The INSURANCE COMPANIES in simple terms is the organization that sells policies to individuals. It can be called as a business that provides coverage in the form of compensation resulting from accidental damages/losses in exchange for premium money.These companies calculate the risk of occurrence followed by determination of the cost to replace the loss to ascertain the premium money.
INSURANCE COMPANIES offer policies to the public, either by selling directly to an individual or it may be offered through sources such as Employee's Benefit Plan.The company usually comprises of multiple insurance agents.It can also specialize in one type of plan (such as life/health/auto insurance) or consists multiple types of plans.
Meaning of Insurance:Insurance is a financial risk management tool in which insured transfers his risk of financial loss to the company that compensates it in exchange for monetary compensation called 'premium'.Insurance in present era, can't be neglected as it has become the need of the hour.It ensures safety and security to the insured individuals during the hardships of life.
In this context, we can explain Insurance Policies as "The contract between the policyholder and the insurance company depending on the type of risk they mitigate".Broadly it contains Travel, Motor, Home,Health, Business Insurance.
The Insurance Company may be for profit, non-profit or government-owned company, that promises to pay for the expense in consideration of regular fee(Premium).For instance, if an individual purchases health insurance then company will pay for medical bills.Likewise, if the client goes for life insurance, the-company will give money when the client dies.For this, the insurance company cover expenses and earn profits by dividing the risk of the single client over the pool of premium from several individuals.
HOW DOES INSURANCE COMPANIES WORK?
Insurance company provides security to the insured to cover damages caused by any man made/natural incidents.It gives you assurance during the adversities of life.In general, we can say that Insurance company is a financial institution that underwrites the loss caused to personal/ business assets (general insurance),life and limb (life insurance).
The company works by pooling risk among a large number of insureds.The premium amount is thus based on the probability of a particular event occurring and the average loss associated with that specified event.This is the responsibility of company's actuarial staff which uses statistical techniques to analyze the past-claims.Sometimes for large insurance risks, the insurance company may opt for reinsurance (sharing the insurance premium with other insurers in proportion to share of potential claim which they are prepared to accept).
The premium received by companies is not used only for settlement of day-to-day claims but also for generating additional income by investing their funds in Financial Securities.Their portfolios maintain a an adequate balance between immediate liquidity requirements and long-term investment return.
TYPES OF INSURANCE COMPANIES
When you think of purchasing insurance and consider your options, you may get variety of insurance quotes for coverage from several insurance companies.If you know what type of company you are dealing with, you will have a better idea whether you are getting the best value on your policy.Insurance Company also called as Insurance Carrier are of different types.Some of them are:-
1.Standard Lines: As the name implies, it is a company that has a license to operate and sell specific lines of insurance in a particular state.Also, known as "Admitted Carriers", the rates charged by standard lines for coverage is regulated by the state board of insurance in the state where it offers coverage.It is also subjected to laws of the state where it is licensed to operate.
2.Excess Lines: Another name for Excess Lines is Surplus Lines company that, mainly insures specialty risk (high-risk auto insurance/high-risk individuals) that are not eligible for coverage by standard lines because of its underwriting guidelines.
3.Captive: Captive is such insurance company that typically insures the risk of group of individuals or special type of risk such as shipping insurance.
For example- if a shipping business is not able to find suitable coverage through standard insurance market, it may form the company to provide insurance for itself.The company thus formed to provide insurance is captive of the parent company.
4.Direct Sellers: Direct Seller is a company that offers insurance directly to customers.It doesn't involve insurance agents.Most of these insurance companies have local field offices with company representatives but most of the business is conducted online.As it doesn't involve local agents, a policyholder must deal directly-to the company while purchasing a policy/or for making changes to policy.The determining factor in using direct insurance is whether an individual feels comfortable dealing with the company or prefers services of local insurance agent.
5.Domestic:It is the domestic insurance company that operates and licensed in the state where it is domiciled.The company can be licensed to operate in any other state but it will be termed alien carrier in those states.
6.Alien: Alien insurance company is incorporated on the laws of another country.For instance, A company incorporated by U.S. company but operating in British would be considered as alien carrier by British.
TOP INSURANCE COMPANIES OF US
For insured individuals, before picking policy they must ensure that the company they are going to choose is a suitable one.And it will be able to provide them assistance /compensation as and when required.They must know about the market reputation of the company; as there are lots of companies providing insurance-coverage.Here is the brief list of America's top insurance carriers-
- Liberty Mutual
- AIA Group Limited
- All State Insurance Company
- State Farm
- Cigna Health Spring
- State Auto Insurance Company
- Amica Mutual Insurance
- State Farm Insurance
WHAT MAKES INSURANCE COMPANIES GOOD?
Finding the best insurance should not be the difficult prospect.From the few quotes you get, choose the best coverage that perfectly meets your needs.However, finding good insurance mean researching various companies to ensure that when you need them, they will be available and offer you the best possible protection.Here are some points that make a company good-
1.CUSTOMER SERVICE:-No doubt, that good customer service is one of the best characteristics of the insurance company.There should be an availability of round the clock customer service, preferably by telephone in an emergency.You should also be aware of companies that offer customer support only through email or online chat.As the good company will surely offer you more personalized service.Every year sources publish reports that shows customer satisfaction ratings and provides information about top companies based on surveys.It can help prospective buyers to choose the best option available.
2.FINANCIAL STABILITY:-Another important aspect of the good insurance company is its financial stability.A good insurance company should have a huge amount of funds held in reserve to pay claims, especially if there is any natural calamity and a large number of people are affected by it and require claim at the same time.
The individuals can check about financial stability and rating of companies by visiting various rating companies' sites.Most of the companies publish their rating on the company's site, particularly if they have received high rating like "A", "A+".Financial stability also ensures the goodwill or public image of the company.
3.CLAIM PROCESSING:-When you don't meet with an accident or don't need to file a claim, it doesn't seem important that claim be processed quickly.However, when you need to use your coverage, claiming process becomes important.A good insurance company will be to process claim quickly.
A company can look good on paper, but you have to do little bit more to find out if they really can be trusted.You must be aware of the fact, How is their history with the claim? How often they adjust rates and to what extent after an accident.
4.PRICE:-Price is always a major factor while we choose an insurance provider.Low-cost insurance can be tempting but you should consider all factors while making a purchase.Even when price is really very low, you will end up paying money, if the company is not able to process your claims or refuses claim when you really need-financial assistance.Also, good insurance companies will give you discounts as a part of the pricing structure.The companies also offers discount when you have more than one policy with them.As important as other factors, everyone knows what really matters is 'money'.No one would like to pay more for their insurance.Find one that you can trust with reliable customer service and affordable rates.
5.RATE ADJUSTMENTS:-The insured might not think about it while signing up with new insurance carrier, but rates may change after an accident.So it's worth doing the research up beforehand.
6.VARIETY OF SERVICES:-Along with other services, insured must also note the variety of insurance that your provider offers.If you can save with more coverage then it can be more attractive and reliable.Before selecting your insurance provider make sure that is reputed and financially strong (it is capable of compensating policyholders in time).Additionally, the company should be available to provide solution to customer's queries.The insurance plan should be explained in such a manner that its rules are understandable by every customer.It should also provide plans that best suits your budget.If individual requires cheap one, then it shouldn't make things complicated.
Thus, after reviewing the above characteristics of good insurance company, you should be able to make your choice a perfect one!!