Many definitions have been given to the term insurance, which on the face there is no similarity between the definition of each other. This is understandable, because they are defined according to the perspective that they use in looking at insurance, which in accordance with the above description that insurance can be viewed from several angles.
definitions include:
- Prof. according to the definition of insurance. Mehr and Cammack:
"Insurance is a means to reduce financial risk, by way of collecting exposure units in sufficient numbers, to make the individual losses can be estimated. Then the predictable losses were borne equally by those who joined".
- Prof. according to the definition of insurance. Mark R. Green:
"Insurance is an economic institution which aims to reduce risk, by combining in a number of management objects large enough numbers, so the overall loss can be predicted within certain limits".
- Definition of insurance by Arthur C. William Jr. and Richard M. Heins, which defines the insurance based on two points of view, namely:
- "Insurance is a security against financial loss by an insurer".
- "Insurance is an agreement by which two or more persons or entities to raise funds to cover financial loss".
- Definition of insurance according to Safir Senduk
"Life Insurance is a promise from the insurance company told its customers that if the customer runs the risk of death in life, then the insurance company will give a particular amount of compensation to the heirs of those customers. By taking Life Insurance, it is expected that you leave the party no difficulty in paying cost her life. "
Based on these definitions above would be about the definition of insurance that can cover all points of view:
"Insurance is a means to reduce the risk inherent in the economy, by combining a number of units affected by the risk of the same or nearly the same, in large enough quantities, so that the probability of losses can be predicted and if the predicted losses will occur in a proportional share by all parties in the joint ".
Insurance Function:
- Transfer Risk
By paying a relatively small premium, a person or company can move the uncertainty of life and property (risk) to the insurance company
- Collection Fund
Premiums received and collected by the insurance company as a fund to pay for the risk that happening.
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