Two terms in insurance you should know about
Health insurance works the same way as public insurance. In fact, the main difference between these two types of insurance is ownership where the former is privately owned while the latter is publicly owned. Generally, the field of insurance involves the use of certain terms that are specific to the industry. Anyone who isn’t familiar with this industry might have some trouble understanding what these terms mean. In this article, I will discuss two of some of the most common terms in insurance, that is, underwriting and reinsurance.
What is underwriting
In the field of insurance, the term underwriting is used to describe the process that is used by insurance companies to determine how much money they should charge for each of the risks they cover under different plans they offer. Thus, when an individual or a company buys an insurance policy, the insurance company knows how much they charge them and the terms that accompany the policy.
When insurers are preparing the different policies that they offer, they usually have a lot of calculations to make. Some of these calculations include how much money they will always agree to pay when a certain loss happens. They also discuss circumstances under which they will agree to pay for losses that occur and lastly, they calculate how much premiums they will be charging their customers.
What is reinsurance?
Another common term international hospitals in China is reinsurance. To make things easier, you can look at reinsurance as insurance for insurance companies. Insurance companies also need to obtain insurance for themselves against certain risks. For instance, an insurance company may buy reinsurance so that in case they are faced with a large number of claims, they can be able to pay them. A good example of such a situation is if a cyclone hits a certain country. This is often referred to as catastrophe cover.