Provinces-definitions include:
1. Definition of insurance under Article 246 of the Indonesian Chamber of Commerce (KUHD):
"Insurance or coverage is an agreement, whereby an insurer binds himself to the insured by accepting a premium, to provide reimbursement to him for a loss, damage or loss of expected profits, which he may suffer for an event which is not certain".
Based on the definition, then in the insurance contained 4 elements, namely:
- a. Insured parties who promise to pay premium money to the insurer, simultaneously or gradually.
- b. Insure party who promised to pay some money (compensation) to the insured, simultaneously or gradually if something happens that contain non-specific elements.
- c. An accident (accident) that is not terntentu (not known before).
- d. Interests (interests) that may experience losses due to events that are not certain.
2. Definisi insurance according to Prof. Mehr and Cammack:
"Insurance is a tool for reducing financial risk, by collecting exposure units in sufficient quantities, to make individual losses predictable, and then the unpredictable losses are uniformly shared by those incorporated."
3. Definisi insurance according to Prof. Mark R. Green:
"Insurance is an economic institution that aims to reduce risks, by combining in the management of a sufficiently large number of objects, so that the loss is wholly predictable within certain limits."
4. The definition of insurance according to C.Arthur William Jr. and Richard M. Heins, who defines insurance based on two points of view:
- a. "Insurance is a safeguard against financial loss committed by an insurer".
- b. "Insurance is an agreement with which two or more persons or bodies collect funds to cope with financial losses".
Based on these definitions above the definition of insurance that can cover all points of view:
"Insurance is a means to reduce the inherent risk to the economy, by combining a number of units of equal or nearly equal risk, in sufficient quantities, so that the probability of loss is predictable and when the forecasted loss occurs will be proportionally divided by all parties in the composite ".
Insurance Functions:
1. Transfer Risk By paying a relatively small premium, a person or company can move the uncertainty of life and property (risk) to the insurance company
2. Account Funds Premium received then collected by the insurance company as a fund to pay the risks that occurred.
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