Definition of insurance:
There are many definitions of insurance, and these definitions, in fact, are of great benefit to insurance, as by studying these definitions between them, you finally arrive at a comprehensive and comprehensive definition of insurance.
Definition of Legal Insurance:
A distinction must be made between three different legal categories when examining the definition of insurance for the jurists. These categories are the courts, the legislator, and the jurists. Courts usually avoid the definition of insurance based on the legislator’s definition of it.
The Egyptian Insurance Legislature defines in Article No. (747) a civilian as follows:
“Insurance contract insured by which is committed to lead to the insured or the beneficiary , who spoke on condition of insurance in favor of an amount or income salary or any other rather than financial in the event of an accident or if the risk specified contract and in a peer premium or any financial boost performed by the insured for the insured”
and the definition focuses The previous one is on the legal side in terms of the parties to the contract and the obligations arising from it. As for the definition of insurance, Dr. Muhammad Ali Arafa knows it in his book (Explanation of the New Civil Law in Insurance and Small Contracts) as follows:
“Insurance is a technical process practiced by a body whose task is to collect the largest possible number of similar risks and bear Its consequences are through clearing between them and according to the laws of statistics. This requires that the trustee or whoever is appointed by him, in the event of realizing the insured risk, obtain a financial compensation paid by the insurer in exchange for the first fulfillment of the installments agreed upon in the insurance policy.
The previous definition is characterized by a focus on the technical aspect on which the insurance is based, in addition to the legal aspect, as the definition clarified that the insurance process is the collection of similar risks and the distribution of losses resulting from them using statistical methods and determining the commitment of both the insured (the insurance premium) and the commitment of the insurer (compensation).
Definition of insurance economists and actuaries:
Economists focus in their definition of insurance income, wealth and the impact of risks and accidents, whether inferior or yard, and on the other side is interested actuaries in introducing them to the methods of measurement and in particular with regard to the possibility of the accident and the expected loss, and the following are economists ‘ definition and actuaries Insurance:
” a system whereby A large uncertain financial loss (the value of the whole subject matter of the insurance) is replaced by a small certain financial loss (the insurance premium), or in other words, a preference for emphasis over uncertainty.
Definition of insurance professionals:
Many specialists in the insurance definition of insurance and notes on all of these definitions as though differed in some sub – districts but they agree in the essence of the insurance process and we will show The following are the most important of these definitions:
1. (insurance means to compensate the individual for the financial loss that resolved as a result of the occurrence of A specific risk, by distributing this loss to a large group of individuals, all of whom are exposed to this risk, according to a previous agreement) (Professor Ahmed Gad Abdel Rahman)
2. (Insurance is a system that reduces the phenomenon of uncertainty present with the trustee by transferring several specific risks to the insured who undertakes to compensate the insured for all or part of the financial loss he incurs) (Dr. Salama Abdullah).
3. (Insurance is a method by which the risks to which a group of persons and establishments are exposed is collected by collecting contributions that are considered as capital from which compensation is paid and which works to reduce the risk) (Williams and Haynes).
4. (A social system to replace uncertainty with certainty by gathering risks) (CALP).
5. A project to reduce the insured’s uncertainty by transferring the burden of certain risks to the insurer, who undertakes to compensate the first, even partially, for the financial loss incurred by him (so he acknowledges).
6. A social system that provides financial compensation for the effects resulting from the dangers, and these compensations are paid from the sum of the contributions collected from all the members participating in the system (Hensel).
From the above, a comprehensive definition of insurance can be reached:
“Insurance is a system that aims to reduce the risk facing the individual or the establishment and in which the insured obtains an undertaking in his favor or in the interest of others from the other party, which is the insurer, under which he pays a certain amount when the risk is realized in return for paying the insurance premium, provided that the insurer collects similar risks and forecasts the value of Financial obligations arising from its realization. “
The most important feature of the previous definition is that it combines all the main characteristics of insurance, which are:
a. Accumulate losses
b. Risk shift
c. Accidental loss compensation
The origin and development of insurance
A follower of the emergence and development of insurance finds that insurance began as a cooperative system that included individuals exposed to the same risk in order to reduce the value of this loss from the shoulders of the person who joined it by distributing this loss to all the individuals participating in this cooperative system, and these individuals are often known to each other. Some people live in the same area and have a common interest.
Historians mention that the ancient Egyptians were the first to practice insurance in this cooperative way through burial societies that were widespread at that time. It is known that when any person died, they embalmed the body and carried out the process of burial, and this had heavy costs that the family of the deceased could not bear alone. These sums were provided by burial societies that existed at that time.
It was mentioned in the introduction of Ibn Khaldun that the members of the trade caravans agreed among themselves to share the loss suffered by any of them as a result of the death of a camel during the winter and summer trip, and the loss was distributed among the members of the trip, and they also agreed to compensate those who had lost their trade from them as a result of the same death of his camels. Previous method.
Marine insurance is considered the oldest of all types of insurance, so it is known that merchants practiced this insurance more than seven hundred years ago, during ship loan operations that were widespread at that time, so ship owners were lent money equivalent in value to the price of the ship and the goods it carried on the basis that it was established. The borrower shall return this loan in addition to 20% to 30% of its value in the event the ship arrives safely at the port of arrival, but if the ship sinks, the owner is not obligated to return anything.
As for life insurance, historians mention that the first document was issued in London in 83 AH1It is worth noting that life insurance was present in the presence of marine insurance, as some marine insurance documents on the ship used to include life insurance for the captain and sailors. It is known that the advantages offered by burial societies among the ancient Egyptians were nothing but a form of life insurance.
As for fire safety, it received great attention after the famous London fire that occurred on Friday, September 2, 1666 AD, which lasted for four days and nights and led to the destruction of about 8% of the city’s buildings at that time. The losses caused by this fire were estimated at about ten Millions of British Pounds.
As for personal accident insurance, it flourished and its importance appeared as soon as trains, cars and airplanes appeared, and it can be said that the beginning of interest in personal accident insurance was at the end of the first half of the nineteenth century.
The emergence of insurance in Egypt:
Insurance did not appear in Egypt until the beginning of the nineteenth century, and when the West knew their way to Egypt and the independence of its economies, most types of insurance entered Egypt to serve their interests in the region, and that was at the beginning of the second half of the nineteenth century and this situation continued until the year 6 AH 19, and in the year 7 AH 19 The Egyptian Company for Reinsurance was established to carry out reinsurance business in the Egyptian market with a capital of half a million pounds. Then Law No. 117 of 1961 was issued to nationalize all insurance companies so that their ownership could devolve to the state and the Egyptian General Insurance Corporation was established. National insurance companies and the existing companies became (Misr Insurance Company – Al Sharq Insurance Company – National Insurance Company – Egyptian Reinsurance Company) and then appeared private sector insurance companies to practice insurance, namely (Suez Canal Insurance Company – Al Mohandes Insurance Company – Delta Insurance Company – The Company Pharaonic Insurance) and then joint insurance companies appearedIn light of economic openness, namely (Egyptian American Insurance Company – Arab International Company for Insurance in Free Zones – African Reinsurance Company).
Types of insurance:
Insurance can be divided in several ways, each of which differs according to the main purpose of the research and the researcher’s view of insurance operations. The following are the most important divisions that an individual may encounter in the field of insurance:
The theoretical division of insurance: Insurance
can be divided in terms of the organization that carries out insurance business into two main types:
a. Private insurance:
This type of insurance includes all the fields of insurance that are not practiced by the government but are practiced by bodies or companies, and this type of insurance includes the following types:
1. Persons insurances:
It is that type of insurance that relates to the person of the insured and covers risks that cause a decrease in the person’s future income or the person’s ability to earn. It is divided into two parts:
the first section: – Life insurance:
There are three types:
• Life insurance.
• Death insurance.
• Life and death insurance together.
The second section: – Injury insurance: It
is divided into two types:
• Personal accident insurance.
• Disease insurance.
2. Property Insurance:
They are the types of insurance that cover risks in which the subject of insurance is human property, including:
marine insurance – fire insurance – insurance against theft – insurance for livestock – insurance from broken glass – insurance of property from earthquakes, volcanoes, disturbances, revolutions and wars – insurance of agricultural crops against rain and natural phenomena.
3. Civil Liability Insurance:
These are the types of insurance that cover the risks of civil liability, and the most important of these types are the following:
• Civil liability insurance for owners of cars, ships and aircraft.
• Civil liability insurance for owners of public places such as cinemas, theaters, restaurants and hotels.
• Work injuries and occupational diseases insurance.
• Civil liability insurance for owners of buildings, stores and garages.
• Civil liability insurance for contractors.
• Securing civil liability for food producers and distributors.
• Securing civil liability for professionals in the liberal professions, such as engineers, accountants, doctors, owners of beauty institutes, pharmacists, and others.
• Securing the civil liability of the owner before the neighbors for the damage caused by a fire that broke out in his building and spread to the neighbors’ buildings and properties.
• Securing civil liability for the tenant before the landlord for the damage caused by a fire that broke out in the place that was rented to him.
B. Governmental Insurance:
It is every insurance that the state enters into with the intention of subsidizing it or imposing it compulsorily to protect a certain group, as is the case in compulsory insurance against car accidents, social insurances where the state participates in bearing part of the costs in addition to the share of the employer and worker. Governmental social insurances include insurance of disability, death, old age and health insurance. Social.
Practical division of insurance
in England Insurance is divided into four types:
insurance 2. Fire
insurance 3. Marine insurance
4. Accident insurance
As for the situation in the United States, the division varies from state to state, and all types are usually placed in two different groups. They are:
A. Individuals groups insurance:
includes individual and group life insurance, industrial life insurance and disability insurance.
B Group of Property and Liability Insurance:
These include fire insurance, marine insurance, liability, breach of trust, credit insurance, theft, and breaking glass … etc.
Types of insurance in Egypt
In Egypt, Law No. (10) of 1981 on supervision and control of the insurance sector in its first article, which was amended by Law No. (91) for the year 1995, defines the different branches of insurance as follows:
First: Insurances of persons and fund formation operations, which include the following branches:
1. Life insurance of all kinds.
It refers to all insurance operations in which the risk of the insured is related to the lives of people and the purpose of them is to pay sums due to the death of a specific person or his permanent or partial total or partial disability or his reaching a certain age or a pension guarantee paid to him or his beneficiaries for life or during a specified period It also includes life insurance, the benefits of which are related to investments in securities.
2. Personal accident insurances and long-term medical treatment, which include:
a. Long-term personal accident insurance: It
refers to all insurance operations that exceed a one-year period in which the risk insured against is related to the person and results from an accident that results in death or disability.
B. Long Term Medical Treatment Insurances:
It refers to all insurance operations whose period exceeds one year and is intended to grant cash benefits to insured persons in cases of disability resulting from illness, as well as to cover the costs of medical treatment.
3. Fund formation operations.
It refers to all operations whose purpose is to form a capital to be spent on a specific date in exchange for periodic installments or installments without this being related to the prospects of life or death.
Second: Property and Liabilities Insurance which includes the following branches:
1. Insurance against the dangers of fire and the insurances that are usually attached to it.
2. Insurance against risks of land, river, sea and air transport, and liability insurances related thereto.
3. Insurances for ship hulls, machinery, tasks and liability insurances related to them.
4. Insurance on aircraft hulls, machinery, and their tasks, and related liability
insurances 5. Auto and liability insurance related thereto.
6. Engineering insurance, liabilities insurance related to it, and the insurances that are usually attached to it.
7. Petroleum insurance, including the following types:
a. Insurance against the dangers of drilling and exploration.
B. Insurance against risks of petroleum manufacturing and refining.
C. Insurance against the dangers of pumping oil into the pipelines.
Dr.. Insurance against all risks to petroleum installations in all stages.
E. Insurance against the risks of loss of revenue on petroleum installations.
And the. Liabilities insurances related to previous risks.
8. Insurances against miscellaneous accident risks and liabilities, including the following types:
a. Personal accident insurances of no more than one year.
B. Insurance of medical treatment for a period not exceeding one year.
C. Fidelity and Security Guarantee.
Dr.. Cash transfer insurance.
E. Burglary and theft insurance.
And the. Glass breakage insurance.
G. Liabilities insurances that are not mentioned in other branches of insurance.
Third: Other insurance and their branches to be specified by a decision of the Authority’s Board of Directors:
This division is useful for knowing the type of contract that takes place between the insurer and the insurer. It is also useful for dividing the existing technical jobs in the insurance project into coherent sections. It is also useful in determining the capital required for each branch of insurance.
Importance of insurance:
Insurance offers many jobs in the field of economic and social development. The importance of insurance is shown in the following:
1. Increase production efficiency:
Insurance sends safety and reassurance in the hearts of the trustees, whether for the owners of projects or for those working in these projects. It reduces the cost of production.
As for the workers of the project, the existence of an insurance program that guarantees covering them from the various dangers to which they are exposed will work to create and develop a feeling of reassurance about their future and the future of their dependents, and this will be reflected in increasing their productivity, which leads them to increase their production and focus on their work.
2. Ensuring the continuation of economic projects:
The insurance protection provided by the insurance contract to the insured, which is to guarantee compensation for potential losses that may occur to the subject matter of the insurance as a result of the realization of a certain risk, is the best guarantee for the continuation of the project and its non-stopping work due to the loss that befalls it.
Insurance provides the project with the necessary funds to replace the damaged assets with new ones, in addition to compensating projects for losses resulting from stopping work and losing profits.
3. Preventing violent fluctuations in the output of economic projects:
Insurance enables enterprises to know the losses that they will bear in advance, which are the installments that they pay in exchange for transferring risks to the insurer, and this leads to stabilizing the losses for a period after another and thus fixing the cost of production. Ultimately this results in the spurt of profits or the prevention of violent fluctuations in them.
4. Life insurance is one of the means of saving:
Insurance companies say that life insurance is one of the means of saving money, I disagree with them because the goal of insurance is not to save money to achieve profits, but the goal of insurance is to avoid the risk by transferring this risk to the insurance company in exchange for a premium to be paid to the insurance company.
For example, among the dangers that make a person turn to insurance for his life is the fear of the risk of sudden death and you own those who depend on them, “parents, wife, or young children.” Therefore, life insurance is insurance against the risk of death and not insurance in the sense that the insurance company will guarantee that you will live to a certain age, for example, as ages are in God’s hands.
Insurance companies have a set of life insurance policies, but the documents that I do not recommend at all are any document that has a savings part, meaning any life insurance policy is a savings move away from it immediately and for more information I advise you to review this separate article titledTypes of life insurance policies and the advantages and disadvantages of each type
5. Funding economic development plans:
Insurance organizations in general, and life insurance organizations in particular, represent an important source of financing that individuals and organizations seek to obtain the necessary loans for them, and their role in this field does not exceed only commercial banks.
The surplus of life insurance bodies consists of the nature of the life insurance contract, which is characterized by the length of the contract period and also as a result of the use of the equal annual installment method in the payment of the insured’s obligations instead of the increased natural premium, due to the increased risk of death with advancing age, and then insurance companies receive premiums Much greater than the normal premium in the early years of contracting and less than the normal premium in recent years. Consequently, the increase in the installments of the first years must be booked in a special account called the arithmetic reserve, and it shall be invested in order to help it pay the deficit of installments in recent years.
6. Supports credit (borrowing):
Insurance is considered an important means of expanding the scope of credit (borrowing), as credit insurance (borrowing) provides a great service to lenders and sellers in installments by ensuring that they receive their full dues in the event of the death of the debtor or the buyer, and thus it encourages the expansion of lending and facilitates the process. installment sales.
In addition to the above, some life insurance policies allow their holders to obtain loans with the guarantee of documents.
Personally, I think that the idea of borrowing money with the guarantee of a lifetime insurance policy is a flaw and not an advantage, because I mainly borrow my money that I paid to the insurance company in the form of installments and I do not borrow from the insurance company’s money, so how can you make me borrow my money with interest ?, The answer that insurance companies tell us is that they will lend us our money We paid at less than the bank’s interest, and these are the terms of the contract.
And I see that this division will eliminate any unfair division, and therefore I do not recommend at all to any life insurance policy that has a savings part, such as a life insurance policy, a savings policy, or a mixed insurance policy, but I only strongly advise the temporary insurance policy and we have dealt with that in detail in a separate article I advise By viewing it for its extreme importance under the title Types of life insurance policies and the advantages and disadvantages of each type
7. Insurance performs important social functions in society:
Insurance performs many social functions for society, the most important of which are:
a. Protecting the vulnerable classes of society from the dangers they are exposed to without being able to protect themselves from them.
B. Contributing to the elimination of unemployment, due to the increase in the number, spread and large size of insurance companies, it absorbs a large part of the available labor.