Policy and Insurance
Policy : A definite course or method of action selected from among alternatives and in light of given conditions to guide and determine present and future decisions is called Policy. Policies are public statements that guide decision making.
A policy refers to a continuous decision that applies to repeated situations. … The manager should have the participation of all his subordinates in policy making. Policies can be in the form of written statements or oral understandings.
Some terms are usefully defined at the outset. Insurance is a contract for reimbursement. For example, it compensates for losses from specific hazards, such as fire, hurricanes, and earthquakes. The insurer is a company or individual who offers a refund.
The insured (sometimes called an insured) is the recipient of the payment, except in the case of life insurance, to which the payment goes to the beneficiary named in the life insurance contract.
The premium is the return paid by the insured – usually yearly or half-yearly – to the reimbursement offered by the insurer. The contract is called policy. Insured events are called risks or accidents.
The regulation of insurance is primarily left to the state, rather than the federal, authorities. Under the McCarran-Ferguson Act, Congress exempted state-regulated insurance companies from federal antitrust laws.
Each state now has an insurance department that oversees insurance rates, policy standards, reserves and other aspects of the industry. Over the years, these departments have come under criticism in many states for being ineffective and “captive” to the industry.
In addition, large insurers operate in all states and both they and consumers must contend with fifty different state regulatory schemes that offer very different degrees of protection. There have been attempts from time to time to bring insurance under federal regulation but none have been successful.
We begin with an overview of the types of insurance from a consumer and business point of view. We then examine the three most important types of insurance in more detail: property, liability, and life.