.
Agencies that distribute risk called the "insured", and the bodies which accept the risk of so-called "insurer". The agreement between the two bodies is called the policy: this is a legal contract that explains every term and condition of the protected. Fees paid by the "insured" to "insurer" for the risks covered by so-called "premium". This is usually determined by the "insurer" for funds that can be claimed in the future, administrative costs, and profits.
For example, a couple bought a house for Rp. 100 million. Knowing that lost their homes would lead them to financial ruin, they took the insurance protection in the form of home ownership policy. The policy will pay for replacement or repair their homes in case of disaster. Insurance companies on their premiums amounting to Rp1 million per year. The risk of loss of homes have been channeled from the homeowner to the insurance company.
In life insurance, the main event is the death of the insured. If the policyholder dies the insurer will make payment in large amount at once, through a series of payments to heirs. Protection of life insurance is not the one who sold his products, most of the work done also includes providing retirement benefits. While insurance companies guarantee payment of property and loss of various kinds of events that caused the loss. 2, home and car insurance.
The main differences are 2 types of insurance lies in the difficulty in determining the timing and amount of payment. Although it is not easy for both types of insurance, but from the point of Actuarial, it is more easily done by life insurance companies. The amount and time of claims by property insurance companies are much more difficult to estimate because of uncertainty kitidak natural disasters and the amount of loss that occurred. Uncertainty about the amount and timing of cash expenditures to meet the claims filed that affect the investment strategy used by fund managers of insurance companies.
Although differentiated seeprti above, usually big insurance companies sell insurance policies in the above two, then divide the subsidiaries according to the types of policies.
In the insurance world there are 6 basic principles that must be met, namely:
- Insurable interest right to insure, arising from a financial relationship, between the insured with the insured and legally recognized.
- An action Utmost good faith to disclose accurately and completely, all facts material (material fact) about something that will be insured either requested or not. The meaning is: the insurer must honestly explain everything clearly about the extent of the terms / conditions of the insurer and the insured must also provide a clear and correct for objects or interests of the insured.
- Proximate cause means the active, efficient cause of events which lead to a result without the intervention of the start and actively from a new and independent sources.
- Indemnity A mechanism by which the insurer provides financial compensation to place the insured in a financial position that he had prior to the loss (KUHD article 252, 253 and affirmed in article 278).
- Subrogation The transfer of demand from the insured to the insurer after a claim is paid.
- Contribution Rights of insurer to invite the other person equally bear, but do not have the same obligations to the insured to help provide indemnity.
Characteristics of insurance companies
Policyholders and insurance premiums are bound under the law of contract where the policyholder pays a premium in exchange for payment to be made by insurance companies rely on events that will occur in the future. Insurance companies are said to bear the risk of the owner of the policy, and acts as a protector of the uncertainty of life. The process involves evaluating the state of the applicant's coverage of the details.
At the policy accepted by insurance companies, policyholders become assets / asset for the owner and liability for insurance companies. Premiums can be paid in a lump sum payment or through a series of payments. If the policy owner can not pay premiums, the policy is said to be overdue or over. Unless both parties renew the contract, the policy owner will lose the protection of policyholders who have been promised.
Insurers use actuarial science to calculate the risks they expect. Actuarial science uses mathematics, particularly statistics and probability, which can be used to protect the risk to estimate the claim at a later date with reliable accuracy.
For example, many people buy homeowner's insurance policy and then they pay premiums to insurance companies. When you lose a protected place, the insurer must pay claims. For some of the insured, the insurance benefit they receive is much greater than the money they had paid to the insurer. Others may not make a claim. When averaged from all policies sold, the total claims paid out is lower than the total premiums paid to the insured, the difference is cost and profit.
Insurance companies also benefit investment. This is obtained from investing premiums received until they have to pay the claim. This money is called "float". Insurers can benefit or loss from price changes in the float and also interest rates or dividends on the float. In the United States, loss of property and deaths recorded by the insurance companies was U.S. $ 142.3 billion within five years ending in 2003. But the total profits in the same period was U.S. $ 68.4 billion, as a result of the float.
surplus
Surplus for insurance companies is the difference between assets and liabilities. If the treatment of assets and obligations stipulated by law, it is called surplus statutorial.
In order to show the amount of liability kontijen appropriately in the financial statements, insurance companies must have a postal / account called backup. Heading back up is a non-cash value of money set apart.
Statutional surplus is important because the government saw it as the final amount to be drawn to be paid to policyholders. The growth of this surplus for the insurance company will determine how much risk can be borne.
Determination of profit
Income derived from two sources: premiums produced during the fiscal year and the second source is the investment income generated from invested assets.
Income earned income minus the cost would generate a profit. Own costs are grouped into two categories. The first category consists of the addition to reserves, the second consists of costs related to cost of sales insurance policy If most of the profits generated are not earmarked for dividend distribution, it will be added to the postal surplus statutorial. If there is a loss, statutorial surplus will be reduced by a number of losses that occur.
Profit or loss on the total divided by two investment income and income risk coverage. Investment income is income from portfolio investment assets of insurance companies.
Revenue risk coverage is the difference between the premium generated by the cost of claims settlement.
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