What is insurance? We live in a complex and technologically advanced society. Insurance economics is part of risk management. It is essential for efficient management of risks. It consists of:

  1. Risk confirmation
  2. Risk analysis
  3. Risk control method selection
  4. Methodology for risk control Implementation, evaluation and reporting

Risk management is the primary method of controlling risk mentioned in (3). This refers to the prevention and reduction in accidents. Credit risk is the flow or cash. Risk financing is divided into (1) savings/self-insurance that does not pass on risk to others, and (2) insurance that passes risk on to others.

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What is the difference between insurance and savings?

(1) Savings refers to the act of depositing money at a financial institution to be ready for unexpected or predictable situations. However, it will not cover major losses such as car accidents and personal injuries.

The amount that you have saved is the limit. It takes many years to save a lot.
You can still get compensation if you have insurance.

(2) Self-insurance

This is where a large company can make a reservation prior to an event in order to manage the risks.

Because it doesn’t distribute risk among large numbers of companies, it is not insurance.

(3) If the debtor defaults on his/her obligations, the insured creditor will be liable for the damages, while the guarantor (who is a third-party) will have to fulfill the obligations the debtor has to the creditor. It is a system that will bear the burden.

This is similar to insurance, in that a third-party takes over the risk of others. However, instead of gathering large numbers of subscribers and underwriting guarantee for a fee (“premium”) as in mortgage guarantee insurance or performance guarantee insurance, it’s more like insurance. The guarantor will generally take out insurance at no cost in most cases. In most cases, however, the default of the debtor will result in the guarantor using his or her own assets.

Features of insurance

There are many ways to prepare for risk, other than insurance. This can be done by saving, for example. Savings can be used to pay for the cost of any economic loss or damages. Insurance is a way for many people to share the costs and compensate each other. You will be able to receive the equivalent amount of money as an emergency. These conditions are called “savings triangular”, and “insurance has a square while savings is triangular.”

Here is a list with some examples of schemes you can design to reduce risk. This will highlight the unique aspects of insurance.

What’s the difference between mutual aid and insurance?

Mutual assistance, which can cover a limited number of people and is not insurance, can be used to protect people who are in a restricted field or profession.

What’s the difference between insurance derivatives and insurance?

Non-life insurance does not provide additional compensation beyond the actual amount of damage. However, derivatives will pay the agreed amount in advance regardless of actual damage. Non-life insurance must be assessed for damage. However, derivatives pay in a very short time if the conditions are right.

What’s the difference between investment trusts and insurance?

Insurance is a way to pay for economic losses (damages) caused by unexpected events or accidents. The contract stipulates that the insured amount is fixed at the time of the contract. Investment trusts can be used to make a profit by managing and investing money. The returns vary depending on how investments perform.

Insurance classification

According to the Commercial Code and the License Agreement, insurance is classified as follows. The term “third-sector” or “third section” refers to insurance that doesn’t apply to life insurance, non life insurance, and insurance that isn’t life insurance. The two insurance companies have been able run since 2001.

First field (unique area of life insurance)

Endowment insurance, whole-life insurance, term insurance.

Insurance promises to pay a certain amount of insurance money. Insurance also covers premiums for insurance in the event of death or life of a person.

Second field (unique area of non-life insurance).

Insurance for fire, automobile, and liability, as well as marine insurance.

This insurance promises to pay premiums and cover damages caused by certain accidents.

Third field

Insurance for accident, medical, and cancer. Long-term care insurance.

An insurance policy that covers a specific amount of medical expenses, long-term care, and physical injuries.

What you should look for when selecting an insurance company


A license must be obtained by the company for certain types of insurance. Check to make sure the license is available for your type of insurance. This can be done on the website of your bank. You can find the insurance company you want by looking at the table “Subjects to Insurance Business” and downloading it. You can also check the availability of online licenses.


All insurance tariffs must conform to the Bank of your country’s requirements. Low rates could be an indication of fraud. Online, you can calculate the approximate cost of the policy by visiting the website of the insurance company. Check the numbers and calculate the cost of the policy on different websites. Note: The insurance price will go up if there are more risks in the contract.


You should look for companies with a good reputation that have been around for a while. Ask your friends to review the company on the Internet.


Be sure to read the terms and conditions of any insurance policy. The complete contract should be requested as it may not include all information. Pay special attention to the section that identifies signs as insured events. Find out what your insurance doesn’t cover. Ask your representative about the indemnification process in different situations, and the timing.