Insurance Principles Examined

by Frank Scherer

If you were to take a good look around the world that you live in it really can be surprising how large a part insurance plays in it. Now most types of insurance we carry because we want to like perhaps life insurance. Then there is the insurance that we have to carry by law such as driving and liability if you own a business. Then there is the type that we have to carry like the insurance on your vehicle the financed company makes you carry.

So the truth of the matter, is that various types of insurance serve many more purposes than simply covering the cost of replacing or paying for things. Look below the surface and you'll see that it in fact it's one of the factors that actually "enables a lot of things that happen" in our world. That's right. If not for insurance coverage there are a whole lot of things that we would just have to go without.

So it was business men in the ports ocean ports of Holland who first conceived of the notion of shipping insurance way back in the 1500s. The worlds boundaries were expanding quickly as larger ships were traveling further in search of trade with far flung colonies. With so much money at stake ship owners and those who invested in their cargoes needed some way to offset risk as they traded in commodities like spices.

So the concept of commercial insurance moved outward from there until today where you find people doing business you will also find insurance carrier taking on at least some of the risks they are taking. In fact did you know that before a record company will sign on a new recording artist they have to be insurable and insured. That is that a carriers has to be able to cover any costs to the label of they fail to adhere to the terms of their contract.

It also works this way on a far grander scale. This is why the US taxpayer was forced to bail out insurance giant AIG at the beginning of this last recession. Bank failures left it teetering on the brink of collapse and AIG was the only insurance carrier large enough to insure large international mega corporations. So the worry was that if AIG went under that the entire global economy would grind to a standstill. Who would insure oil refineries and hydroelectric dams for instance?

So the next time you reach into your mail box and pull out your latest bill for some type of coverage you have, don't complain. Just be glad that there are carriers around that will assume the risks that allow so many of the businesses that we need to operate. Like the coverage that you have on your vehicle, so you can make payments on it. Or the policy where you work that makes it possible for the company to employ you.

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