Insurance Premium

Gbogbo ọrọ náà

Every insurance contract turns on one payment: the premium. It is the price of transferring your risk to the insurer, and it is the single thing that makes the whole promise legally binding. Pay it and the insurer is bound to pay your claim; fail to pay it and there is no contract at all. Yet the figure on your policy is not plucked from the air. It is built up, piece by piece, from the insurer's estimate of what your risk will cost.

In this lesson you will learn what a premium really is, how an underwriter decides its size, and how a bare risk cost grows into the office premium you actually pay once expenses, a margin for surprises and a profit are added on. You will rate a premium yourself from real claims figures, and you will work out what an insurer must refund when a policy ends early. These are the calculations WAEC sets almost every year.

Ebumnobi

  1. Define the premium and explain its function as the consideration in an insurance contract
  2. Describe the factors an underwriter considers in determining a premium
  3. Explain loading and state the reasons an insurer adds it to the basic rate
  4. Explain when a return premium becomes payable and calculate a simple return premium

Akọmọ Ojú-ẹkọ

A young man in Enugu buys motor insurance, pays ₦80,000, and is annoyed that his neighbour pays only ₦55,000 for what looks like the same cover. He suspects he is being overcharged. He is not. The two men present different risks, and the premium is simply the price each one's risk carries. Understand how that price is built and you understand the engine of the whole industry: an insurer that prices its premiums too low collapses when claims arrive, and one that prices them too high loses every customer to a cheaper rival. The premium is where insurance either works or fails.

Ayẹwo Ẹkọ

Ekele diri gi maka imecha ihe karịrị na Insurance Premium. Ugbu a na ị na-enyochakwa isi echiche na echiche ndị dị mkpa, ọ bụ oge iji nwalee ihe ị ma. Ngwa a na-enye ụdị ajụjụ ọmụmụ dị iche iche emebere iji kwado nghọta gị wee nyere gị aka ịmata otú ị ghọtara ihe ndị a kụziri.

Ị ga-ahụ ngwakọta nke ụdị ajụjụ dị iche iche, gụnyere ajụjụ chọrọ ịhọrọ otu n’ime ọtụtụ azịza, ajụjụ chọrọ mkpirisi azịza, na ajụjụ ede ede. A na-arụpụta ajụjụ ọ bụla nke ọma iji nwalee akụkụ dị iche iche nke ihe ọmụma gị na nkà nke ịtụgharị uche.

Jiri akụkụ a nke nyocha ka ohere iji kụziere ihe ị matara banyere isiokwu ahụ ma chọpụta ebe ọ bụla ị nwere ike ịchọ ọmụmụ ihe ọzọ. Ekwela ka nsogbu ọ bụla ị na-eche ihu mee ka ị daa mba; kama, lee ha anya dị ka ohere maka ịzụlite onwe gị na imeziwanye.

  1. The premium in a contract of insurance is best described as the: A. Amount the insurer pays when a loss occurs B. Consideration paid by the insured for the cover C. Value of the property insured D. Profit made by the insurer Answer: B
  2. Which of the following is NOT a form of loading? A. Expense loading B. Profit loading C. Pure premium D. Contingency loading Answer: C
  3. A pure premium of 20,000 naira is loaded with total loadings equal to 40 per cent of the pure premium. The office premium is: A. 24,000 naira B. 28,000 naira C. 8,000 naira D. 20,400 naira Answer: B
  4. Which factor would an underwriter LEAST consider when rating a private motor policy? A. Age and experience of the driver B. Value of the vehicle C. Purpose for which the vehicle is used D. Blood group of the driver Answer: D
  5. A one-year policy carries an annual premium of 60,000 naira. The insurer cancels it after six months. The pro rata return premium is: A. 60,000 naira B. 45,000 naira C. 30,000 naira D. 15,000 naira Answer: C

Àwọn Ìwé Tó Dáa Láti Kà

Principles of Risk Management and Insurance
Principles of Risk Management and Insurance
Ìkọ̀wé-àbáojú: Thirteenth edition
Onkọwe atẹjade: Pearson
Afọ: 2016
ISBN: 978-0-13-408257-8
Akọkọ ọrọ.: The standard introduction to risk and insurance, covering risk management, insurer operations and the main lines of life, health, property and liability cover.
Fundamentals of Risk and Insurance
Fundamentals of Risk and Insurance
Ìkọ̀wé-àbáojú: Tenth edition
Onkọwe atẹjade: Wiley
Afọ: 2008
ISBN: 978-0-470-08753-4
Akọkọ ọrọ.: A clear account of the nature of risk and the economics of insurance, written for beginning students across life, health, property and liability insurance.
Fundamentals of Insurance
Fundamentals of Insurance
Ìkọ̀wé-àbáojú: Second edition
Onkọwe atẹjade: Himalaya Publishing House
Afọ: 2017
ISBN: 978-93-5097-079-9
Akọkọ ọrọ.: An accessible treatment of insurance in four parts: the basics of risk, insurance management, life insurance and non-life insurance.