Insurance is one of the oldest categories of public relations.Born in the period of disintegration of primitive society, it gradually became an indispensable companion of social production. The original meaning of the concept under consideration is associated with the word “fear”. The owners of the property, joining together in industrial relations, fear for their safety, […]
Insurance is one of the oldest categories of public relations.Born in the period of disintegration of primitive society, it gradually became an indispensable companion of social production. The original meaning of the concept under consideration is associated with the word “fear”. The owners of the property, joining together in industrial relations, fear for their safety, with the possibility of destruction or loss in connection with natural disasters, fires, looting and other unforeseen hazards of economic life.
The risk nature of social production is the main cause of concern for each property owner and for the producers for their material well-being. On this ground there was found a natural idea of pecuniary damages by the solidarity of its layout between the interested property owners. If each individual owner tries to repair the damage at his own expense, he would be forced to create tangible or cash resources, equal to the value of his property, which certainly is ruinous.
Meanwhile, life experience, based on years of observations, led to the conclusion of a random nature of occurrence of extreme events and the uneven damage. It was noted that the number of interested households, often greater than the number affected by various hazards. Under such conditions solidarity layout of damage among interested households markedly ameliorate the effects of floods and other accidents.
The greater the number of farms involved in the layout of damage, the smaller the proportion of funds accounted by one participant. So there arisen an insurance, the essence of which is joint and several closed layout of damage.
The most primitive form of damage layouts was a natural insurance, but as the development of commodity-money relations, it was replaced by the insurance in money form.
Apportionment of damages in cash created broad opportunities primarily for mutual insurance, where the amount of damage is compensated by the participants at the joint and several basis, or after every insured, or at the end of each financial year. Mutual insurance under capitalism became naturally to grow into an independent branch of the insurance business. If a mutual insurance has not yet formed pre-calculated, using probability theory, insurance fund, then in the future, the likely average amount of potential damage attributable to each party’s insurance, was used as the basis of insurance premiums for the early formation of the insurance fund.
In a modern society insurance has become an universal mean of insurance protection for all forms of property, income and other interests of enterprises, organizations, farmers, tenants and citizens.
Liability insurance is directed on protection of the property rights of individuals affected by the actions or inaction of the Insured.
In this case compensation of damages to the victims is guaranteed by the insurance company and does not depend on the financial condition of the Insured. Such insurance also protects and financial condition of the Insured which in the presence of an insurance policy is exempt from the costs associated with caused harm. The awards can be very significant (losses often have catastrophic nature).
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