Without a doubt, insurance is an important mechanism for helping individuals, states and the nation as a whole. You have, or may have, retained one or more insurance policies for peace of mind, self-reliance and security against the financial loss you have suffered. Then let me ask you this question. Have you ever experienced the pain of knowing that the hateful premium you paid to policyholders every year, whether justified or not? The purpose of this article is to introduce you to the light and be justified in the composition of your premium.
Risk premium: In any case, the insurance involves risk and in order to properly assess the risk, the policyholder needs to know the degree of exposure of these assets to the particular risk. Thus, the part of the premium that is allocated to the insurance risk element is called the risk premium, which represented about 50% of the total premium.
Cost allocation: Based on the literary sense of cost. It is a distribution that covers the expenses of insurance companies such as overheads, lighting and heating, rents, salaries of employees and so on. Conservatively speaking, this will represent about 25% of the premiums paid to insurers.
Profit Accumulation: Insurance, like any other business, operates on a profit center basis. To this end, they seek to make ever greater profits every year. Based on this fact, policyholders took this into account when making premiums. The profit share is about 15% of the premium payable.
Contingency Load: As you fully understand, the financial market is dizzy and very volatile. And to make matters worse, there is a global economic downturn that has devastated the whole world. Guess insurers behave like seers (prophets), that is, when their business is reasonably foreseeable. The part of the premium that is used to mitigate the effects of bad assets or adverse business year (s) is called the contingency load.
Here, you are convinced that you are no longer new to the factors that determine your office premium. Good day and goodbye, I care about your insurance information.