1. Intro to Insurance

2. Objectives Describe how insurance began and the way it has evolved over time List the benefits and costs of insurance Explain how the insurance industry is organized Describe the two general principles of insurance Define basic insurance terms

3. What do you know about insurance?

4. Key Terms Benjamin Franklin Commercial Insurance Fire Marks Hazard Indemnity Insurable Interest Insurance Hazard Speculative Risk Personal Property and Casualty Insurable Interest Pure Risk Commercial Life and Health Indemnified Loss Peril

5. Lloyd’s of London Beginnings of Lloyd’s of London: – Late 1600’s in a coffee shop – Edward Lloyd was the founder – Wealthy merchants took on the risks of cargo ships – Underwriters – Now known for insuring the wild, wacky and everything in between.

6. American Fire Marks – A Good Story Round Robin everyone reads a paragraph

7. Quiz 1.1

8. What Insurance Will You Need After Your Graduate? Homeowners Insurance Renters Insurance Boat Insurance Auto Insurance Health Insurance Life Insurance

9. Benefits of Insurance Reimburse people when property is damaged or when they suffer a loss Helps individuals resume their normal standard of living Restore someone to same financial condition before the loss occurred Encourages people to practice loss control to reduce losses from happening

10. Costs of Insurance Takes resources- office building, employees etc. to be able to run an insurance company or agency Some people commit crimes to collect on insurance policies Some people are less careful because they know insurance will reimburse them for a loss

11. Quiz 1.2

12. Insurance Industry Part of the financial industry Divided into 2 primary divisions: – Property & Casualty: 2 classifications as well Commercial or Business Personal – Life & Health

13. Major Types of Loss Exposure Property: These are easier to see, touch and evaluate. – Example: Damage to your home Liability: Involves the loss of assets because we have become financially responsible to another person, firm or organization. – Example: Lawsuit from destroying someone else’s property Human: Involves the loss of life, health, or earning capacity – Example: Getting hurt on the job

14. Principles of Insurance Insurance Interest- person must have financial interest or ownership of damaged item Principle of Indemnity- Insurance is designed to restore the policyholder to the same financial condition enjoyed prior to a loss.

15. Words to Know Risk: Uncertainty about the outcome – Pure Risk- loss or no loss – Speculative Risk- gain, loss or no loss Peril: cause of a possible loss. Loss: decline in value

16. Hazards Four Types Hazard: condition that increases the probability of a loss. Four types of Hazards: – Physical Hazards- improper brakes on car – Moral Hazards- speeding in car – Morale Hazards- leaving keys in car – Legal Hazards- personal injury lawyers All of the above increase the chance of a loss and may also increase damages incurred.

17. Elements of a Loss Physical Hazard Moral Hazard Morale Hazard Legal Hazard Perils Loss Financial Consequence Risk Chance of loss Increases

18. Insurance is a social and contractual device that transfers the risk of financial loss from individuals or businesses to an Insurer

19. Banks & Insurance Why do banks want you to buy insurance for your car or home? How would your live be different without insurance?

20. Quiz 1.3

21. Questions?