Principles and types of insurance contracts

Abstract

Insurance, as an economic and financial institution, is a complex system. An insurance contract is important in the implementation of insurance activities, which implies close cooperation between economists, lawyers and other experts in the field specified in the insurance contract.
In an insurance company, the damage caused by the occurrence of a risk event is compensated as a result of the accumulation of the insurance premium paid by the insured. The central concept of insurance relations is the probability of risk occurrence. In fact, the entire insurance system, its functioning, success and failure depend on how correctly the probability of risk occurrence is calculated and, accordingly, the insurance premium is correctly determined.
It is practically impossible to determine the exact probability of the occurrence of a particular event separately for a specific individual or object. To determine the probability, it is necessary to consider subjects or objects with the same or similar risks, that is, living or existing in a similar environment with similar social, economic, ecological or other characteristics. This is where the statistical nature of insurance relations appears. Economic statistics occupies a very important place in the full-fledged functioning of the insurance sector. A clear reflection of the dependence on the elements of insurance relations statistics is the production of actuarial calculations in insurance activities. Practically all insurers use such calculations and they imply special mathematical models for calculating insurance premiums and insurance payments, which depend on different conditions and risk situations in time and space. Incompleteness of risk description can have a significant impact on the insurance market.